Weichai Power Co, one of the biggest diesel engine and heavy truck producers on the mainland, forecasts stronger sales and earnings this year, supported by overseas expansion, after reporting a strong performance for 2009 and stronger momentum in the first quarter of 2010.

Tan Xuguang, chairman of Weichai Power said at the media briefing of the company's annual result Tuesday that after acquiring Moteurs Baudouin SA, a French maker of diesel engines and gearboxes in 2009 and setting up branches in Singapore, the company is now targeting the European and Southeast Asian markets. He expects the company's overseas sales, currently accounting for approximately only 7 percent of its overall sales, will rise to 15 percent in about three to five years. "According to the sales objectives for the next decade that our parent Weichai Group set out for us, we are aiming to have our revenue reach 100 billion yuan and 150 billion in 2012 and 2015, respectively, and accomplish 2,000 billion in 2020," said Tan. The company posted a net profit of 3.4 billion yuan in 2009, up 77 percent from the previous year on sales of 35.26 billion yuan. It has already locked in 1.62 billion in net profit in the first quarter this year, which is equivalent to 35 percent of this year's profit target and almost half of the whole-year net profit of 2009.

Tan attributed its profit gain to the recovery in market demand for heavy trucks. He said their automobiles are "in short supply" in the market, and predicts sales of heavy trucks and diesels over the

next three to five years will increase from last year's 226,000 and 820,000 units, respectively, to about 250,000 and 1 million. The Hong Kong-listed Weichai Power Tuesday

dropped HK$3.75 or 5.43 percent to HK$65.35 on profit taking. Kenny Tang, a director at Redford Securities Ltd, said the slump in Weichai's share price reflected that the market has well anticipated

its strong performance in 2009.

"As Weichai Power shares rebounded strongly in the second half of 2009, its stock price has increased from HK$55 to almost HK$75 over the past few months, because investors know the company will deliver some good news today," said Kenny. Morgan Stanley maintains its "buy" rating on Weichai Power. It said in a note to investors Tuesday that the rebound in the construction

and truck industries on the mainland since the second half of last year will further boost Weichai Power's truck sales, as well as its gross margin.

Tan did not provide a profit growth target for Weichai Power this year. He said although the company remains optimistic about its performance this year, the actual growth will depend on the development in the economy.

CHINA DAILY

(HK Edition 04/28/2010 page2)