Weichai Power (000338): Heavy truck industry chain leader extends both inside and outside to lead industry upgrade
Key points of investment: Leader of domestic heavy truck industry chain, deep wall casting absolute advantage.
The advantages of several similar companies are as follows: 1) Full: The company has built a gold system including the internal powertrain of engines, axles, and transmissions. In addition, it extends upstream components and downstream heavy trucks, and is the first to get involved in forklifts and intelligent warehouse logistics.
2) Large: The (fixed) asset scale industry is the first, and the distribution of channels in China’s “three zones and five places” has been fully formed. Foreign countries have sold more than 11佛山桑拿网0 countries and regions through national strategic product marketing.
The market share of major products such as heavy truck gearboxes exceeds 70%.
3) New: The research and development investment is at the leading level in the industry. The average replacement is earlier than the required 2-3 years. It has taken the lead in completing the technical reserves of 6 national six engines and actively cooperated with international advanced technology vendors.
4) Stable: Long-term strategic relationship with mainstream heavy truck companies for many years. The supporting ratio in the heavy truck market has stabilized at more than 25%. There are also large downstream heavy truck companies such as Shaanxi Heavy Truck and China National Heavy Duty Truck to support upstream business orders.
Supervision and emissions upgrades have driven the sales hub upward, the engine market share has increased, and multiple product layouts have increased revenue levels.
The implementation of the super-policy policy at the end of 2016 caused a decline in the capacity of heavy trucks and an increase in demand. The Blue Sky Defense war proposed the elimination of 1 million national triple trucks by the end of 2020. It is estimated that the industry’s annual sales in 19-21 will be 1.17, 120, and 124 million.
The company insists on product innovation and product innovation, leading the industry’s emissions upgrade. Therefore, the city share of heavy truck engines has been continuously enhanced and increased by 5pct in the past five years. With the breakthrough of customers such as Sinotruk and Qingdao Jiefang, the city share is expected to continueRaised to 40%.
The company adjusted its product structure and sales strategy, multi-product layout, and successively launched high-end high-power engines, agricultural equipment and industrial power, and other non-road market engines. Sales of high-end products continued to increase, and revenue levels were gradually increased.
The spare parts business is working hard to jointly resist the competitiveness of the industry.
The parts business mainly includes forklift business, hydraulic business, intelligent logistics storage, etc.
Forklift business: KION has a complete mature business model closed-loop chain. As the world’s second forklift company, it will overcome the decline in interest rates and acquire companies to turn losses into profits in the future, and the company’s profit opportunities will improve.
Intelligent warehousing and logistics business: Dematic is a global leader in the industry. It is expected that the industry will have an average annual growth rate of more than 10% in the next five years.
Linde Hydraulics: As an international high-end hydraulic enterprise, Linde Hydraulics is located around the world.
With a 5% market share, the reorganization and acquisition of Linde Hydraulics is a shortcut to obtain high-end German hydraulic technology.
Linde (China) ‘s revenue growth rate increased from 73 million yuan in 2016 to 2 in 2018.
500 million, revenue has doubled.
In the future, we will continue to deepen the complementarity between Linde and Weichai in terms of products, technologies and channels. The independently operated hydraulic business will fully tap the untapped market potential.
Layout new energy technologies to keep up with industry development trends.
The company actively promotes new energy powertrain systems and independently develops plug-in hybrid powertrain systems.
On September 6, 2019, the company announced that the development of the first prototype range extender for China’s fuel cell buses was completed. Sirius Power and the company are currently working on developing the next phase of the system.test.
Investment suggestion: Cover for the first time and give an overweight rating.
We expect the company to achieve operating revenues of 176.8 billion, 189.3 billion and 195.9 billion from 2019 to 2021, and net profit attributable to mothers of 102.
700 million, 114.
600 million and 126.
200 million, corresponding to EPS 1.
29 yuan, 1.
44 yuan and 1.
59 yuan, corresponding estimates are 12 times, 11 times and 10 times.
FCFF estimates that the company’s intrinsic value is 18.
80 yuan, the current consensus (closed on December 26, 2019) is 15.
27 yuan, with a growth rate of 23%. The company is judged to be 5-20% stronger than the market performance in the next 6 months and given an overweight rating.
Risk reminder: Insufficient policy implementation, market structure changes after the Sixth National Day.