Company Coverage
Weichai Power (2338 HK) - 3Q26: In Line; Power And Energy Remain The Growth Engines; Upgrade To BUY
BUY (Upgraded)
Current price:
Target price:
Upside:
HK$23.52
HK$31.00
+31.8%
Analyst
Highlights
- 3Q26 adjusted net profit rose 13.9% yoy to Rmb3,220m, in line. GAAP net profit fell 8.6% on Ballard fair value losses, credit provisions and forex loss.
- Looking ahead, the power and energy segments will serve as the primary growth drivers of Weichai, contributing about 20% of group profit.
- Management is guiding for data centre diesel gensets of above 4,000 units in 2026 and above 6,000 in 2027.
- Upgrade from HOLD to BUY with an unchanged target price of HK$31.00 pegged to 12x 2027F PE.
Analysis
- 3Q26 results met expectations, with GAAP net profit of Rmb2,957m (-8.6% yoy/-35.9% qoq) and adjusted net profit of Rmb3,220m (+13.9% yoy/+2.8% qoq). The drop in GAAP net profit was due to: a) revenue slowdown (+1% yoy/-4% qoq); b) fair value loss of Rmb293m (+606% yoy) for Ballard Power Systems (Ballard) vs 2Q26 fair value gain of Rmb186m; c) credit provision of Rmb332m vs credit provision write-back of Rmb383m/Rmb108m in 3Q25/2Q26 respectively, and d) forex loss of Rmb200m vs 3Q25’s forex gain of >Rmb100m.
- Revenue edged up 1% yoy and dropped 4.3% qoq to Rmb58b in 3Q26, driven by large-bore engines.
- The sales volume of large-bore engines surged 60% yoy to 4,000 units in 3Q26, bringing 9M26 volume to >11,000 units (+40% yoy). Among them, sales volume of AI data centre (ADIC) power generation sets (gensets) grew from 500 units in 1Q26 to 800/1,300 units in 2Q26/3Q26 respectively.
Highlights
- 3Q26 adjusted net profit rose 13.9% yoy to Rmb3,220m, in line. GAAP net profit fell 8.6% on Ballard fair value losses, credit provisions and forex loss.
- Looking ahead, the power and energy segments will serve as the primary growth drivers of Weichai, contributing about 20% of group profit.
- Management is guiding for data centre diesel gensets of above 4,000 units in 2026 and above 6,000 in 2027.
- Upgrade from HOLD to BUY with an unchanged target price of HK$31.00 pegged to 12x 2027F PE.
Analysis
- 3Q26 results met expectations, with GAAP net profit of Rmb2,957m (-8.6% yoy/-35.9% qoq) and adjusted net profit of Rmb3,220m (+13.9% yoy/+2.8% qoq). The drop in GAAP net profit was due to: a) revenue slowdown (+1% yoy/-4% qoq); b) fair value loss of Rmb293m (+606% yoy) for Ballard Power Systems (Ballard) vs 2Q26 fair value gain of Rmb186m; c) credit provision of Rmb332m vs credit provision write-back of Rmb383m/Rmb108m in 3Q25/2Q26 respectively, and d) forex loss of Rmb200m vs 3Q25’s forex gain of >Rmb100m.
- Revenue edged up 1% yoy and dropped 4.3% qoq to Rmb58b in 3Q26, driven by large-bore engines.
- The sales volume of large-bore engines surged 60% yoy to 4,000 units in 3Q26, bringing 9M26 volume to >11,000 units (+40% yoy). Among them, sales volume of AI data centre (ADIC) power generation sets (gensets) grew from 500 units in 1Q26 to 800/1,300 units in 2Q26/3Q26 respectively.
BUY (Upgraded)
Current price:
Target price:
Upside:
HK$23.52
HK$31.00
+31.8%
Analyst
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