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<Research> HSBC Research: WEICHAI POWER (02338.HK) AI Data Center Biz Continues to Grow; Raises TP to HKD46
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HSBC Research issued a report stating that WEICHAI POWER (02338.HK)'s AI data center (AIDC) business continues to grow, despite its 1Q26 net profit coming in below expectations, mainly due to foreign exchange losses. The broker maintained its Buy rating on the companys H shares and raised the H-share TP from HKD39 to HKD46. The report noted that the stock price has surged 92% YTD, primarily driven by its AIDC power generation potential. The report highlighted that its key US customer Generac is in the final stage of supplier approval with two hyperscale clients. Generacs backlog of standby generator sets increased from USD400 million at end-4Q25 to USD700 million at end-1Q26. WEICHAI POWER sold 500 AIDC engines in 1Q26, up 240% YoY, representing 13% of the brokers full-year 2026 forecast of 3,800 units. In addition, the company has begun large-scale recruitment of engineers for solid oxide fuel cell (SOFC) manufacturing and processes, signaling imminent capacity expansion. The broker explained that the 1Q26 net profit miss was due to foreign exchange losses recorded under finance costs, which swung from a gain of RMB208 million in the same period last year to a loss of RMB364 million. Excluding this YoY volatility, the broker estimated that 1Q26 net profit would have been approximately RMB3.7 billion, up about 35% YoY. In light of stronger AIDC demand, the broker raised its earnings forecasts for 2027 and 2028 by 7% and 8%, respectively, but trimmed its 2026 earnings forecast by 3% due to foreign exchange losses. (ad/da) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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