Quote | Super Quote
Super Quote   |   Detail Quote   |   Interactive Chart   |   Transaction   |   Related News   |   Related Securities   |   Company Information   |   Dividend Records   |   Short Sell
02338 WEICHAI POWER
RTNominal up14.920 +0.240 (+1.635%)
Research Report

17/12/2019 18:01

{I-bank focus}Sinotruk's earnings seen to decline in 2019-20

[ET Net News Agency, 17 December 2019] Sinotruk (Hong Kong) (03808) announced its plan
to purchase parts from Weichai Power (02338) for its commercial vehicle business. It will
buy no more than RMB130mn in December 2019 and RMB1.47bn in 2020, at market price.
Within the RMB1.47bn deal in 2020, Morgan Stanley expects most to be heavy-duty truck
(HDT) engines. Morgan estimated this RMB1.47bn purchase would contribute RMB210mn net
profit to Weichai in 2020 (assuming engine segment net margin of 14%), accounting for 2%
of Weichai's 2020 net profit (Morgan assumed RMB8.5bn net profit in 2020).
In turn, Sinotruk would face an impact of RMB220mn on 2020 operating profit (by assuming
the engine segment operating margin of 15%). After baking in the potential decline in the
engine workshop's utilization, the impact is likely to be larger than RMB220mn.
Morgan remains "underweight" on Sinotruk, with a target price of HK$10. The research
house forecast Sinotruk's earnings to decline in both 2019 and 2020. It expects that
Sinotruk's own engine workshop would face lower utilization after increasing Weichai's
engine supply. This would make Weichai more defensive in turn, with stable market share
status amid an industry down-cycle. (KL)

Remark: Real time quote last updated: 28/03/2024 18:00
  Real-time basic market prices of Hong Kong securities are provided by HKEx; a Designated Website authorized by the HKEx Group to provide the Service
A Member of HKET Holdings
Customer Service Hotline:(852) 2880 7004     Customer Service Email:cs@etnet.com.hk
Copyright 2024 ET Net Limited. http://www.etnet.com.hk ET Net Limited, HKEx Information Services Limited, its Holding Companies and/or any Subsidiaries of such holding companies, and Third Party Information Providers endeavour to ensure the availability, completeness, timeliness, accuracy and reliability of the information provided but do not guarantee its availability, completeness, timeliness, accuracy or reliability and accept no liability (whether in tort or contract or otherwise) any loss or damage arising directly or indirectly from any inaccuracies, interruption, incompleteness, delay, omissions, or any decision made or action taken by you or any third party in reliance upon the information provided. The quotes, charts, commentaries and buy/sell ratings on this website should be used as references only with your own discretion. ET Net Limited is not soliciting any subscriber or site visitor to execute any trade. Any trades executed following the commentaries and buy/sell ratings on this website are taken at your own risk for your own account.