Weichai Power (000338) Annual Report 2018 Review: Performance Exceeds Expectation, Profitability Steady and Rising

Weichai Power (000338) Annual Report 2018 Review: Performance Exceeds Expectation, Profitability Steady and Rising

This report reads: The performance is slightly better than expected, the profitability of the engine business and Shaanxi Heavy Truck has improved significantly, and the fuel cell layout opens up new long-term growth opportunities for the company.

Investment Highlights: Raise the target price to 13 yuan and maintain the “overweight” rating.

Considering the increase in the profitability of the engine business and Shaanxi Heavy Duty Truck, the EPS for 2019-2021 is raised to 1.

14 (+0.

05) / 1.

26 (+0.

05) / 1.

38 yuan, given in November 2019.

4x PE with a target price from 12.

32 was raised to 13 yuan.

The performance growth was slightly higher than expected, and the engine 杭州夜网论坛 business led the growth.

The company’s 2018 revenue was 159.3 billion US dollars (ten years + 5%), net profit attributable to mothers was 8.7 billion US dollars (above + 27%), net profit attributable to non-mothers was US $ 8 billion (+ 24% per year), and financial expensesIs 0.

800 million (previous year-87%).

The engine business’s profit contribution is about US $ 6.1 billion (+ 26% per year, accounting for 70% of net profit attributable to mothers), and its profit contribution is expected to be US $ 6.8 / 7.5 billion in 2019/20.

It is estimated that BAIC Foton (including Foton Daimler’s 2018 purchase value of USD 7.2 billion, + 9% per year) will start supporting the company’s high-horsepower products (high unit price and high profit) in 2018, which is the main factor for the company’s engine business profit improvementImprovement of consolidated financial expenses, net profit margin of consolidated statements from 6.
.

1% increased to 7.

3%.

Shaanxi Heavy Vehicle (51% owned by Weichai) has a net profit of US $ 1.2 billion (ten years + 78%). It is estimated that its net profit for 2019/20 will be 10/100 billion (originally expected to be 500 million / 500 million).

Increased bicycle revenue due to the trend of heavy-duty trucks (33 in 2018).

40,000 yuan a year ago + 5%), combined with the improvement of internal operations, in 2018 Shaanxi Heavy Industry’s net interest rate increased by 0.

91 points to 2.

32%.

As the penetration of high-horsepower products matures, its marginal effect on profit improvement is expected to decline in 2019/20.

Fuel cell layout leads the industry, opening up new long-term growth space for the company.

After cooperating with Ballard, according to the announcement of Vrsai in March 2019, it will conduct fuel cell related transactions with Weichai Power (expected to not exceed 45 million yuan).

Risk warning: The sales volume of the heavy truck industry is lower than expected, and the impairment of goodwill exceeds 重庆耍耍网 expectations.