CICC: Maintain China National Heavy Duty Truck's Outperform Industry Rating, Target Price HKD 47.7

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CICC released a research report stating that the earnings forecasts for China National Heavy Duty Truck Group (03808) for 2026/2027 remain essentially unchanged. Maintain an outperform industry rating. The current stock price corresponds to 13.1/11.7 times P/E for 2026/2027. Maintain the target price of HKD 47.7, which corresponds to a 15.0 times P/E for 2026, with an upside potential of 13.2% from the current level.

CICC’s main points are as follows:

2025 performance meets the bank’s expectations

The company’s revenue in 2025 increased by 15% year-on-year to 109.5 billion yuan, with net profit attributable to parent up 20% to 7.02 billion yuan. In 2H25, revenue grew by 27%/15% quarter-on-quarter to 58.7 billion yuan, and net profit attributable to parent increased by 40%/5% quarter-on-quarter to 3.59 billion yuan. This aligns with the bank’s expectations.

Heavy-duty truck leader remains solid, revenue and profit hit record highs in 2025

The company’s heavy-duty truck sales in 2025 increased by 20% year-on-year to 292k units, maintaining the top domestic market share, with exports and domestic sales up 27% and 14% respectively to 139,000 and 153k units. The bank estimates that the average revenue per heavy-duty truck decreased by 11k yuan to 331k yuan, mainly due to a higher proportion of exports of mid- and low-end models to regions such as Africa and Southeast Asia, leading to lower export prices. The bank estimates that the net profit per heavy-duty truck remained roughly flat at 24k yuan, while net profit excluding non-recurring items per truck increased by 2,127 yuan to 20k yuan.

Steady profitability, ample cash on hand

The company’s gross profit margin in 2025 decreased by 0.5 percentage points to 15.1%, period expense ratio decreased by 0.5 percentage points to 8.3%, and net profit margin increased by 0.2 percentage points to 6.4%. As of the end of 2025, the company held net cash of 26.7 billion yuan; the company announced a proposed total cash dividend of 4.03 billion yuan for the full year, approximately 57% of net profit attributable to parent, continuing high dividend payouts to shareholders. Looking at the business segments in 2025: 1) Heavy-duty truck division revenue increased by 13.7% to 97.2 billion yuan, with an operating profit margin down 0.4 percentage points to 8.3%. 2) Light truck and other segments revenue grew by 30.4% to 14.6 billion yuan, with an operating loss rate down 0.4 percentage points to 1.5%, continuing to reduce losses. 3) The company’s financial segment revenue increased by 20.6% to 740 million yuan, with an operating profit margin up 5.9 percentage points to 25.7%.

Optimistic about long-term opportunities for Chinese heavy-duty trucks going abroad, leading players strengthening their dominance

Referring to the General Administration of Customs, exports of heavy-duty trucks in January-February 2026 increased by 63.8% year-on-year to 68k units, continuing the strong momentum since 2H25. The company has been deeply engaged in overseas markets for over 20 years, establishing 37 knock-down (KD) assembly plants and over 700 service outlets and spare parts centers abroad, and has begun to enter the European market through OEM partnerships. The bank is optimistic about the sustained growth of heavy-duty trucks in Africa, Latin America, and other regions, as well as the long-term potential of European exports. As a leading heavy-duty truck manufacturer, the company is poised to benefit from new growth points in volume and profit.

Risk factors: Domestic and international demand for heavy-duty trucks falls short of expectations, rising shipping costs, deterioration of industry competition landscape.