[ET Net News Agency, 9 October 2018] HSBC Global Research maintained its target price
for Sinotruk (03808) at HK$15, but downgraded its rating to "hold" from "buy".
The research house said Sinotruk continued to outperform the market in low season.
China's domestic heavy-duty truck (HDT) sales volume decreased 24.8% in September to
around 76,000 units compared to 101,110 units in September 2017, dragging the year-to-date
growth to 3.2%. Sinotruk sold 12,500 HDTs versus Weichai's 10,600 units, implying a slip
of 16.7% and 33.6%, respectively.
HSBC noted that Sinotruk set a market-oriented strategy after the appointment of its new
chairman, including achieving higher market share and cutting expenses. It assumed
Sinotruk cuts distribution and administration expenses to total sales by 0.5ppt per
annum to 9.7% and 9.5% in 2019/20, resulting in potential earnings upside of 15.3%/22.3%
on top of our current estimates. (KL)