Core Viewpoint - The report from Guotai Haitong indicates that with economic recovery and the implementation of the "old-for-new" policy for heavy trucks in 2025, domestic heavy truck sales are expected to gradually rebound, with a projected sales volume of 1.067 million units in 2025, representing an 18% year-on-year increase [1] Summary by Sections Overall Sales Performance - In October, domestic heavy truck sales reached 106,000 units, marking a 60% year-on-year increase and a 1% month-on-month increase. Cumulatively, from January to October, total sales amounted to 928,000 units, reflecting a 24% year-on-year growth. The "old-for-new" policy continues to support strong terminal sales [2] Sales Structure - In October 2025, the sales proportions of semi-trailer tractors, cargo trucks, and incomplete vehicles within the heavy truck segment were 51.4%, 27.2%, and 21.4% respectively. This shows an increase in the share of heavy cargo trucks compared to 2024. In October, semi-trailer tractor sales were 59,000 units, up 83% year-on-year and 4% month-on-month [3] Focus on Natural Gas Heavy Trucks - In October, domestic natural gas heavy truck sales reached 22,000 units, a significant 197% year-on-year increase and a 2% month-on-month increase. Cumulatively, from January to October, natural gas heavy truck sales totaled 158,000 units, up 12% year-on-year. The penetration rate of natural gas in heavy trucks was 20% in October and 17% for the year-to-date [4] Focus on New Energy Heavy Trucks - In October, domestic new energy heavy truck sales were 20,000 units, representing a 176% year-on-year increase and a 7% month-on-month increase. From January to October, cumulative sales of new energy heavy trucks reached 141,000 units, also up 176% year-on-year. The penetration rate for new energy heavy trucks was 19% in October and 15% year-to-date [4]

Investment Rating - The report maintains a "Recommended" rating for the company, with a target price based on the closing price of 17.48 yuan on October 30, 2025, corresponding to PE ratios of 13, 11, and 9 for the years 2025, 2026, and 2027 respectively [4][6]. Core Insights - The company reported revenue of 40.49 billion yuan for the first three quarters of 2025, a year-on-year increase of 20.55%, and a net profit attributable to shareholders of 1.05 billion yuan, up 12.45% year-on-year. In Q3 2025, revenue reached 14.33 billion yuan, reflecting a significant year-on-year growth of 55.98% and a quarter-on-quarter increase of 8.11% [1][2]. - The heavy truck export market remains robust, with Q3 2025 exports increasing by 22.91% year-on-year, and the company holds a market share of 47.77%, indicating strong competitive positioning [3]. - The implementation of the "old-for-new" policy is expected to stimulate domestic demand, as it includes subsidies for older heavy trucks, which will likely benefit the company as a leading player in the industry [3]. Summary by Sections Financial Performance - For Q3 2025, the company achieved a gross profit margin of 7.12%, which is a decline compared to the previous year due to changes in revenue structure. The net profit margin stood at 3.80% [2]. - The company’s operating expenses showed a decrease in sales, management, and R&D expense ratios, attributed to improved scale efficiency [2]. Market Dynamics - The heavy truck market in China is experiencing a recovery, with wholesale sales of heavy trucks increasing by 58.07% year-on-year in Q3 2025. The company’s sales performance aligns closely with industry trends [2]. - The report highlights the favorable conditions in the export market, with the company benefiting from high demand and competitive pricing [3]. Future Projections - Revenue projections for the company are estimated at 56.16 billion yuan in 2025, 64.02 billion yuan in 2026, and 71.71 billion yuan in 2027, with corresponding net profits of 1.62 billion yuan, 1.87 billion yuan, and 2.17 billion yuan respectively [5][9]. - The report anticipates continued growth in earnings per share (EPS), projected at 1.38 yuan for 2025, 1.60 yuan for 2026, and 1.85 yuan for 2027 [4][5].