China Merchants Securities International released a research report stating that it maintained Weichai Power's (02338) “gain” rating and had strong results in the first quarter. The net profit forecast for the 2024 fiscal year remained unchanged. The net profit forecast for the 2025-2026 fiscal year was raised by 5% and 9% respectively, reflecting multiple structural improvements in fundamentals driving medium- to long-term profitability. The target price increased from HK$18.2 to HK$21.
The bank pointed out that the heavy truck industry is in an upward cycle. According to the First Commercial Vehicle Network, the total sales volume of the heavy truck industry increased 11% year-on-year to 360,000 vehicles in the first 4 months. In terms of the domestic market, following passenger cars, the country's trade-in policy and subsidy rules for old trucks are expected to be introduced at the end of the second quarter to support steady growth in demand for heavy trucks in the second half of the year, and the company, as a leading enterprise, will continue to benefit. The bank believes that Weichai Power has entered a boom phase, and the return on net assets (ROE) is expected to continue to rise.