Weichai Power: Continuous Improvement in Performance
Weichai Power is a professional manufacturer of high-power high-speed diesel engines and heavy-duty transmissions in China and has a very clear leading edge in these two product markets. The holding company Shaanxi Zhongqi has enabled the company to have the most complete automotive and parts industrial chain in China. At the same time, with the technology and scale advantages in the field of heavy truck engines, the expansion of Weichai Power in the fields of construction machinery, passenger cars, ships and power generation is expected to open up the company's growth potential. Today's investment "Online analyst" shows: the company's consolidated earnings per share forecast for 2009-2011 were 2.64,3.00 and 3.45 yuan, corresponding to a dynamic price-earnings ratio of 19.5 times, 17 times and 15 times; a total of 31 analysts tracking, Among them, 18 and 13 were recommended for strong buying and buying respectively, and the overall rating coefficient was 1.42.
Affected by the decline in sales volume and the high base effect of the same period last year, Weichai Power's overall profit fell in the first half of the year. However, in the second quarter alone, Weichai Power realized operating revenue of 9.631 billion yuan, an increase of 56.20% from the previous period; net profit attributable to shareholders of the parent company was 861 million yuan, an increase of 138.26% from the previous period, and the upward trend in profitability was evident. Reversal trend.
The recovery of the industry is the basis for improving the performance of Weichai Power. Stimulating by the government's “investment-driven economy†policy, government investment will continue to be invested and private speculation is expected to start. It is expected that the growth rate of fixed asset investment will maintain a high level of growth, and the demand for heavy trucks and construction machinery will continue to stimulate. The recovery of the logistics market, represented by semitrailer tractors, will also lead to an improvement in the sales of the heavy truck industry. The overall improvement of the fundamentals of the industry is the basis for the improvement of the company's income and net profit.
Northeast Securities pointed out that the core competitiveness of Weichai Power is the production and sales of engines. As for other businesses, it is an extension of the industry chain. Therefore, the value of Weichai Power's investment should be based on the development of the engine business. At present, Weichai Power's engine diversification strategy, the engine business to the two ends of development, relying on the 5-33L full range of engines, and constantly open up in the heavy truck, construction machinery, passenger cars, ships, power generation, agricultural vehicles and other fields, to achieve a diversified development strategy . Factors such as fuel tax changes and weight and toll collection have led to the trend of heavy tonnage of heavy trucks. Weichai Power purchased the assets of BAUDOUTIN in France in January and relied on the company’s advantages in engines of 15L and above to develop the company’s R&D cycle for large-tonnage engines. It has been shortened to one year in five years and entered the shipping sector.
According to Guohai Securities, the progress of infrastructure investment in the second half of the year and the recovery of the logistics industry led to Weichai Power's heavy truck and engine sales will be better than in the first half, while the transmission business structure is also converted to multi-block high-margin products. Weichai Power's profitability will continue to increase. Weichai Power is expected to sell better in the second half of the year than in the first half. KGI also believes that the annual sales volume of the heavy truck market in 2009 is expected to surpass market expectations and achieve a growth of about 5%. Looking forward to 10 years, due to the economic activity will be better than in 2009, the sustainable growth of the heavy truck market is still available. Therefore, the general environment for the development of Weichai Power is still good. It is expected that Weichai Power will sell engines, transmissions and heavy trucks of 302,000 units, 488,000 units and 59,000 units respectively in 2009.
China Merchants Securities believes that the recovery of heavy-duty truck and construction machinery industry will bring about improvement in the company's performance, and that the expected revision of future performance growth will also lead to a rise in valuation. At the same time, the core technology of Weichai Power's high-power engine and transmission has a high technological content. The competitive advantage is very obvious. Weichai Power should enjoy a relatively high valuation and continue to maintain the “Highly Recommended-A†investment rating.
Risk factors: In the fourth quarter, the performance of the heavy truck market was significantly lower than expected. The prices of bulk commodities such as pig iron, scrap steel, and steel products rose sharply, and the proportion of major customers purchasing decreased.
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