Bank of America Securities: Lowering the target price of Weichai Power (02338) to HK$42. The third quarter AIDC engine was delivered as planned, driven by exports

The Zhitong Finance App learned that Bank of America Securities released a research report saying that the AIDC engine for the third quarter of Weichai Power (02338) was delivered according to the plan. Heavy truck sales were driven by exports. The bank lowered its earnings forecast per share for 2026 to 2028 by 6%, 15% and 11%, respectively. The target price for H shares was lowered from HK$47.5 to HK$42, confirming the “buy” rating.

Weichai Power announced its results for the third quarter of this year. The sales volume was 58.1 billion yuan, up 1% year on year and down 4% from quarter to quarter, which is roughly in line with the bank's expectations. Gross margin was 22.9%, up 1.5 percentage points year over year, benefiting from improved product portfolio. Operating profit (clean EBIT) was 5.5 billion yuan, up 27% year on year and 7% quarterly, in line with the forecast. Net profit was RMB 3 billion, down 9% year on year; after excluding investment losses and credit impairment refunds on Ballard's holdings, adjusted net profit was RMB 3.2 billion, up 14% year on year, broadly in line with market expectations.

According to the bank, 4,300 large bore engines were delivered in the third quarter (including 1,300 units for AIDC, up 330% year on year), up 55% year on year. It is progressing according to plan. It is expected to deliver 15,000 large bore engines and more than 4,000 AIDC engines/generators in 2026. Despite weak sales of heavy trucks in the Mainland in the third quarter, particularly LNG heavy trucks, the company said the impact on heavy truck engine sales was limited, as indirect export sales accounted for more than 50% in the first nine months of this year; bus and construction machinery engine sales also recorded strong growth.

The bank lowered its 2026-2028 earnings forecast by 6%, 15% and 11%, respectively, to reflect third-quarter results, new AIDC-related product assumptions, and KION's third-quarter results. It is optimistic about the steady growth prospects of large bore diesel/gas engines driven by data center demand, and incremental revenue from SOFC solutions.