Westport Fuel Systems Inc. WPRT has entered a definitive agreement with China’s Weichai Westport Inc. (“WWI”). With WWI, Westport Fuel will develop and commercialize natural gas engine based on one of Weichai Power Co., Ltd.’s (Weichai Power) heavy-duty engine platforms. Enabled with Westport Fuel’s HPDI 2.0 technology, this heavy-duty natural gas engine will cater to the Chinese market.
Both, Weichai Power and WWI are affiliates of Weichai Holding Group Co., Ltd (Weichai).
Once the production rolls out, Westport Fuel will support WWI and provide HPDI 2.0 system components for the manufacturing of engines. Producing a single engine will require a separate HPDI 2.0 system component. Hence, for producing at least 18,000 HPDI 2.0 engines between the launch date and the end of 2023, WWI has committed to purchase HPDI 2.0 system components from Westport Fuel. Additionally, considering the HPDI license rights provided to WWI, Westport Fuel will obtain a royalty payment for each engine sold by WWI.
Westport Fuel Systems Inc. Price and Consensus
Further, the product will be marketed, featuring Westport HPDI 2.0 technology, to various original equipment manufacturers. The new heavy-duty engine will be certified to address China VI emissions standards. It is expected to be launched in the second half of 2019.
Per Westport Fuel’s management, the collaboration with China’s leading engine producer, Weichai, is a milestone in developing cleaner heavy-duty vehicle options to trim greenhouse gas emissions in China.
The rising demand for natural gas vehicles, supported by widespread liquefied natural gas fueling infrastructure network in China, has led to increased demand for cleaner and more efficient engines. This, along with Westport Fuel’s verified and commercially obtainable HPDI 2.0 technology, will aid Weichai to offer a cleaner powertrain solution in the Chinese market.
Price Performance
In the past six months, Westport Fuel’s stock has gained 8.7%, outperforming 3.1% decline recorded by the industry it belongs to.
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Zacks Rank & Key Picks
Westport Fuel currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space include Fox Factory Holdings Corporation FOXF, Oshkosh Corporation OSK and Cummins Inc. CMI. Fox Factory and Oshkosh sport a Zacks Rank #1 (Strong Buy) while Cummins carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Oshkosh has an expected long-term growth rate of 18.3%. The Zacks Consensus Estimate for fourth-quarter fiscal 2018 earnings has been revised 5.8% upward over the past 30 days.
Fox Factory has an expected long-term growth rate of 16.8%. The Zacks Consensus Estimate for third-quarter 2018 earnings has been revised 22% upward over the past 30 days.
Cummins has an expected long-term growth rate of 11.6%. The Zacks Consensus Estimate for third-quarter 2018 earnings has been revised 4.8% upward over the past 30 days.
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