Recently, the reporter conducted a field survey of Weichai Power. The main research findings are as follows:

First, the business organization is basically stable, and the engine product line has been extended.

The sales revenue structure of Weichai’s consolidated statements is roughly 1/3 of the total for engine business, heavy truck sales, and transmission business. The sales profit structure accounts for about 70% of engine profits, 20% of transmission business, and heavy trucks. About 5% of sales. In the future, the parent company will expand its product organization from its original displacement of 10L and 12L to a full range of engines covering 2L, 3L, 5L, 7L, 10L, and 12L through strategic adjustment.

Specific measures include:

1. At the end of 2008, the capacity of the new products WP5 and WP7 after the cylinder expansion of the original 6105 engine was already in place, with displacements of 5L and 7L, respectively. In the future, it will be mainly applied to city buses, excavator equipment, etc. The sales of WP5 and WP7 will also increase in 2010. Weichai has opened the matching business of medium-sized card companies such as Futian South Construction Vehicles, which is expected to be in 2010 in the China Card Market. Start volume delivery.

2. Weichai adopted a low-price agreement at the end of 2009, holding 80% of Yangchai's light truck engine assets, and will form an annual production capacity of approximately 100,000 units of 3L engines. The gross margin of this part of the assets is about 10%, and the profit rate is about 1%-2%. In 2009, the sales amounted to about 1 billion yuan and the profit was tens of millions.

3. Weichai may introduce the Italian VM engine at a price of RMB 1-2 billion through the introduction of a technology agreement in the future, obtain the country 2 emission standard, and upgrade the potential of the 2.5-liter and 2.8-liter VM engine of the National 5 standard. The future is expected to be placed on Yangchai's production. The 2-3L engine will be mainly used for light trucks, light passengers, construction machinery, agricultural machinery and export business.

In 2009, Weichai's report will reflect the acquisition of Yangchai's engine business. However, due to the late signing of the agreement and the small profits, it has little effect on EPS thickening in the current year. The company has strong confidence in the light truck market based on the logic of holding volume effect and technology upgrade demand.

Second, orders are booming. Current sales of engine business mainly depends on production capacity.

Weichai's monthly orders for the first two months of 2010 ranged from 60,000 to 70,000 units. Currently, the actual monthly production capacity is 40,000-40,000. To reduce the impact of insufficient production capacity, Weichai has arranged three shifts and has not taken vacations during the Spring Festival. It is estimated that the company’s engine sales will be in the range of 12-13 million in the first quarter of 2010. The capacity structure of Weichai is roughly about 230,000 for the new and old plants, and the annual capacity for the Chongqing plant is 40,000 units. The reason for the increase in monthly production capacity of 30,000-36,000 in 2009 was mainly due to process reengineering and technological improvement. However, the production capacity of existing production lines has not been further improved in the short term.

The reporter also noticed that the design capacity of No. 2 plant in Weichai's new plant was 100,000 units/year. According to the flexible production line design, the WP10, WP12 3, and 4 and 5 products can be co-produced. For trial production, it is expected that the production capacity of the No. 2 plant will be gradually released after completion of the commissioning in 2010. If production capacity is released to catch up with the peak season, the company’s production and sales volume may exceed market expectations.

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