AIDC gen-sets growth on track; Attractive valuation after pullback
潍柴动力(000338)
In the post-results call, Weichai revealed that AIDC gen-sets delivery is on agood track and is confident of maintaining a resilient ASP due to the shortageover the coming 2-3 years. Power business (including non-AIDC) accountedfor 30% of total profit in 3Q26, up from 25% in 9M26, which has served as akey earnings growth driver. For HDT engines, by leveraging the partnershipwith Sinotruk (3808 HK, BUY), FAW (000800 CH, NR) and Foton (600166 CH,NR), Weichai is confident of enjoying the growth of HDT export going forward.We continue to like Weichai given the solid outlook of AIDC gen-sets. Besides,trading at only 5x 2026E EV/EBITDA which is below the historical average of6x, Weichai’s current valuation has yet to reflect AIDC gen-sets growthpotential. Maintain BUY with unchanged SOTP-based TP ofHK$44.7/RMB38.9 for Weichai H/A. Weichai remains a key pick in the CapitalGoods sector.
3Q26 results highlights: Weichai’s revenue grew 1% YoY to RMB58bnin 3Q26. Gross margin expanded 1.5ppts YoY to 22.9%. Affected by FXloss and fair value change, EBIT increased only 2% YoY to RMB5.1bn. Netprofit dropped 9% YoY to RMB2.96bn, due to higher effective tax rate.
AIDC gen-sets: Weichai revealed that sales volume of AIDC diesel gensets in 3Q26 reached 1.3k units, up from 500/800 units in 1Q/2Q26. Fornatural gas gen-sets, the delivery is expected to be only 200 units this yearas Weichai has allocated the capacity for diesel gen-sets. Looking into2027E, Weichai expects the ramp-up of gas gen-sets will be similar to thatof diesel gen-sets in 2026. We maintain our gas gen-sets sales forecast of2k units in 2027E, as we see the deal between Generac (GNRC, NR) andAmazon (AMZN US, BUY, covered by our internet team) offers gooddemand visibility.
SOFC: Weichai maintained the target of 30MW capacity (phase one) to becompleted by end-2026. Production is expected to be 15-20MW in 2027E,as time is needed for ramp-up. Weichai expects 200MW capacity (phasetwo) to be completed by end-2027E.
