Weichai Power(02338) 交银国际·2025-03-28 12:28Investment Rating - The report maintains a "Buy" rating for Weichai Power (2338 HK) with a target price raised to HKD 20.50, indicating a potential upside of 31.4% from the current price of HKD 15.60 [1][6][8]. Core Insights - Weichai Power's engine profits have shown strong growth, with a record high dividend payout ratio of 55%. The company is expected to achieve a revenue growth of 0.8% in 2024, reaching RMB 215.7 billion, driven by improved gross margins and a net profit increase of 26.5% to RMB 11.4 billion [2][6]. - The report highlights several catalysts for growth, including new subsidies to boost heavy truck demand, strong growth in data center engines, and robust demand for natural gas heavy trucks [6][10]. Financial Overview - Revenue projections for Weichai Power are as follows: - 2023: RMB 213.96 billion - 2024: RMB 215.69 billion (0.8% YoY growth) - 2025E: RMB 237.92 billion (10.3% YoY growth) - 2026E: RMB 254.83 billion (7.1% YoY growth) - 2027E: RMB 269.35 billion (5.7% YoY growth) [3][10]. - Net profit forecasts are: - 2023: RMB 9.01 billion - 2024: RMB 11.40 billion (26.5% YoY growth) - 2025E: RMB 14.64 billion (28.4% YoY growth) - 2026E: RMB 16.19 billion (10.6% YoY growth) - 2027E: RMB 17.77 billion (9.8% YoY growth) [3][10]. - The report notes a significant improvement in gross margin, which is expected to reach 22.4% in 2024, up from 21.1% in 2023 [11]. Market Position and Performance - Weichai Power's market share in the domestic heavy truck engine market is 38.7%, with a strong performance in high-end markets such as data centers, where sales of M-series engines grew by 148% [6][10]. - The company has maintained a stable market share despite a 5% decline in overall commercial vehicle demand in the domestic market [6][10]. Valuation Metrics - The report provides the following valuation metrics: - Price-to-Earnings (P/E) ratio for 2025E is projected at 11.5x, with a corresponding dividend yield of 6.6% [6][10]. - The book value per share is expected to be RMB 8.73 in 2025E, with a price-to-book (P/B) ratio of 2.4x [3][10].