Weichai production and sales are expected to improve in the fourth quarter

As a major engine supplier for heavy trucks and loaders, Weichai's power management has a strong cyclical nature, and the contraction of fixed assets investment has led to the suppression of terminals. The main engine plant has been cautiously dispatched, and the company’s engine sales have shrunk. It is worth mentioning that the company still has strong bargaining power under the background of low economic prosperity. The gross profit margin in the first half of the year dropped by 2.4 percentage points year-on-year, mainly due to the decline in capacity utilization rate. There is not much price reduction in product sales itself. , Shows the company's powerful voice in the industry chain.

The position is still just waiting for the horn to blow again. In the first half of the year, domestic sales of heavy trucks and sales of 5-ton loaders fell by 32.0% and 33.3% year-on-year, respectively, and the company’s share of the heavy-duty card market with a total mass of over 14 tons was 34.0%, which was basically stable. For construction machinery, the company’s load was 5 tons. The market share of loaders fell to 62.3%, which was mainly due to the fact that the sales volume of loaders in the first half of the year was partly from last year's inventory. The company’s market performance in the area of ​​loader engines was distorted. In essence, the company’s heavy trucks In the field or in the loader sector, it still maintains an absolute advantage. The improvement in the fundamentals of the industry is expected to bring about a strong rebound in the company.

Overseas acquisitions are bullish in the long-term and cautious in the short-term. The company's 738 million euro acquisition of 25% of KION's equity and 70% of Linde Hydraulics hopes to form two synergies: Yangchai Engine + Linde Hydraulic + Kiao forklift, Weichai Engine + Linde Hydraulic + Shandong Heavy Machinery, the company entered the field of construction machinery through hydraulics, optimistic about the long-term market space.

However, in the short term, KION’s financial pressure is large. The company needs continuous blood transfusions until it resumes healthy operations. In addition, both KION and Linde Hydraulics have significant uncertainties regarding the development of domestic businesses. The contribution comes from long-term expectations and should be cautious in the short-term.

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