With Sinotruk Hong Kong (3808-HK) listed on Hong Kong this Wednesday, Sinotruk and Weichai Power (000338-CN, 2338-HK), which are two Happiness players, will be clustered in Hong Kong’s capital market. , to upgrade to the capital market, who will become the industry leader? Who will receive the most recognition from the capital market? There will inevitably be another round of fighting.
Heavy truck market is still the boss
Heavy truck Hong Kong holds a 63.78% stake in A shares listed company China National Heavy Duty Truck (000951-CN). According to data provided by the China Association of Automobile Manufacturers earlier, the cumulative sales volume of Sinotruk in the first eight months of 2007 was 70,169 units, a year-on-year increase. 71.15% has already surpassed FAW and Dongfeng as the industry leader; in the first three quarters, the market share in the heavy truck market has increased to approximately 20.8%. Obviously, relying on historical accumulation of brand and company effects, China National Heavy Duty Truck has taken the lead in the heavy truck market. machine. As for Weichai Power, the cumulative sales of its Shaanxi Auto Group during the same period was 39,394 units, which was only 56% of China National Heavy Duty Truck Corporation Limited. However, with the cooperation of various spare parts businesses and a complete production chain, Shaanxi Automobile's growth was significantly improved and its market share was increased. It has increased from 10% in 2006 to about 15% in the third quarter.
Industry Chain Helps Weichai Power Lead Profitability
Although the sales of heavy trucks cannot temporarily compete with Hong Kong-Shenzhen Hong Kong, after Weichai Power absorbed the merger of the A-share listed company Torch, it was transformed from a pure diesel engine manufacturer and transformed into an engine (formerly Weichai Power). The integrated heavy truck manufacturer integrated with transmission (FARTEC), axle (HANDE) and vehicle (Shaanxi CNHTC) has become the only complete powertrain in the domestic heavy truck industry (engine + transmission + axle) The supplier. Among them, the Weichai engine has more than 80% of domestic heavy-duty trucks with more than 15 tons of heavy trucks and more than 5 tons of loaders. Handebridge and Fast Transmission also have a monopoly position in the heavy-duty truck industry.
With a complete industrial chain advantage, Weichai Power, together with its own related accessories with higher technology and quality, can also shift from single-market competition to joint-competitive market competition, enhance market competitive advantages, and thus help control production costs. The premium feature enjoyed by the industry chain has significantly increased the overall pricing capability of the product and promoted the increase in the average gross margin of the overall product. According to the latest quarterly report, the profit margin of Weichai Power's main business in the third quarter of this year has been expanded from 22.2% in the same period of last year to 23.13%, which is higher than that of about 18% of Hong Kong's Hong Kong, and far ahead of its subsidiary China National Heavy Duty Truck. 12.58% level.
State III heavy trucks become the new commanding heights
To cope with future competition and share the boom in the industry cycle, both Weichai Power and CNHTC have made moves. The former announced early this month that it plans to publicly issue no more than 60 million A shares to raise 5.58 billion yuan to build the Lanqing engine. Four projects, such as the engine unit, further established its leading technological advantages in the engine field and fully grasped the favorable development opportunities in the industry. Investment banks generally forecast their FY07 earnings per share to exceed RMB 3.5, and the current A-share and H-share dynamic price-to-earnings ratios are approximately 22 and 15 times respectively. Similarly, Hong Kong SAR's IPO financing will be partially used to repay debt, most of which will be used to increase production capacity, R&D expenses, acquire assets and expand markets, and lay a solid foundation for building the world's top heavy truck manufacturers; Formal listing is also conducive to the implementation of corporate internationalization strategy. However, the issue price cap is already equivalent to a 27-fold forecasted P/E for FY07. The valuation has a certain premium over Weichai Power.
Looking into the future, China's auto industry and heavy equipment industry are now in a stage of rapid development. Since China is still at the junior stage of heavy chemical industrialization, the promotion of heavy industry provides a good opportunity for the vigorous development of machinery and equipment manufacturing companies. At the same time, the heavy-duty truck industry will continue to maintain steady growth as a result of the strong growth in domestic trade and the increasing demand for heavy trucks in overseas markets.
Of course, domestic macroeconomic regulation and uncertainties in the international economic environment may slow down the growth rate of the domestic economy next year. Certainly, the heavy truck industry will also be affected. Therefore, the industry situation should not be overly optimistic. With the general trend of the nationwide implementation of the National III Standard in 2008, the focus of competition in the heavy truck industry will shift to the competition of the National III Heavy Truck next year. Both Hong Kong and Weichai Power have invested heavily, who will be faster and better. To seize this commanding height, it is expected to take the initiative in the competitive landscape of the new market.
View related topics: China National Heavy Duty Truck Breaks Monthly Sales Record for National Heavy Truck Industry
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