Weichai Power: Double Power Drives for Heavy Trucks and Construction Machinery
The company is cautiously optimistic about the development of the industry. The company expects sales revenue in 2009 will reach about 3.5 billion.
We are optimistic about the development opportunities brought by the country's investment of RMB 4 trillion in boosting domestic demand for heavy trucks and construction machinery. It is expected that the heavy truck industry will benefit from the construction of the “three links and one leveling†construction project first, and the dump truck market will be the first to start. Subsequent construction materials (steel, cement, and other bulk materials) and the derivative demand for equipment transportation will start sales of semitrailer tractors.
The latest data shows that in March 2009 heavy truck industry sold 61,500 vehicles. Recalling our forecast for monthly sales of the heavy truck industry in the annual strategy “Beginning of the Ramp†at the end of 2008, the sales volume in the first quarter of this year is basically consistent with our judgment. Although the industry’s most optimistic forecasters, actual sales in March still slightly exceeded our forecast.
We forecast the company's 2009 and 2010 earnings per share to be 2.77 yuan and 3.29 yuan respectively. According to the closing price of 33.37 yuan on April 27, the current dynamic PE is about 12 times, and the stock price has a large room for growth. Maintain the "strongly recommended" investment rating.
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