Benefiting from the increase in demand for engines and other products, Weifang Diesel has sufficient power orders. Weichai’s engine sales in the first quarter of 2011 are expected to reach 300,000 units, a year-on-year increase of around 30%.
With the gradual implementation of infrastructure investment brought about by the protection of housing, irrigation and water conservancy construction, and the 12th Five-Year Plan, the effectiveness of the smashing of China's heavy-duty truck industry is obvious, and the orders of manufacturers have increased significantly. Under the guarantee of the downstream economy and its own competitiveness, the future of Weichai Power is relatively optimistic.
Full orders are expected to usher in the first quarter
Benefiting from strong downstream demand, Weichai Power had sufficient orders in the first quarter of 2011, and production arrangements have been implemented in three shifts since December 2010. Construction has started in 24 hours, basically no holidays, and the operating rate is at the best stage in history. It is expected that the company's engine sales in the first quarter are expected to reach 300,000 units, an increase of about 30% compared with the same period last year.
With the gradual implementation of infrastructure investment brought about by the protection of housing, construction of farmland water conservancy projects and the 12th Five-Year Plan, and the sales season for the heavy-duty truck industry in the second quarter, Weichai Power expects sales growth in the first half of this year to exceed market expectations.
Market share is expected to rise in the first half of the year
Weichai Power is the largest manufacturer of high-power engines in China. Its products are widely used in heavy trucks, construction machinery and large passenger vehicle markets. In 2010, the company sold 580,000 sets of various engines, including about 400,000 heavy-duty engines and a market share of nearly 40%. It is expected that the market share of heavy truck engines in the industry in the first half of 2011 will reach 42%, which is about 4 percentage points higher than the same period of last year.
Capacity bottleneck is expected to break through
By the end of 2010, the company has completed capacity expansion. It is expected that the capacity of Weichai's engines will be expanded from the previous 650,000 units to 730,000 units, including an annual production capacity of 360,000 units in the old Weifang plant and an annual production capacity of 370,000 units in the new plant. In the first quarter of 2011, the company's new plant will also release 100,000 units of production capacity, basically meeting production needs. At present, the company's new 3 plants and new 4 plants have been completed and the capacity bottleneck is expected to break through.
Further expansion of product lines
The main products of Weichai Power include heavy truck core components such as engines, transmissions, and axles, as well as the production and sales of heavy trucks. Weichai's engine products are mainly concentrated in the 8-12 litre engine and are actively developing the 5-7 litre market, which will be mainly assembled in the domestic medium and small excavators and small and medium passenger car markets. The small and medium excavators have a market capacity of more than 100,000 units per year. Currently, they mainly rely on foreign imports. The company's product prices are only half that of imported products. Currently, it is being adapted to Sany, China United, and Liugong; the market capacity of medium and small passenger cars exceeds 300,000 annually. Taiwan, the company is currently and Yutong, Huanghai and other manufacturers.
Valuation and profit adjustment
Weichai Corporation previously announced that net profit under the A-shares China Accounting Standards for the first three quarters of 2010 increased by 102% year-on-year to RMB 4,801 million, which postulates that net profit in the third quarter increased by 35% year-on-year to RMB 1.57 billion. The company predicts that the annual earnings per share for the year 2010 is expected to increase by 75-105% from the same period last year to RMB 7.16-8.38.
Since 2011 is the first year of the Twelfth Five-Year Plan, many infrastructure projects will start, and civil and road transportation demand will be strong. New projects will be concentrated on infrastructure construction, and the demand for capacity and construction machinery will be large. Similar to the 400 billion investment in water conservancy each year, there are many demands for construction machinery and heavy trucks. It is expected that Weichai Power will achieve sales of around 640,000 units of various types of engines in 2011.
Risk factors:
Heavy-duty industry cyclical fluctuations,
The engine and gearbox business faces external competition.
In the future, there may be fluctuations in performance in the integration process of its subsidiaries.
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