Revenue reached 19.568 billion yuan in the first three quarters, an increase of 12.42% year-on-year. Net profit attributable to shareholders reached 2.277 billion yuan, up 244.64%...... Cimc Vehicles recently delivered an impressive third-quarter report. 

In the first nine months, CIMC Vehicles sold a total of 116,300 units of various types of vehicles worldwide. It has topped the global semi-trailer sales chart for eleven consecutive years, and its title as the leading semi-trailer manufacturer is well-deserved. 

Although the performance is impressive, behind a string of performance figures, it is more necessary to pay attention to what CIMC Vehicles has done right. 

 In fact, the business structure of CIMC Vehicles has undergone a series of major changes in the past two years. Especially in the first three quarters of this year, CIMC Vehicles, which has "embarked on its third round of entrepreneurship", has now completed a new round of accumulation and is getting ready for its next "leap". 

 So, what happened to CIMC Vehicles during this period of time? How will the business operations of this global leader in semi-trailers unfold next? 

 The Starlink Project has achieved phased results 

 At the beginning of this year, CIMC Vehicles announced the launch of its "third entrepreneurship", along with its "Starlink Plan". 

The semi-trailer business has always been the most important business of CIMC Vehicles. According to the data of the first half of this year, this business achieved a revenue of 10.268 billion yuan in the first half of the year, accounting for 76.23% of the total revenue, contributing the vast majority of the revenue of CIMC Vehicles. 

However, in 2022, the domestic semi-trailer industry was affected by factors such as the epidemic, putting pressure on consumer demand and leading to a decline in the number of vehicles in use. This has also affected the domestic performance of CIMC Vehicles. Against this background, the adjustment of domestic business is imperative. At the beginning of the year, the management of CIMC Vehicles proposed the "Starlink Plan" and set three goals: First, by integrating production and manufacturing resources, achieve a leapfrog increase in market share, sales and profits; Second, break through the development bottleneck of semi-trailer business, master core technologies, and create world-class products; Third, leverage the profit foundation and successful experience from overseas markets to support the domestic semi-trailer business and become a global resource allocator. 

Since the beginning of this year, CIMC Vehicles has integrated the production, circulation, distribution and consumption resources of seven domestic semi-trailer factories. Cimc Vehicles mentioned in its third-quarter report that with the comprehensive organizational restructuring, personnel optimization and streamlining, the gross profit margin of domestic semi-trailers has increased year-on-year. 

Cimc Vehicles disclosed in its third-quarter report that the 1.0 construction phase of the "Starlink Plan", which reshaped the domestic semi-trailer business, has been fully completed. The new organization of its "Starlink Plan" has taken shape, and the investment in the Starlink LTP production line will be implemented. 

It is worth mentioning that before the implementation of the "Star Link Plan", CIMC Vehicles still held the top position in the domestic semi-trailer market share. As of 2022, its market share reached 14.45%, ranking first in the country for four consecutive years. 

In a research report, CICC commented that the "Star Chain Plan" reform that CIMC Vehicles is accelerating the implementation of is expected to promote cost reduction and efficiency improvement in the domestic semi-trailer business and achieve revenue and performance growth. 

The recovery signals of the domestic semi-trailer industry are strengthening 

The "Starlink Project" has entered a new stage of development, which also indicates that CIMC Vehicles has completed its preparations for the next stage. 

Meanwhile, subtle changes have also emerged in the domestic market. In the first half of this year, domestic demand has shown signs of recovery. According to statistics, the total volume of social logistics in China reached 160.6 trillion yuan in the first half of the year, increasing by 4.8% year-on-year. The prosperity index of the logistics industry has rebounded. 

In addition, the domestic road freight volume reached 19.01 billion tons, increasing by 7.5% year-on-year. With the smoothness of the road traffic network and the recovery of domestic logistics demand, the signal of the recovery of semi-trailers has strengthened. 

It is well known that the high-quality development of the logistics industry is a key factor driving the increase in CIMC Vehicles' market share. Semi-trailers are not only important vehicles for modern road logistics transportation, but also powerful tools for enhancing transportation efficiency. Citic Securities analyzed in a research report that using semi-trailers for cargo transportation can increase the carrying capacity of a single vehicle by 30% to 50%. 

