Citi Retains Buy Rating on Weichai Power with HK$50 Target Price

Deep News10-31

Citi has released a research report maintaining its "Buy" rating on Weichai Power Co.,Ltd. (02338) with a target price of HK$50.

In the third quarter, the company recorded revenue of RMB 58 billion, representing a 1% year-on-year increase and a 4% quarter-on-quarter decline, beating market expectations by 2%. Core net profit, excluding one-off items, came in at RMB 3.22 billion, up 14% year-on-year and 3% quarter-on-quarter, broadly in line with expectations.

The bank noted that Weichai Power Co.,Ltd.'s third-quarter net profit attributable to shareholders was RMB 2.957 billion, down 9% year-on-year. This was primarily due to a fair value loss of RMB 390 million on its equity stake in Ballard Power Systems, compared with a bad debt reversal of RMB 410 million recorded in the same period last year. In addition, the company recorded a foreign exchange loss of RMB 200 million, versus a foreign exchange gain of RMB 100 million in the prior-year period, while the effective tax rate rose to 20.4% from 17.5% a year earlier.

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