Weichai Power: Engine sales will hit a record high in the first half of 2011


Weichai Power (000338) is principally engaged in the production and sale of diesel engines and related parts and components, as well as the design, development, production, sales and maintenance of diesel engines and ancillary products. The company is one of the major manufacturers of high-power high-speed diesel engines in China. It mainly supplies products to domestic truck and construction machinery manufacturers. The diesel engines are mainly used for the supporting of final products such as heavy-duty vehicles, engineering machinery, ships, large passenger cars and generator sets. The market has expanded from single heavy-duty vehicles to construction machinery, large passenger cars, ships, generator sets and many other fields. Today's investment "online analyst" shows: the company's 2010-2012 consolidated earnings per share forecast were 4.24 yuan, 4.95 yuan, 5.66 yuan, corresponding to a dynamic price-earnings ratio of 14 times, 12 times, 10 times; the current total of 23 analysts Tracking, which strongly recommended buying and buying were 11 and 11 respectively, suggesting a moderate reduction of 1 and a comprehensive rating of 1.61.

Weichai Power is the world's largest and is the leading full-line engine R&D and production company. It has extensive R&D and manufacturing experience in construction machinery engines. The products include passenger car engines, truck engines, power generation engines, marine engines, and agricultural engines. Multiple areas.

In 2010, the company sold 580,000 sets of engines. In the first quarter of 2011, the demand for domestic heavy trucks and construction machinery was strong. The company’s orders were full and production was tight. In the first quarter of 2011, it produced over 60,000 units per month. Guodu Securities stated that it expects 1Q12. The company's engine sales are expected to reach 200,000 units, an increase of more than 30% year-on-year, and the second quarter will usher in the sales season. It is expected that sales will grow strongly in the first half of the year. At the end of last year, the company's production capacity has expanded from 650,000 units to more than 750,000 units, which can satisfy the strong sales demand. In addition, the company's production of 70% of the engine supporting heavy truck, high-pressure common rail engine which accounted for 30%. Guodu Securities believes that in the face of implementation of the National IV standard in 2012, the company will use the high-pressure common rail + SCR line, which is now ready. At that time, it will gain the initiative and the market share of high-pressure common-rail engines will be increased.

With the changes in market demand and the improvement of its own product line, Weichai's product structure adjustments have also become more in place, and the spectrum of diesel engines has gradually become complete. Currently, except for the 10 to 12-liter series of heavy-duty truck engines that have occupied 35% to 40% of the market share, the independently developed 5 to 7-liter engines have passed the market inspection for more than two years in the fields of passenger cars, excavators and medium- and heavy-duty trucks. It is expected to form a larger market breakthrough. From 2 to 620 liters, the power from 30 to 10 thousand horsepower, Weichai's product model is gradually complete, the engine product line width has exceeded all other engine suppliers in the world.

AVIC Securities also stated that the company’s highlights are in the full-power system and the construction of a company body that runs through the entire industrial chain of “parts supply companies → entire vehicle and key assembly parts manufacturing enterprises → parts and components wholesale and distribution companies → service terminal enterprises”. It is expected that the company's earnings per share for 2010-2012 will be 3.35 yuan, 4.45 yuan, and 5.76 yuan, respectively, with an investment rating of "buy", with a target price of 75.06 yuan for 6-12 months.

Risk factors: macroeconomic policy risks; falling demand in the heavy truck industry; and rising raw material prices.

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