In addition, the domestic semi-trailer market is also becoming more standardized. Previously, the domestic semi-trailer industry was confronted with market segmentation and a situation of being "small, scattered and chaotic". The management of CIMC Vehicles once made a judgment on the domestic market at the interim results meeting. At that time, the management believed that if non-compliant and illegal vehicle models were banned, the market would give rise to new demands and also generate new demands for semi-trailers. 

In May this year, the National Technical Committee for Automotive Standardization issued a letter titled "On Conducting Research on the Implementation of GB7258-2017 and GB1589-2016 Standards and the Need for Standard Revision", which will guide the upgrading direction of semi-trailer vehicle technology and promote the improvement of transportation efficiency and safety. 

Citic Securities believes that as the market environment for semi-trailers in China becomes more orderly and standardized, the phenomenon of overloading and oversizing decreases, and products are updated and upgraded, CIMC Vehicles, as the leading supplier of semi-trailers, is expected to be the first to benefit from the industry trend of increasing concentration in the domestic semi-trailer industry, achieve an increase in its own market share, and is expected to usher in a new round of rapid growth. 

Benefit from the electrification process of heavy trucks 

However, the "lead time" of CIMC Vehicles does not end here. In its third-quarter report, CIMC Vehicles disclosed that in the future, it will establish an innovative and entrepreneurial platform that integrates new energy source trailer trains and evolves traditional fuel head-trailer integrated solutions, thereby accelerating the commercialization process of new energy semi-trailers. 

Citic Securities' research report stated that the penetration rate of new energy heavy-duty trucks in China rose to 5% in 2022, and the singularity of accelerated penetration has arrived. Considering the usage habits of Chinese truck users, it is expected that the next generation of pure electric heavy-duty trucks in China will have to be compatible with: 1) batteries integrated into the chassis to lower the center of gravity; 2) Battery swapping is possible; 3) Optimal range and energy consumption parameters. If all the above trends are met simultaneously, the electrification of semi-trailers will be an inevitable trend, and the front of the vehicle will no longer be the only place where batteries are placed. 

In the industry's view, the advantages of semi-trailer electrification include: sufficient space for the layout of battery swap batteries and the lowest center of gravity; The load distribution is more reasonable, and the geometric center of the vehicle is closer to the center of mass. Semi-trailers can be integrated with line-controlled motors for energy recovery, and energy consumption can be saved by about 15%. In addition, installing a set of electric drive axles on the semi-trailer can double the distance between the two drive shafts, achieving a more stable four-wheel drive or even six-wheel drive with a larger wheelbase. 

It is understood that in April this year, Vanguard, a subsidiary of CIMC Vehicles in North America, as a core supplier, has provided Sysco with an overall solution for new energy refrigerated semi-trailers. In the Sysco project, Vanguard, a subsidiary of CIMC Vehicles in North America, delivered the first batch of multi-temperature refrigerated semi-trailer prototypes for Sysco at the Moreno Valley factory in California. 

In the semi-trailer sector, CIMC Vehicles has already initiated the definition and pre-research work for the integration of new energy source trailers and trains, and is advancing in accordance with the expected research and development progress. It is learned that the project team has initially established the EV-RT platform architecture and has completed the prototype vehicle of J-trailer. The next step will be to actively upgrade, trial-produce and test calibrate it. 

In addition, in the field of special vehicles, CIMC Vehicles has also launched long-range pure electric mining trucks and developed multiple new energy charging and battery swapping type concrete mixer truck products, significantly reducing the overall vehicle weight and enhancing the economic efficiency for customers. In terms of refrigerated box-type vehicle bodies, our company actively collaborates with original equipment manufacturers (Oems) to develop new energy refrigerated vehicle products. 

Citic Securities predicts that the product form of the next generation of new energy heavy trucks will undergo revolutionary changes. Semi-trailers will become the value center of electrification, and the price and technical barriers of semi-trailer products are expected to increase several times. (CIS