宇通客车(600066)

Event

Yutong reported November bus wholesale shipment data after the market close on 4 December.

Impact

Soft November sales: Yutong shipped 5,784 buses in November, down 25% YoY. Sales of large buses (2,341 units, -10% YoY) and medium buses (2,596 units, -42% YoY) declined further. Total sales were down 8% YoY to 50,002 units in 11M18. The weakness was mainly due to a continued decline in the demand for conventional buses, especially in the non-urban transit segment. Yutong sold ~3,000 new energy buses (E-buses) in November, down from 4,663 units in November 2017.

What is behind our Neutral rating: 1) assuming 40% and 20% subsidy cuts for E-buses in 2019-20E. The reported subsidy policy (LINK) indicates that there could be an upside with subsidies in 2019; 2) expecting continued weakness in bus demand in 2019, especially in conventional bus space and overseas markets; 3) elevated impairment losses as well as R&D costs duringproduct and technology transition. We would turn more positive on better-thanexpected bus demand, lower-than-expected subsidy cut and higher-thanexpected battery procurement cost cut.

Action and recommendation

We maintain our Neutral rating.