20231016-招银国际-潍柴动力-000338.SZ-3Q23_earnings_surged_120-200__YoY__Strong_gas_trucks_sales_continue_to_be_key_driver_7页_1mb

Summary of Weichai Power (000338 CH) - 3Q23 Earnings Report

• Earnings Overview: Net profit for the third quarter of 2023 is expected to surge 120-200% year-on-year, reaching RMB2.03-2.77bn, exceeding analyst expectations. This growth contributed to an 80-100% YoY increase in net profit for the first nine months of 2023, boosted significantly by the high gain in Q3.

• Key Growth Drivers: The strong performance is attributed to increased sales of natural gas trucks and robust export activity, which helped offset potential industry-wide headwinds. Natural gas demand in September 2023 continued to rise due to lower LNG prices compared to diesel, with natural gas heavy-duty trucks (HDTs) accounting for 31% of total HDT sales in September.

• Recommendation: Reiterates a BUY recommendation with upwardly revised 2023E/24E/25E earnings forecasts (+17%/+9%/+8%) due to higher engine sales volume assumptions. Target prices are updated to RMB14.7/A share (up from RMB13.8), reflecting positive outlook.

• Market Position: Engine sales in the first eight months of 2023 grew 25% YoY to ~460k units, surpassing the industry average of 6%, with a 17% market share (up 2.6pp YoY). HDT industry sales volume rose 32% YoY in 2023 to ~690k units (including exports), driven by strong demand for NG trucks.

• Risks: Potential weaknesses include declining engine exports, rising component costs, and weaker-than-anticipated growth in new business segments.

• Financial Highlights:

  • Revenue and Profit: Projected FY23E revenue at RMB210.55bn, with adjusted net profit at RMB8.416bn. P/E ratio now 13.3x and P/B 1.4x.
  • Valuation: SOTP-based target price RMB14.7 per A share. Price performance shows consistent gains over various periods.

• Disclosures: Standard analyst certification and risk factors as per Bloomberg standards; the report is certified to reflect personal views and no conflicts of interest declared.