Weichai Power (000338) 2019 First Quarterly Report Review: First-Quarter Performance Exceeds Expectation Steady Increase in City Share

Weichai Power (000338) 2019 First Quarterly Report Review: First-Quarter Performance Exceeds Expectation Steady Increase in City Share

Core Views The company achieved revenues of 43.2 billion in the first quarter of 2019 (ten years +15.

3%), to achieve net profit attributable to mother 25.

9% (+ 35%), net profit after deduction is 24.

5 ‰ (+23.

0%), the growth rate of net profit attributable to mothers far exceeds the growth rate of the heavy truck industry (+0.

3%), exceeding market expectations.

Q1 net profit exceeded market expectations.

The company achieved revenue of 43.2 billion in the first quarter of 2019 (ten years +15.

3%), to achieve net profit attributable to mother 25.

9% (+ 35%), net profit after deduction is 24.

5 ‰ (+23.

0%), the growth rate of net profit attributable to mothers far exceeds the growth rate of the heavy truck industry (+0.

3%), exceeding market expectations.

Q1 non-recurring gains and losses totaled 1.

4.4 billion, of which 0.

830,000 yuan is the financial income of structured deposits, 0.

US $ 4.7 billion in current government subsidies; losses due to corporate credit losses from 4 in the first quarter of 2018.

8.7 billion pounds2.

00ppm, mainly due to changes in the receivable budget structure for impairment losses.

The engine segment has contributed steadily to profitability, and the leading part has become stronger.

Weichai Power’s parent company realized revenue of RMB 12.8 billion in the first quarter (ten years +25.

8%), 四川耍耍网 and achieved net profit of 25%.

400 million US dollars (+ 37% a year ago), after deducting investment income, realize net profit attributable to mothers 25

2 ‰ (ten years + 50%).

The company sold a total of 22 multi-cylinder diesel engines in the first quarter of 2019.

920 thousand units, with a market share of 18.

6%, compared with 15 in 2018.

The increase of 8% is obvious; the sales volume of diesel engines for commercial vehicles is 16.

90,000 units, with a market share of 22.

2%, compared with 18 last year.

1% continued to improve.

We expect that infrastructure investment and real estate starts have picked up, and the company’s engine sales may continue to exceed expectations in April-May.

Previously, Weichai Power ‘s alpha attribute in commercial vehicles: it is not afraid of China VI disturbances, and its market share has continued to increase.

The national VI a standard for diesel vehicles came into effect on July 1, Beijing, Tianjin, Hebei, and the Pearl River Delta. It is expected that the replacement of heavy trucks will increase by 3-4 million.

The transition period of China VI will bring some disturbance to the industry’s sales in the short term, but we expect that the sales volume of heavy-duty trucks will still exceed one million.

In the medium term, the company ‘s State VI engine will start supporting FAW Jiefang (Changchun), China National Heavy Duty Truck and other new customers. Yangchai ‘s light truck engine is also expected to increase sales significantly.

In the long run, the company acquired core technologies in the fuel cell industry chain through the acquisition of Ballard and Sirius.

Weichai Power is expected to rely on the comprehensive layout of the fuel cell and vehicle industries, and join forces with Shaanxi Heavy Duty Truck, Zhongtong Bus, Yaxing Bus, and Sinotruk to build China’s first fuel cell commercial vehicle alliance. Risk factors: Heavy truck sales fall short of expectations; overseas business progress falls short of expectations; provision for large amounts of goodwill impairment.

Earnings forecast and forecast: Maintain the company’s EPS forecast for 2019/20/211.

15/1.

28/1.

38 yuan, corresponding to 10 in 2019/20/21.

6/9.

7/8.

7 times PE.

The company is a Chinese advanced manufacturing company with global core competitiveness. The diversification of business has improved and reduced the performance of the company and promoted growth.

We think the company’s reasonable estimate is 15 times PE in 2019 with a target price of 17.

2 yuan.

Maintain “Buy” rating.