Weichai Heavy Machinery (SZ:000880) GF SECURITIES·2025-04-03 11:15Investment Rating - The report assigns a "Buy" rating to the company with a current price of 36.00 CNY and a fair value of 39.35 CNY [2]. Core Insights - The company is positioned as a leader in the inland ship engine market and a pioneer in domestic diesel generator replacement, benefiting from policies promoting upgrades and a recovering domestic demand [6][8]. - The generator business is expected to experience rapid growth due to increasing demand from data centers driven by AI computing power, with the company capturing significant market share in upcoming tenders [8][60]. - The company forecasts a substantial increase in net profit from 326 million CNY in 2025 to 653 million CNY in 2027, supported by a projected 40x PE ratio for 2025 [8]. Summary by Sections 1. Company Overview - Weichai Heavy Machinery Co., Ltd. is a high-tech enterprise with a comprehensive service network covering inland, coastal, and major islands in China, supported by over 300 maintenance stations [17][20]. - The company produces a wide range of engines and generators, establishing a full industry chain advantage in power solutions [23]. 2. Diesel Generator Business - The global diesel generator market is expected to grow steadily, with China becoming a key driver of this growth, increasing its market share from approximately 26.37% in 2018 to nearly 30% by 2030 [42][46]. - The company has seen significant growth in its generator business, with a revenue increase of 38.44% year-on-year in 2024, marking a new high [50]. 3. Inland Ship Engine Market - The company benefits from domestic policies promoting the replacement of aging vessels, which is expected to stabilize demand in the inland ship engine market [8][60]. - The introduction of new products aimed at reducing fuel consumption is expected to enhance the company's market share in the inland and near-coastal fishing vessel markets [8]. 4. Financial Projections - The company anticipates a steady increase in revenue from 40.02 billion CNY in 2024 to 89.87 billion CNY by 2027, with a compound annual growth rate of 27.5% in 2025 [7]. - The projected EBITDA for 2025 is 401 million CNY, with a net profit of 326 million CNY, reflecting a growth rate of 76.2% [7]. 5. Market Dynamics - The demand for diesel generators is expected to rise significantly due to the expansion of data centers, with the market size projected to reach 190 billion USD in 2024, a year-on-year increase of 86.9% [60][67]. - The company has successfully increased its market share in tenders, achieving a 40% share in the 2025-2026 bidding for high-pressure water-cooled diesel generators [71][81].