Expected 4Q08 heavy truck industry losses, Weichai worst breakeven
4Q08 heavy-duty card industry is expected to lose money: 2H08 heavy truck sales for six consecutive months of negative growth, 4Q08 heavy truck industry sales fell 43.7% year-on-year, is expected to heavy truck industry 4Q08 losses. Main reasons: [1] The operation of the macro-economy at the bottom, the financial crisis has spread to the real economy, and exports have fallen sharply; [2] the turnover volume of road freight has shown a downward trend, and the transportation industry customers have adopted a cautious investment attitude. 1H08 heavy truck sales pressure is still large, 2H08 is expected to bottom out. It is estimated that the sales growth of heavy trucks in 2009 and 2010 will be -30% and 30% respectively.
4Q08 Weichai worst-case break-even: The main source of corporate earnings is the engine business (see Figure 1). Weichai 4Q08 engine sales of about 29,000 units, slightly more profitable balance point. In 2008, it is expected that Weichai headquarters, Shaanxi Fast and Shaanxi Zhongqi will obtain the qualification of high-tech enterprises, and the income tax rate will be reduced from 25% (pre-paid) to 15%. It is expected that the income tax saving will be the event after the balance sheet date. Confirmed in 2008. The above two issues will make the 4Q08 single quarter final profit of 10 million yuan. Taking into account the company's possible withdrawal of preparation, accounting for the appropriate smoothing period, our model temporarily calculates the 4Q08 profit to zero, that is, the EPS of Weichai in 2008 is expected to be 2.42 yuan.
In 2009, the company will benefit from the recovery of the machinery industry and benefit from the recovery of the heavy truck industry.
Engine business is the main source of profit for the company. Taking 2008 as an example, it is expected that the engine business will realize a net profit of 1.583 billion yuan, accounting for 79% of the total net profit.
Engine business diversification Anti-risk: In 2009 heavy truck industry sales will be reduced by 30%, and heavy truck industry profits will be reduced by 30%-50%. However, Weichai Power's (000338, stocks) decline in earnings will be weaker than the industry average, mainly due to the company's engine products across two industries - heavy trucks, construction machinery, distracted the risk of excessive concentration of business in the heavy truck industry, is expected to support the project in 2009 The engine's engine share will increase from 30% to 39%.
The company will benefit from the warming of the machinery industry: [1] In 2009, driven by 4 trillion investment, rapid enterprise inventory depletion, and falling raw material prices, the performance of the construction machinery industry will be far better than that of the heavy truck industry, and with the new 2Q08 The project has entered the construction phase one after another, and the machinery industry will warm up before the heavy truck industry. The wheel loader industry has strong standardization characteristics and a relatively stable growth. It is expected that the sales volume of the wheel loader market above 5 tons will increase by 8%. [2] Weichai owns more than 80% of the market share of wheel loaders over 5 tons, and the main customers are Liugong (000528, Shares), Longgong, Lingong, Xugong and Shangong. Since 2001, the proportion of the company's Diesel Engine for engineering machinery has fluctuated between 30% and 50%. In 2009, Weichai was expected to follow the market and continue to adjust the structure of its engine products. The sales of construction machinery engines will increase from 30% in 2008 to 39%.
The company will benefit from the recovery of heavy-duty truck industry: It is expected that the heavy-duty truck industry will go through the worst time and 2H09 will begin to recover. The sales growth in 2009 and 2010 will be -30% and 30% respectively. The company's 2H09 will benefit from the recovery of the heavy-duty truck industry. It is estimated that in 2009 and 2010, the sales volume of engines of the company's heavy trucks will be 140,000 units and 182,000 units. The year-on-year growth rates will be -30% and 30% respectively. (In our model, we assume that the company's heavy truck engine sales growth is the same as the industry growth rate, but The actual performance of the company may be better than the industry average. We pointed out in the “Investment Strategy for the Automotive Industry in 2009: M&A First, followed by Wheelsâ€: “We will increase the ratings of related companies before and after the heavy truck industry reaches the “worst timeâ€. Increase company rating.
Raise company investment rating to "prudent recommendation"
Weichai's power rating was raised from "neutral" to "prudently recommended." It is expected that the company's 2008-2010EPS will be 2.42 yuan (ie, 4Q08 earnings balance) (11.8x), 1.91 yuan (14.9x), and 2.65 yuan (10.7x). It needs to be emphasized that the above profit forecast is more conservative: [1] Taking into account the company's possible preparations and appropriate smoothing period accounting methods, our model is temporarily calculated based on 4Q08 profit; [2] 2009 assumption that the company's heavy truck engine sales fall rate Consistent with the industry, actual company performance may be better than the industry. The 12-month target price increase is 30%, and the target share price is 37 yuan, which corresponds to 19xPE in 2009 and 14xPE in 2010.
Both Weichai Power and China National Heavy Duty Truck (000951.SZ) are leaders in the heavy truck industry, and the two sides take turns to seize the tide. However, at the current stage (ie 2009), we believe that Weichai Power is superior to China National Heavy Duty Truck. The reasons are: [1] Weichai Power's dependence on foreign sales is weaker than that of China National Heavy Duty Truck Group; [2] Weichai Power's dependence on the heavy truck industry is weaker than that of China National Heavy Duty Truck Group. It is expected that in 2009, the company's engine will receive 39% of its supporting construction machinery. The construction machinery industry rebounded much better than heavy trucks. (Incidentally, engine profit is expected to account for about 60% of the company's total profit in 2009 as well;) [3] The company's internal control of EGR's State III engine has been verified and it is expected that relevant vehicle products will be validated in May. From the perspective of the State III engine, Weichai's internal control of EGR costs will be much lower than that of China's heavy-duty trucks, and the high-pressure common-rail support is also far better than China National Heavy Duty Truck. Looking at the above two aspects, we believe that the relative advantage of the Euro III engine is that Weichai has “rising†the heavy truck to “fall.â€
Genour Power Machinery Ltd. , http://www.tzgasolinegenerator.com