A Niche Sector with 9 Stocks: Why Top Investors Keep Buying More?

By mid-September, the market had not yet seen the "Golden September and Silver October" trend that was anticipated at the end of August, with the Shanghai Composite Index continuously hitting new lows.

In terms of sectors, the trends from the early period are still being maintained, with local hot spots continuously emerging, such as the gene testing, Huawei HMS, and solid-state battery topics taking turns to rise this week.

However, some niche tracks have recently shown a stable upward trend in the market, and the motorcycle track is a typical example of this.

As of September 12th, the motorcycle index has risen by 32% year-to-date, ranking first among the 67 thematic industry indices in Wind, with the second to fifth places being occupied by the popular bank, insurance, precious metals, and home appliance indices this year, but their increases are significantly weaker than that of the motorcycle index, all around 10%.

On that day, the motorcycle index rose again in the morning and once ranked first in the increase list of all thematic industry indices.

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From the news, the strength of the motorcycle sector may be related to the industry entering a high prosperity cycle.

According to data from the China Customs and CCCM China Motorcycle Industry Association, from January to July this year, the production and sales of motorcycles in our country showed a steady upward trend, with a total production and sales volume of 9.4 million fuel motorcycles, respectively increasing by 11.81% and 10.95% year-on-year.

Among them, as one of the world's largest motorcycle production and sales countries, our country's exports are particularly eye-catching, with an export volume of 6.162 million vehicles, a year-on-year increase of 27.82%, and an export value of $3.915 billion, a year-on-year increase of 19.61%.

Specifically, Longxin, Da Changjiang, Guangdong Daye, Chongqing Yinxiang, Guangzhou Haojin, Zongshen, Jiangmen Zhufeng, New Dazhou Honda, Lifan, and Runtong are among the top ten enterprises in motorcycle export volume.

In response, Guotai Junan Research Report pointed out that exports are the main growth driver of China's motorcycle market.

With the rise of independent motorcycle manufacturers, Chinese motorcycles are starting the road of brand going abroad, and leading independent motorcycle manufacturers are expected to open up new growth space.

Against this background, A-share motorcycle companies have generally ushered in rapid development.

According to Wind statistics, among the 9 constituent stocks of the Shenwan Motorcycle Index, 8 have achieved profits in the first half of this year, and 6 have achieved year-on-year growth in performance.

Among them, the year-on-year growth rate of net profit attributable to the parent company of Taotao Vehicle Industry, Chunfeng Power, and Qianjiang Motorcycle all exceeded 20%, and Longxin General and Huayang Racing are both above 10%.

The only loss-making Yong'an Line is due to the larger weight of bicycle-related business in the company, and the company also stated, "During the reporting period, affected by the macro environment, the company's public bicycle project increased insufficiently and reduced in stock, resulting in a decrease in the company's current income and profit decline."

The motorcycle market recovered rapidly in the first half of the year, and based on the research of related companies and industry insiders, the second half of the year is still worth looking forward to.

From the cost side, the semi-annual reports of various motorcycle companies show that while operating income has increased significantly, their operating costs have also increased significantly, such as Taotao Vehicle Industry increased by 93.44% year-on-year, Longxin General by 27.79%, and Chunfeng Power and many others have also exceeded 10%.

For motorcycle exports, sea freight is a major part of operating costs.

However, a research report by Zheshang Securities pointed out that the authoritative shipping consulting agency Linerlytica recently released a forecast report, predicting that container freight rates may drop by as much as 70% in the next 10 months, and the pressure of sea freight prices is expected to ease marginally.

In response, Taotao Vehicle Industry stated in a recent institutional research that "so far, the price of sea freight has fallen, which will have a positive impact on the company's operating performance."

From the market side, Guotai Junan pointed out that in the post-epidemic era, many regions and countries in emerging markets have continued to grow in the motorcycle market due to economic recovery, and Chinese manufacturers have ushered in new development opportunities.

At the same time, China's current motorcycle exports account for only 13.7% of the overseas market, far lower than Japanese and Indian manufacturers, and the export form is mainly OEM, so the past motorcycle export volume is large but the price is low.

However, with the rise of independent motorcycle brands and the improvement of manufacturing capabilities in the middle and large displacement motorcycles, China's motorcycles are expected to transform from manufacturing exports to brand exports, driving motorcycle exports to increase in both volume and price, and opening up new growth space.

Some motorcycle companies have recently stated, "The second half of the year is relatively the peak season for the company's sales, and the company is confident in the performance of the second half of the year."

The policy side is also continuously exerting force.

During the first quarter of this year, the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Replacement" was released, with cars and home appliances becoming the main objects of "replacement", but motorcycles are also benefiting from the queue.

For example, in July, Chongqing City organized the 2024 electric vehicle and motorcycle replacement and new purchase consumer promotion activity, which will last until October.

It specifically includes fuel motorcycles, electric motorcycles, etc., and many motorcycle brands have joined the activity, such as all models of Zongshen and Sai Ke Long support replacement and new purchase, with a maximum of 1,000 yuan/vehicle replacement subsidy.

Combining the latest holdings, many constituent stocks of the motorcycle index have been heavily held by well-known institutions or investors, and further increased their positions during the second quarter of this year.

Taking Chunfeng Power, the company with the highest market value, as an example, as of the end of the second quarter of this year, the only fund product of "top stream" Zhu Shaoxing, Fuguo Tianhui Selection Growth, once again appeared in the list of the company's top ten circulating shareholders, and the number of shares held increased by 266,300 compared to the end of the first quarter.

In response, Zhu Shaoxing stated in the fund's semi-annual report, "The market style in the first half of the year was very extreme.

We should pay more attention to the company's ability to gain market share in a complex environment, as well as the anti-risk ability of stable finances.

Investors may also need to use a longer-term perspective to evaluate excellent companies in order to filter out too many short-term fluctuations.

The fund maintained a high position in the first half of the year, and the portfolio was biased towards stocks with stable operations and excellent quality, with a balanced industry and style configuration."

At the same time, the "national team" basic pension insurance fund 16022 combination and 16021 respectively completed the increase and new heavy position of Chunfeng Power, and the high-quality strict selection managed by the star fund manager Xiao Nan of Yifangda also completed the new heavy position.

Lifan Technology, the company with the second highest market value, is a guest of the bank.

In the list of the company's top ten circulating shareholders at the end of the second quarter of this year, Agricultural Bank of China, Shanghai Pudong Development Bank, Bohai Bank, etc.

are all listed, and the shares held have not changed.

In addition, the "super bull scattered" Gao Yaping and Ye Maoyang, who have a certain relationship, appeared at the same time to heavily hold Qianjiang Motorcycle, "smart money" Northbound funds newly entered the heavy position of Taotao Vehicle Industry, Jing Shun Great Wall three fund products and insurance capital China Pacific Property Insurance jointly held Zhenghe Industry...