[ET Net News Agency, 11 April 2018] After an 11% YoY sales growth in 1Q 2018 due to
robust infrastructure constructions, Credit Suisse expects China's heavy duty truck (HDT)
demand to weaken and drop 19% YoY to 900k units in 2018.
The research house attributed the decline to: (1) 15% YoY lower replacement demand; (2)
reduced impact from the anti-overloading policy (GB1589-2016); and (3) diesel truck
restrictions in some sea ports in north China.
Credit Suisse said truck makers would feel the pain first during a sector downturn. This
is because the truck market is more fragmented than the engine and core-component markets.
At the beginning of a sector down cycle, pricing competition is more likely to happen
among truck makers.
It downgraded both Weichai Power (02338) and Sinotruk (03808) to "underperform" from
"neutral" nothing both the stocks face de-rating amid a HDT sector downturn in 2018 and
2019. It reduced its target prices for Weichai to HK$7.4 from HK$9.5, and for Sinotruk to
HK$7.6 from HK$11. (KL)