Auto Parts Industry 2012 Strategy Report: Beyond Cycle, Regression Value

The medium and heavy trucks have a greater chance of seeing the top of the long-term cycle, and the industry's profitability will continue to be restrained by the release of production capacity lag.

As the narrow center of the passenger vehicle moves down, profit demands on the company’s overall competitiveness are higher, and marginal assets (weak companies) will lack long-term profit opportunities.

The predictable slowdown in the profitability of the industry and the expansion and long-term differentiation of the company's profitability have made the cycle strategy or the strategy of simply looking at multiple industries fail, while the absolute valuation strategy based on the stability of the company's profitability has become possible.

Core quality assets have a margin of safety, and the subject and growth are subject to overall inspection.

Maintain the "overweight" rating of the passenger vehicle industry and give the truck and bus industry a "neutral" rating.

We recommend Huayu Automotive, Shanghai Automotive, Fuyao Glass, Yueda Investment, Zhongda University, FAW Fuwei and Jiangling Motors based on absolute valuations or safety margins.

Based on grasping the potential major growth opportunities in the industry, we recommend Changan Automobile and recommend that investors pay attention to Great Wall Motors, Huge Group, and Foton Motor.