Soochow: The export performance of the heavy truck industry in January is good, and the sector is expected to have a good market performance throughout the year under the stimulus of the National IV policy.

Soochow released a research report stating that the export performance of the heavy truck industry in January was good; considering the Spring Festival factor, the terminal performance slightly exceeded expectations. Among them, Dongfeng's terminal market share increased year-on-year, Foton's export market share increased significantly month-on-month; Weichai's market share increased year-on-year, ranking first. The bank is optimistic about the sector's performance throughout the year under the stimulus of National IV policy. In the short term, the top recommendation is Sinotruk Jinan Truck (000951.SZ), the most benefiting from domestic demand reversal, while in the long term, they are bullish on Sinotruk Jinan Truck (03808) + Weichai Power (02338, 000338.SZ), emphasizing FAW Jiefang Group (000800.SZ) + Beiqi Foton Motor (600166.SH) for performance improvement elasticity. Key points from Soochow are as follows: January sales: Terminal and export sales slightly exceeded expectations Industry total: The export performance in January was good; considering the Spring Festival factor, the terminal performance slightly exceeded expectations. 1) Production: 76,000 heavy trucks were produced in January, with a month-on-month change of -15.3%/-7.5%; 2) Wholesale: 72,000 heavy trucks were wholesaled in January, with a month-on-month change of -25.5%/-14.3%; 3) Retail: 34,000 heavy trucks were sold at retail in January, with a month-on-month change of -0.5%/-51.4%; 4) Export: 24,000 heavy trucks were exported in January, with a month-on-month change of -7.2%/+4.3%; 5) Inventory: The inventory of heavy truck companies increased by 4,000 units in January, while channel inventory increased by 15,000 units. Industry structure: Significant rebound in natural gas heavy trucks, penetration rate growing In January, sales of new energy heavy trucks were 6,000 units, with a month-on-month change of +66.3%/-60.3%, and a penetration rate of 17.80%, with a month-on-month change of +7.16/-3.96pct. In January, sales of natural gas heavy trucks were 8,000 units, with a month-on-month change of +20.5%/-19.7%, and a penetration rate of 22.8%, with a month-on-month change of +3.98/+9.01pct. The average price difference of oil and gas in January was 2.2 yuan, up 0.2 yuan from December. January market share: Dongfeng's terminal market share increased year-on-year, Foton's export market share increased significantly Overall market share: Dongfeng's terminal market share increased year-on-year, while Foton's export market share increased significantly. 1) Terminal: In January 2025, the domestic market share of sales for the terminal of Jiefang/Dongfeng/FAW/Shaanxi Auto/Foton were 19.9%/22.2%/18.8%/10.5%/10.2%, respectively, with year-on-year changes of -3.8/+2.5/+1.0/-0.2/-0.2pct, and month-on-month changes of -5.8/+2.9/+3.7/+0.2/+0.5pct. 2) Export: In January 2025, the domestic market share for exports of Jiefang/Dongfeng/FAW/Shaanxi Auto/Foton were 16.7%/4.6%/45.9%/21.6%/6.2%, respectively, with year-on-year changes of -2.5/-4.4/+5.0/-0.1/+2.2pct, and month-on-month changes of +3.3/-6.5/-1.0/-0.6/+2.8pct. January market share: Weichai's market share increased year-on-year, ranking first Engine market share: Weichai's terminal market share rose to 20.8%, reclaiming the top position. 1) Overall: In January, the market share of Weichai/Cummins/Xi Chai/FAW/Yuchai were 20.8%/17.0%/14.1%/11.0%/13.5%, respectively, with year-on-year changes of -6.7/-1.5/-1.0/+3.8/-0.1pct, and month-on-month changes of +3.1/+1.4/-4.7/+1.9/-0.8pct; 2) Weichai: In January, Weichai's terminal sales volume was 7,000 units, with month-on-month changes of -18.8%/-42.9%. Looking at different truck companies, in January, Weichai's matching rates for Shaanxi Auto/FAW/Jiefang were 62.6%/40.7%/22.9%, with month-on-month changes of +5.9/+2.4/+6.7pct, and year-on-year changes of -5.4/-17.4/-7.6pct. Looking at different fuel types, in January, Weichai's market share for diesel/natural gas engines were 17.1%/49.2%, with year-on-year changes of -0.4/-10.4pct, and month-on-month changes of +1.4/-6.4pct. Risk warning: Domestic heavy truck industry recovery falls short of expectations, natural gas price rises exceed expectations.