Weichai Power: The biggest beneficiaries of heavy truck demand

Weichai Power is principally engaged in the design, development, production, sales, and maintenance of diesel engines and related parts, as well as diesel engines and ancillary products. Among them, the vehicle and the assembly accounted for 53.86% of the main business income, the engine accounted for 28.42%, and other auto parts accounted for 11.68%. Today's investment "online analyst" shows: the company's 2008-2010 consolidated earnings per share forecast were 3.94,4.53 and 4.98 yuan, corresponding to a dynamic price-earnings ratio of 19,16 and 15 times; currently a total of 24 analyst tracking, 17 Analysts recommended “strong buy”, 12 analysts recommended “buy”, and one analyst gave “wait and see” ratings, with an overall rating factor of 1.47.

The development capability of Weichai Power Products ranks in the forefront of the domestic industry, and the overall level of technological equipment ranks the leading position in China; the average occupancy rate of WD615 and WD618 diesel engines produced by the company in the heavy-duty automotive and construction machinery market reaches over 75%, and in recent years, 10L/12L. High-power diesel engines have always maintained market leadership.

Orient Securities said that the share price catalyst of Weichai Power Co., Ltd. is that sales of heavy truck products continue to exceed expectations. In 2010, orders for heavy-duty trucks surged. It is expected that the sales volume of heavy-duty trucks will reach 60,000 units in January, not only far better than the same period in 2009, but also significantly higher than the highest sales in January in the history, and not in the off-season. very obvious. The continued strong demand for road freight heavy truck products is an important driving factor for the sales of heavy truck products. It is expected that in 2010, driven by the continued growth of investment and consumption, the road freight industry will maintain a high degree of prosperity, which will drive the demand for heavy cargo trucks of road freight to maintain a high degree of prosperity throughout the year.

The current market concerns about Weichai Power mainly include two aspects: Weichai Power's profit margins and net profit scale in the 3rd quarter of 2009 all set the best record since the listing. The market is worried that the company's high profitability will be difficult to sustain and future profit margins There is a risk of decline; the market is concerned that in 2010, heavy truck industry will continue to grow despite the slowdown in investment growth, which will affect the engine orders of Weichai Power;

According to Guojin Securities, the profit margin of Weichai Power in 2009 was mainly attributable to the rapid recovery of downstream orders and the increase in the proportion of high horsepower and high-pressure common rail products in the product structure. As a result of the company's cost of diesel engines, scrap, pig iron and other raw materials The proportion is only 10%, so the cost is not the main reason for the increase in Weichai Power's gross profit margin. Therefore, even if steel prices rise in 2010, the impact on Weichai Power is very limited; they judge whether Weichai Power's profit margin is the first to decline. The key point is whether the business environment of the construction machinery and heavy truck industries will change in the future. It is certain that, at least in 2010, there will be no major changes in the competitive landscape of the heavy truck and loader industries. The self-sufficiency rate of auto engines will not increase, so the industry will not change in 2010. This means that once the demand does not change negatively, the company can still maintain a stronger bargaining power than the downstream vehicle; for heavy trucks in 2010 The demand of the industry is forecast to be 15% of sales growth. From the analysis of historical trends, the growth rate of GDP is maintained at more than 8%. The heavy truck industry maintains growth of at least 10%.

It will be difficult for competitors to exert pressure on Weichai in the short term. The production and matching of heavy-duty truck engines have a high technological content. Due to the scale and brand advantages, the industry status of Weichai is difficult to shake. In addition, Weichai will also establish its dominant position in the general powertrain field by means of radiating small-displacement engines.

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