Automobile industry policy, both the bottom valuation

 Industry policy bottom

1. purchase tax relief, car to the countryside, trade-out policies, trade policy to complete

2. Domestic policy out with Japan, Europe and other mature markets is not comparable 3. necessary conditions for further growth.

valuation bottom

the current first-line auto stocks in particular passenger cars stock, TTM is about 12 times earnings, and 05Q2, 08Q3, and to the level of January 2010 rather 6,7 , 2011, Dynamic PE9-10 times, is at the bottom.

narrow passenger car sales: up about up, growth will be stronger than market expectations

11Q1, Q2 quarter to determine the trend of wholesale sales are as follows: 1) 11Q1 wholesale sales were About 5% of the decline, but there are still about 9% year on year positive growth; 2) 11Q2 performance of the wholesale sales were significantly better than 10Q2, 11Q2 wholesale sales that are up year on year growth rate of high probability events, estimated to reach about 20 % year on year growth.


quarter sales year on year in Q1 based on the bottom of the judgments, we further determine, 1,2 there in January year on year monthly high probability of bottoming out, mainly closer to the top of this year's Spring Festival (2 3 May), March sales of less subdued by the impact of the economy after the holiday, while the 2010 (Chinese New Year February 14) March sales of the Spring Festival of factors is low (similar to 2007).

the above, we believe that the current point in time, car sales are in monthly, quarterly and year low probability of very large, which is about an upward trend, and the growth rate will be significantly stronger than market expectations.

investment advice

passenger line to buy the stock because: 1) industrial policy have been clearing, the actual sales volume is likely to exceed market expectations; 2) the historical trend of auto stocks that the bottom of the valuation, industry sales up bottom up (growth rate consistent with the performance of listed companies) are the main conditions for the formation of share price rally, now largely in place. Recommend Company: China domain Motors, Shanghai Automotive, Fuyao, Yueda Investment, Rich-dimensional FAW, FAW cars.

(This article Source: CSC)