Citi: Maintains "Buy" rating and HK$50 target price on Weichai Power (02338); third-quarter core net profit in line with expectations

Citi issued a research report stating that it maintains a "Buy" rating and HK$50 target price on Weichai Power (02338). In the third quarter, the company achieved revenue of RMB58 billion, up 1% year-on-year and down 4% quarter-on-quarter, 2% above market expectations; core net profit (excluding one-off items) was RMB3.22 billion, up 14% year-on-year and 3% quarter-on-quarter, broadly in line with expectations. The bank noted that Weichai Power's net profit attributable to shareholders in the third quarter was RMB2.957 billion, down 9% year-on-year, mainly due to a RMB390 million fair value loss recorded on its stake in Ballard Power Systems, compared with a RMB410 million bad debt reversal recorded in the same period last year; in addition, the company recorded a foreign exchange loss of RMB200 million, compared with a foreign exchange gain of RMB100 million in the same period last year, and its effective tax rate also rose to 20.4% from 17.5% in the same period last year.