SEHK:2338

Stock Analysis Report

Executive Summary

Weichai Power Co., Ltd. designs, develops, produces, sells, and repairs diesel engines and related parts, automobiles, and other automobile components in the People’s Republic of China and internationally.

Rewards

Trading at 25.3% below its fair value

Earnings are forecast to grow 12.5% per year

Earnings grew by 18.4% over the past year

Risk Analysis

Has a high level of debt

Unstable dividend track record



Snowflake Analysis

Excellent balance sheet with proven track record and pays a dividend.


Similar Companies

Share Price & News

How has Weichai Power's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 2338 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

6.4%

2338

4.6%

HK Machinery

1.7%

HK Market


1 Year Return

49.7%

2338

24.7%

HK Machinery

-2.9%

HK Market

Return vs Industry: 2338 exceeded the Hong Kong Machinery industry which returned 24.7% over the past year.

Return vs Market: 2338 exceeded the Hong Kong Market which returned -2.9% over the past year.


Shareholder returns

2338IndustryMarket
7 Day6.4%4.6%1.7%
30 Day-1.8%-2.1%-4.8%
90 Day14.8%12.1%3.4%
1 Year55.7%49.7%28.4%24.7%0.7%-2.9%
3 Year154.5%123.9%63.5%53.1%15.3%3.6%
5 Year131.3%94.6%64.9%50.6%15.9%-3.5%

Price Volatility Vs. Market

How volatile is Weichai Power's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Weichai Power undervalued compared to its fair value and its price relative to the market?

25.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 2338 (HK$15.54) is trading below our estimate of fair value (HK$20.8)

Significantly Below Fair Value: 2338 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 2338 is poor value based on its PE Ratio (11.4x) compared to the Machinery industry average (10.1x).

PE vs Market: 2338 is poor value based on its PE Ratio (11.4x) compared to the Hong Kong market (10.1x).


Price to Earnings Growth Ratio

PEG Ratio: 2338 is good value based on its PEG Ratio (0.9x)


Price to Book Ratio

PB vs Industry: 2338 is overvalued based on its PB Ratio (2.6x) compared to the HK Machinery industry average (1x).


Next Steps

Future Growth

How is Weichai Power forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

12.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2338's forecast earnings growth (12.5% per year) is above the savings rate (1.6%).

Earnings vs Market: 2338's earnings (12.5% per year) are forecast to grow faster than the Hong Kong market (11.7% per year).

High Growth Earnings: 2338's earnings are forecast to grow, but not significantly.

Revenue vs Market: 2338's revenue (6.6% per year) is forecast to grow slower than the Hong Kong market (10.5% per year).

High Growth Revenue: 2338's revenue (6.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 2338's Return on Equity is forecast to be low in 3 years time (18.6%).


Next Steps

  • Explore growth companies in the Capital Goods industry.

Past Performance

How has Weichai Power performed over the past 5 years?

29.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 2338 has high quality earnings.

Growing Profit Margin: 2338's current net profit margins (5.8%) are higher than last year (5.2%).


Past Earnings Growth Analysis

Earnings Trend: 2338's earnings have grown significantly by 29.6% per year over the past 5 years.

Accelerating Growth: 2338's earnings growth over the past year (18.4%) is below its 5-year average (29.6% per year).

Earnings vs Industry: 2338 earnings growth over the past year (18.4%) exceeded the Machinery industry 7.3%.


Return on Equity

High ROE: 2338's Return on Equity (19.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Weichai Power's financial position?


Financial Position Analysis

Short Term Liabilities: 2338's short term assets (CN¥117.0B) exceed its short term liabilities (CN¥95.9B).

Long Term Liabilities: 2338's short term assets (CN¥117.0B) exceed its long term liabilities (CN¥61.1B).


Debt to Equity History and Analysis

Debt Level: 2338's debt to equity ratio (48%) is considered high.

Reducing Debt: 2338's debt to equity ratio has reduced from 61.6% to 48% over the past 5 years.

Debt Coverage: 2338's debt is well covered by operating cash flow (61.7%).

Interest Coverage: 2338 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 2338 has a high level of physical assets or inventory.

Debt Coverage by Assets: 2338's debt is covered by short term assets (assets are 3.6x debt).


Next Steps

Dividend

What is Weichai Power's current dividend yield, its reliability and sustainability?

3.08%

Current Dividend Yield


Dividend Yield vs Market

company3.1%marketbottom25%2.3%markettop25%6.3%industryaverage2.5%forecastin3Years3.7%

Current dividend yield vs market & industry

Notable Dividend: 2338's dividend (3.08%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.27%).

High Dividend: 2338's dividend (3.08%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.34%).


