2025-03-21 02:54Summary of WeiChai Power Conference Call Company and Industry Overview - Company: WeiChai Power (2338.HK, 000338.SZ) - Industry: Heavy-duty truck (HDT) market in China Key Points and Arguments 1. Sales Performance: WeiChai sold 12.1k HDT units in February 2025, representing an 18% year-over-year increase, which is lower than the industry's 36% year-over-year growth [1] 2. Monthly Comparison: The sales in February 2025 decreased by 3% month-over-month, while the industry experienced a 13% month-over-month increase [1] 3. Market Share: WeiChai's market share declined to 14.9% in February 2025, down from 17.3% in February 2024 and 17.4% in January 2025, indicating a loss of 2.3 percentage points year-over-year and 2.4 percentage points month-over-month [1] 4. Revenue Exposure: Over half of WeiChai's revenue is linked to the HDT market in China, making ShaanQi's sales volume a critical indicator for WeiChai's share price [4] 5. Stock Rating: WeiChai Power is rated as "Overweight" with a price target of HK$20.00, indicating a potential upside of 26% from the closing price of HK$15.90 on March 14, 2025 [6] 6. Earnings Projections: Projected EPS for WeiChai is expected to grow from Rmb1.03 in FY23 to Rmb1.63 in FY26, reflecting a positive outlook for earnings growth [6] 7. Valuation Methodology: An A-H premium of 12% is applied based on its five-year historical average, leading to the A-share price target of Rmb20 [9] Risks and Considerations 1. Upside Risks: - Stronger-than-expected earnings contribution from KION - Better-than-expected volume growth in engine and HDT sales - Expanding A-H premium [10][12] 2. Downside Risks: - Slower-than-expected fixed asset investment (FAI) growth - Market share loss in the engine/HDT market - Compression of the A-H premium [10][12] Additional Insights - The HDT industry is anticipated to be in a mild up-cycle during 2025-2026, which is expected to support earnings growth for WeiChai [10] - The demand for large-bore engines is projected to benefit from domestic AI capital expenditure acceleration, which is still in its early stages [10] This summary encapsulates the essential insights from the conference call regarding WeiChai Power's performance, market dynamics, and future outlook, along with associated risks.