Table Of Contents
Fine-tuning our forecasts for Chinese vehicle sales ....................... 3
We expect 11.3%/9.8% growth in 2013/14 on normalizing growth .................................. 3
PV: lukewarm status quo but outlook improving ........................... 4
Recovering demand hampered by Sino-Japanese dispute ............................................... 4
Inventory level still higher than optimal level, but on easing trend ................................... 4
Domestic macro recovery to drive up auto demand in 2013E .......................................... 5
Capacity issue is not acute; we expect a mild margin downtrend .................................... 6
Theme 1: Continuation of luxury car sales boom .............................................................. 8
Theme 2: Local brand sales recovery ................................................................................. 8
Theme 3: Japanese brands’ sales recovery ....................................................................... 9
CV: Some dim light out of the tunnel ........................................... 11
Weaker-than-expected sales on slow 2H12 recovery ..................................................... 11
We expect policy loosening impact to materialize by mid-2013 ..................................... 11
Stock implications ........................................................................ 13
Earnings and target price adjustments ............................................................................ 13
Sector valuation still reasonable, despite recent rally ...................................................... 14
Stock recommendations, valuation and risks .................................................................. 15
Our China Buys are also compelling on a regional basis ................................................. 21
Sector risks ................................................................................... 23
Better-than-expected auto purchase sentiment from early 2013 .................................... 23
Prolonged tightening in the Chinese economy ................................................................ 23