Stability and Growth of Payments

Stable Dividend: 2338's dividend payments have been volatile in the past 10 years.

Growing Dividend: 2338's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35.2%), 2338's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 2338's dividends in 3 years are forecast to be well covered by earnings (40% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure


CEO

Xuguang Tan (58yo)

CN¥57,161

Compensation

Mr. Xuguang Tan serves as the President of Ferretti, S.p.A. Mr. Tan serves as the Chairman of Management Board at Weichai Group. Mr. Tan serves as the Chairman and Chief Executive Officer of Weichai Power  ...


Leadership Team

NamePositionTenureCompensationOwnership
Xuguang Tan
Chairman & CEO0yrsCN¥57.16k0.74% CN¥930.3m
Hongming Yuan
Executive President & Executive Director2.7yrsno data0.013% CN¥15.8m
Jianbo Yan
Executive President & Executive Director2.7yrsno data0.014% CN¥17.4m
Kwan Tong Kwong
Company Secretary & CFO6.9yrsCN¥1.50mno data
Haoyan Hu
VP & Chief Technology Officer0yrsCN¥1.93mno data
Quan Zhang
Executive President & Executive Director17.2yrsCN¥2.22m0.17% CN¥216.4m
Xinyu Xu
Executive President & Executive Director17.2yrsCN¥2.46m0.17% CN¥216.4m
Shaojun Sun
Executive President & Executive Director17.2yrsCN¥2.43m0.17% CN¥216.4m
Jiyuan Zhang
VP & Chief Designer0yrsCN¥1.86m0.015% CN¥18.3m
Liu Yuanqiang
VP, Chief Process Officer0yrsCN¥1.66mno data

2.4yrs

Average Tenure

54.5yo

Average Age

Experienced Management: 2338's management team is considered experienced (2.4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Xuguang Tan
Chairman & CEO0yrsCN¥57.16k0.74% CN¥930.3m
Hongming Yuan
Executive President & Executive Director2.7yrsno data0.013% CN¥15.8m
Jianbo Yan
Executive President & Executive Director2.7yrsno data0.014% CN¥17.4m
Quan Zhang
Executive President & Executive Director17.2yrsCN¥2.22m0.17% CN¥216.4m
Xinyu Xu
Executive President & Executive Director17.2yrsCN¥2.46m0.17% CN¥216.4m
Shaojun Sun
Executive President & Executive Director17.2yrsCN¥2.43m0.17% CN¥216.4m
Zhong Zhang
Independent Non-Executive Director5.7yrsCN¥120.00kno data
Wenwu Lu
Chairman of the Supervisory Committee0yrsCN¥840.68k0.0076% CN¥9.5m
Gongyong Wang
Independent Non-Executive Director5.7yrsCN¥120.00kno data
Michael Macht
Non-Executive Director1.7yrsCN¥72.80kno data

5.7yrs

Average Tenure

54.5yo

Average Age

Experienced Board: 2338's board of directors are considered experienced (5.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Weichai Power Co., Ltd.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Weichai Power Co., Ltd.
  • Ticker: 2338
  • Exchange: SEHK
  • Founded: 2002
  • Industry: Construction Machinery and Heavy Trucks
  • Sector: Capital Goods
  • Market Cap: HK$125.437b
  • Shares outstanding: 7.93b
  • Website: https://www.weichaipower.com

Number of Employees


Location

  • Weichai Power Co., Ltd.
  • 197, Fu Shou East Street
  • Section A
  • Weifang
  • Shandong Province
  • 261061
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
WEIC.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDMar 2004
2338SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDMar 2004
WI4DB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEURMar 2004
2338SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDMar 2004
338SZSE (Shenzhen Stock Exchange)Domestic SharesCNCNYMay 2007
338XSEC (Shenzhen Stock Exchange - Shenzhen-Hong Kong Stock Connect)Domestic SharesCNCNYMay 2007
WEIC.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDDec 2008

Biography

Weichai Power Co., Ltd. designs, develops, produces, sells, and repairs diesel engines and related parts, automobiles, and other automobile components in the People’s Republic of China and internationally. It operates through Diesel Engines, Automobiles and Other Major Automobile Components, Other Components, Import & Export Services, and Forklift Trucks and Supply Chain Solution segments. The company offers heavy duty truck and construction machinery engines; heavy-duty trucks; heavy-duty gear boxes; forklift trucks and warehouses technology services; and supply chain solutions. It also provides spark plugs, axles, chassis, air-conditioner compressors, hydraulic controlling parts, etc. The company was founded in 2002 and is headquartered in Weifang, the People’s Republic of China. Weichai Power Co., Ltd. is a subsidiary of Weichai Group Holdings Limited. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 12:50
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.