Commercial vehicle faucet series in-depth report (1): Weichai Power (000338): National Six upgrade ascending faucet advantages

Commercial vehicle faucet series in-depth report (1): Weichai Power (000338): National Six upgrade ascending faucet advantages

Report Summary: Weichai Power is the leading domestic heavy truck diesel engine with a market share of 32% in 2018.

Starting from 2020, the national six emission standards for diesel engines have been implemented in a serious and unprecedented way, and the intelligence of diesel engine doors will be significantly improved.

As the highest-ranking company, Weichai will obviously benefit from the increased market concentration brought by the improvement of door intelligence.

  Weichai Power has a higher bargaining power in the industrial chain, and the advantages of the sixth stage will be more obvious.

The company supports almost all major heavy truck manufacturers in the country and does not form a major dependence on any one customer.

At the same time, the supply pattern of the company’s key components is scattered.

Some key components of heavy-duty diesel engines are controlled by foreign multinational giants, while Weichai is less dependent on a single supplier.

Initial bargaining power The operating company had too much cash flow, and the net operating cycle extended far beyond that of ordinary auto parts suppliers, leaving multiple OEMs.

The abundant cash flow ensures 杭州桑拿网 the company’s investment and financing activities.

  China National Heavy Duty Truck’s heavy truck diesel demand will significantly increase Weichai’s revenue, and overseas demand is improving.

The company’s supporting facilities in Sinotruk continue to increase, and it is expected to expand most of them in areas other than 13L.

Sinotruk and Shaanxi Sinotruk are the Chinese heavy truck companies with the fastest growth in overseas revenue in recent years. In the countries along the “Belt and Road”, the substitution of second-hand multinational brands for heavy trucks has achieved remarkable results.

In 2018, overseas KD factories realized localized production and sales.

Cooperating with customers’ overseas development, Weichai will maintain a considerable degree of growth for a long time, and the resulting changes in 南京桑拿网 domestic heavy truck demand will be partially suppressed.

  For benchmarking global diesel engine leader Cummins, the profitability of Weichai Engine Business (parent company) has already prevailed according to the EBITDA% caliber.

Since the beginning of this century, the company’s diesel engine business volume has gradually approached Cummins.

Weichai and Cummins have similar engine product structures. We are optimistic that Weichai’s market share will continue to increase.

  With reference to the estimates of multinational giants, Weichai Engine Business was given July 2019.

15 times EV / EBITDA, corresponding to a market value of 78.9 billion.

It is estimated that the revenue of the entire listed company in 2019/2020/2021 will be 162,163,173,11.7 billion, and the EPS will be 1.

19/1.

21/1.

28 yuan, corresponding to PE is 9.

9/9.

8/9.

3 times.

  Give 12x PE in 2019 and raise target price to 14.

5 yuan.

Maintain the “Highly Recommended” rating.

  Risk reminder: The growth trend reverses fundamentally; the price of raw materials rises sharply.