According to a research report released by J.P. Morgan Chase, considering the slowdown in export growth, the investment rating of Zhonglian Heavy Industries (01157) was downgraded from “neutral” to “reduced holdings”, and the target price was lowered from HK$3.8 to HK$3.4; the target price for China Longgong (03339) was lowered from “increased holdings” to “neutral”, and the target price dropped from HK$1.8 to HK$1.3; and emphasized that it is still optimistic about Weichai Power (02338), ranked as the industry's preferred stock, and the target price rose from HK$18.3 to HK$18.6.
According to the report, the structure of the construction equipment and heavy truck markets in China and the US has changed, and competition is expected to intensify. Among them, demand growth in the Chinese market is supported, while construction activity and orders in the US have peaked, and demand is expected to slow down starting next year. After reviewing the performance of machinery and equipment foundries in China and the US in the third quarter of this year, the bank believes that overall performance is mixed, and demand in vertical areas of key terminal demand is weak. It is expected that China's heavy truck demand will be the highlight of the industry next year.