We believe the recovery in heavy truck demand in YTD16 is stilldriven by logistic-related demand. With robust growth ininfrastructure spending and property new starts translate intodemand for construction-related trucks gradually, we view themomentum will be sustained in Q2 and through 2016.

　　Trucks – Sales up 8% YoY in April: Truck sales totaled 298.7k units in Apr-16, +7.7% YoY, and Jan-Apr aggregated sales increased 4.5% YoY. Accordingto CAAM, heavy truck (HDT) sales were up 17% YoY to 68.9k units (around1.9k units or 3% higher than preliminary data from CVWorld). Jan-Apraggregated sales volume reached 215k units, +11% YoY, an acceleration from+8% YoY in Jan-Mar. For other sub-segments in the truck space, light trucksales remained weak – down 6% YoY last month, and - 4% YoY in YTD16.

　　Buses – Sales declined 24% YoY in April: Large buses sales saw solidgrowth by 12% YoY in April, and YTD16 was up 7% YoY. Minibus salesremained soft at -22% YoY last month and -30% YoY in YTD16.

　　Company Highlights

　　Sinotruk: HDT growth momentum was slower than the overall market, butsales volume still increased steadily by 6% YoY in April, and YTD16 growthspeed up to +2% YoY, from YoY flat in 1Q16. Market share moderated 1.5pptYoY to 16.8%, ranking No.3, behind FAW and Dongfeng. Meanwhile, thecompany's light truck sales outperformed the market, +29% YoY in Apr and+8% YoY in YTD16, vs. +1.5% YoY in 1Q16.

　　WeiChai Power: HDT subsidiary, Shaanqi's sales volume were up 13% YoY inApril and growth in YTD16 remains at +14% YoY, slightly better than themarket. Market share was 0.3ppt YoY higher at 14.3% at end April, ranking No.4. Overall, WeiChai Group's diesel engine sales rose 17% YoY in Apr and +10%YoY in YTD16, vs. +8% YoY in 1Q16.

　　FAW Group: HDT sales growth remained the strongest among peers, up 55%YoY in Apr and +54% YoY in YTD16. Market share in YTD16 increased 5.7pptYoY to 20.5%, taking the no.1 position from Dongfeng. WeiChai managementindicated during the post 1Q16 results conference call that WeiChai hassupplied around 4k units engines for FAW's HDT in 1Q16 (~15% of FAW'ssales volume, increased from less than 10% in full year 2015), mainly for largediesel engines (12-13L) that FAW's engine plant is still not yet capable ofmanufacturing. (See: Weichai Power: Takeaways Post 1Q16 Results ConfCall)