China Yuchai International LimitedNYSE: CYD

China Yuchai's potential shareholder yield has been boosted by a new $40 million share repurchase program. CYD's outlook has become better, taking into account its peer's industry sales projection and the latest monthly LNG (Liquefied Natural Gas) HDT (Heavy-Duty Truck) sales numbers. I raised my rating for CYD to a Buy after assessing its buybacks and growth prospects.

SINGAPORE , June 7, 2024 /PRNewswire/ -- China Yuchai International Limited (NYSE: CYD) ("China Yuchai" or the "Company") today announced that its Board of Directors has approved a share buyback plan under which the Company may repurchase its ordinary shares up to US$40 million in dollar amount or 4 million in number (whichever occurs earlier). Under the share buyback plan, the Company may repurchase shares from time to time on the open market at prevailing market prices, in privately negotiated transactions, and/or by other legally permissible means in accordance with applicable laws and regulations.

SINGAPORE , June 7, 2024 /PRNewswire/ -- China Yuchai International Limited (NYSE: CYD) ("China Yuchai" or the "Company") today announced its Board of Directors has approved two equity incentive plans, proposed to be implemented by its Chinese subsidiaries, Guangxi Yuchai Machinery Company Limited ("GYMCL") and Guangxi Yuchai Marine and Genset Power Co., Ltd. ("MGP"), in respect of equity interests in MGP (collectively, the "Equity Plans").

China Yuchai International Limited (CYD) Second Half and Full Year 2023 Earnings Call Transcript

Heavy duty truck sales in Mainland China are expected to grow by a mid-teens percentage this year based on third-party projections. The analysts are too bearish on CYD's prospects, forecasting a +9.9% top-line expansion in FY 2024 which is way below that of the industry's expected growth rate. I think that CYD stock is undervalued, as it currently trades at low-single-digit EV/EBITDA and mid-single-digit EV/EBIT multiples.

The most oversold stocks in the industrials sector presents an opportunity to buy into undervalued companies.

China Yuchai's key peer, Weichai Power, recently announced a positive earnings alert. Heavy duty truck sales volume in China jumped by +66% YoY in September 2023. CYD's new powertrain is expected to allow the company to win more orders associated with the agricultural end-market.

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