J.P. Morgan: Weichai Power’s third-quarter recurring profit rises 14% as data-center engine shipments accelerate

Why did Weichai’s profit beat expectations as the heavy-duty truck market weakened?

In the third quarter of 2026, industry sales of heavy-duty trucks fell 4% year on year to 270 thousand vehicles, while LNG truck sales plunged approximately 71% to 14 thousand vehicles. Weichai’s recurring net profit, however, rose 14% year on year to 3.2 billion yuan over the same period, exceeding the approximately 5% increase JPMorgan had previously forecast.
Third-quarter revenue rose just 1% year on year to 58.008 billion yuan, while the group’s gross margin increased 1.5 percentage points to 22.9%. JPMorgan attributed the improvement to a greater contribution from high-margin power and energy businesses, particularly data-center engines.

Weichai’s sales of diesel engines for data centers rose from approximately 500 units in the first quarter of 2026 and approximately 900 in the second quarter to approximately 1300 in the third quarter. Shipments totaled approximately 2700 units in the first three quarters, against the company’s full-year target of approximately 4000.
Sales of large-bore engines reached 11 thousand units in the first three quarters, exceeding the total for all of 2025. JPMorgan believes growth in the power and energy businesses is diversifying the company’s earnings sources.

Third-quarter net profit attributable to the parent was approximately 3 billion yuan, down approximately 9% year on year, in line with JPMorgan’s earnings preview. One-off effects included a 390 million yuan loss from changes in Ballard’s fair value and a 225 million yuan foreign exchange loss; a foreign exchange gain of 141 million yuan was recorded in the same period a year earlier.
Operating cash flow was a net outflow of 1.1 billion yuan over the same period. The company attributed this to increased advance payments to suppliers, describing it as a working-capital timing factor; cash and equivalents stood at 72 billion yuan at the end of the third quarter.

JPMorgan cited power-generation equipment company Generac as a reference point for industry demand: it signed a long-term supply agreement with Amazon for data-center backup generators, with initial deliveries worth 2.4 billion US dollars in 2027–2028; Generac’s order backlog nearly tripled in 90 days to 4.5 billion US dollars.
The bank believes customer demand for solutions including diesel, gas and solid oxide fuel cells has expanded the potential market for Weichai’s diesel and fuel-cell businesses. Weichai is also using its gas-engine and fuel-cell technologies to enter the overseas market for primary power-supply systems for data centers.
JPMorgan maintained its overweight ratings on Weichai’s A and H shares, with price targets of 54 yuan and 57 Hong Kong dollars respectively. Key variables for its assessment include a recovery in heavy-duty truck sales, market-share gains, data-center product sales and Kion’s performance.