We expect HDT industry demand growth to slow to 3% YoY in 2026E (from21% in 2025E), due to the high base following the accelerated sales growthsince mid-2025. That said, for Weichai, we expect the explosive growth ofbackup power engines for data centres will continue to gain traction (moredetails in our 2026 sector outlook published today (link)). We forecastWeichai’s total engine sales volume (all types) to grow 8%/3% in 2025E/26Ealong with margin expansion, driven by elevated HDT demand in 2026E andhigher contribution from high-margin data centre engines. We revise up our2025E-27E earnings forecast by 1-5%, to reflect our latest industry forecast.Our SOTP-based TP for A/H, after rolling over to 2026E, is revised up toRMB22.3/HK$21.9. Maintain BUY.

Weichai’s engine sales have recovered since Aug. According toCICEIA, Weichai's multi-cylinder engine sales (including HDT, constructionmachinery, other engines) grew 19%/39%/35% YoY in Aug/Sep/Oct,following fluctuating sales in 7M25. The recent acceleration was drivenlargely by HDT demand growth. In 10M25, Weichai’s multi-cylinder enginesales grew ~5% YoY.

Data centre power engines: Still limited contribution but growing fast.We estimate Weichai to deliver 1.2k units of backup power engines for datacenters in 2025E (+3x YoY). We estimate this will contribute ~5% ofWeichai’s total net profit in 2025E. While Weichai has yet to set a target for2026E, we see huge potential for Weichai to boost power engine sales in2026E, given that 3k units of annual capacity is already in place.

Key risks. 1) High base of industry HDT sales in 2025; 2) lower-thanexpecteddata centre backup power engine sales.