Soochow Securities·2025-08-19 12:30Investment Rating - The report recommends a "Buy" rating for the bus sector, specifically favoring Yutong and King Long [3][4]. Core Insights - The driving factors behind the current bus cycle indicate that the bus industry represents China's automotive manufacturing sector's potential to become a global leader in technology output. The overseas market is expected to contribute significantly, potentially creating a market equivalent to China's within 3-5 years [2]. - The report highlights that the domestic price war has ended, which will not hinder growth but rather resonate positively with demand recovery driven by tourism and public transport updates [2]. - The report anticipates that the bus industry's profitability can reach new highs, supported by the absence of price wars, a concentrated market structure, and favorable cost trends in lithium carbonate [6]. Industry Overview - In July 2025, the overall production of the bus industry in China was 44,000 units, with year-on-year growth of 24% and a month-on-month decline of 12%. The wholesale volume was 42,000 units, reflecting a year-on-year increase of 16% and a month-on-month decrease of 21% [9][10]. - The terminal sales for buses in July 2025 reached 45,000 units, showing a year-on-year increase of 12% and a month-on-month increase of 2% [16]. Company Performance - Yutong is characterized as a "model student" with high growth and high dividend attributes, with projected net profits of 4.63 billion, 5.52 billion, and 6.68 billion yuan for 2025-2027, representing year-on-year growth of 12%, 19%, and 21% respectively [4]. - King Long is noted for its rapid progress, with expected net profits of 440 million, 640 million, and 830 million yuan for 2025-2027, showing substantial year-on-year growth of 182%, 45%, and 28% respectively [4]. Market Dynamics - The report indicates that the domestic market for buses is stabilizing, with Yutong and King Long maintaining leading positions. In July, Yutong's domestic bus sales were 561 units with a market share of 41%, while King Long sold 374 units with a market share of 27% [44]. - The export performance of the bus sector is also highlighted, with July exports reaching 5,052 units, a year-on-year increase of 84% but a month-on-month decrease of 10% [45].