Foton Motor: Growth in Light Truck Sales Will Drive Company's 2009 Growth

Light trucks continue to maintain their leading position in the industry. Futian sold 121,470 vehicles in the first quarter of 2009, of which 87.87% were sold by light trucks. In the first quarter, the sales volume of light trucks reached 109,200, an increase of 8.2% year-on-year, and the market share continued to rank first in the industry. However, at the end of 2008, the company’s market share of light trucks was 28%, which dropped by 4 percentage points to 24% in the first quarter. We believe that the decline in the market share of light trucks is mainly due to the rapid expansion of the total capacity of light trucks under the stimulus of the automobile to the countryside policy. The company's light passenger sales achieved impressive results. Against the backdrop of a sharp drop in the sales of light passengers in the industry, the company recorded an increase of 9.7%, and its market share reached 17.6%, ranking second in the industry.

In the short term, Foton is a major commercial vehicle manufacturer benefiting from the automobile to the countryside. With the contribution of new energy buses to the company's earnings, we have increased the company's 09 and 10 years' EPS to RMB 0.65 and RMB 0.73. The corresponding PE of the current stock price is 19 times and 17 times respectively. In the long run, the four-yuan increase in new energy buses, light trucks, medium-to-heavy trucks, and engines formed by structural adjustments is likely to increase the valuation center. We give the company a "buy" investment rating.