Jefferies Raises WEICHAI POWER's Target Price to HKD23.7, Maintains Buy Rating

JPMorgan has rated WEICHAI POWER as a top pick in the industrial sector for 2026 due to several key factors. Firstly, concerns regarding the potential strategic decoupling between WEICHAI POWER and SINOTRUK following the retirement of founder Tan Xuguang were alleviated by the appointment of Wang Zhijian as chairman of Shandong Heavy, which is the parent company of both firms. This leadership continuity is expected to maintain strategic alignment between the two companies. Additionally, JPMorgan highlighted China's strong demand for heavy trucks, particularly in the second half of the year, and expressed optimism about a surge in sales of liquefied natural gas (LNG) trucks. WEICHAI POWER's leading position in the LNG heavy truck engine market further supports its potential for re-rating. As a result, the firm maintained an Overweight rating for WEICHAI POWER with a target price of HKD31.

The analyst rating for WEICHAI POWER was upgraded from Neutral to Buy due to several key factors. UBS raised its target price significantly from $18.5 to $27.8, reflecting increased confidence in the company's future performance. The upgrade is supported by a 3-5% increase in earnings forecasts for 2026-2027 and an 11-27% increase for 2028-2030, driven by higher revenue and improved earnings visibility from new business ventures. Additionally, the company's business transformation has exceeded expectations, with projections indicating that the contribution of power generation to net profit will rise substantially by 2030, which is expected to mitigate risks associated with electric trucks.

The analyst rating for WEICHAI POWER was influenced by several factors highlighted in the article. Jefferies raised its target price from HKD18.8 to HKD23.7 and maintained a Buy rating due to the significant increase in the average selling price of large-bore engines, which rose to over RMB500,000 in the first three quarters of 2025, driven by demand for data center products. Additionally, the company's ongoing construction of a solid oxide fuel cell production line, despite the lack of disclosed capacity details, suggests potential for future growth. The expectation to meet the upper limit of the shipment target for data center-related products further supports a positive outlook for the company.