Summary of WeiChai Power Conference Call Company Overview - **Company**: WeiChai Power (2338.HK, 000338.SZ) - **Industry**: China Industrials - **Current Stock Rating**: Equal-weight - **Price Target**: HK$26.20 - **Current Share Price (as of Feb 10, 2026)**: HK$29.20 - **Market Capitalization**: Rmb225,885 million - **Fiscal Year Ending**: December 2024 Key Industry Insights - **HDT Market Sales**: Expected to be flat or mildly grow in 2026, supported by solid exports, particularly to Africa and the Middle East, and the extension of domestic trade-in subsidy policies [3][8] - **LNG HDT Penetration**: Anticipated to rise slightly in 2026 from approximately 24% in 2025 [3] - **New Energy HDT Penetration**: Expected to surpass 30% in 2026 [3] Financial Performance and Projections - **New Energy Business Revenue**: Reached approximately Rmb3 billion in 2025, doubling year-on-year, with continued growth momentum expected in 2026 [8] - **Large-Bore Engine Shipments**: Projected to double year-on-year to approximately 2,800 units in 2026, contributing to a total sales target of around 13,000 units [8] - **AIDC Generator ASP**: Remains stable at over Rmb2 million, with a capacity of 3,000 to 4,000 units [8] - **SOFC Capacity**: Expected to reach 1GW by 2030, with the first 10MW production line going live in 2026 [8] Strategic Goals - **Market Share in LNG HDT Engines**: WeiChai aims to stabilize its market share at 55-60% in the long term [8] - **Global AIDC Generator Share**: Targeting a 20-30% share in 3-5 years, up from the current teens [8] Risks and Considerations - **Upside Risks**: Stronger-than-expected recovery from KION, better volume growth in engine and HDT sales due to stronger stimulus [12][13] - **Downside Risks**: Slower-than-expected AI capital expenditures, potential market share loss in the engine/HDT market [12][13] Valuation Methodology - **P/E Ratios**: - Traditional engine and truck business: 10x 2026e P/E, in line with an 8-year historical average [10] - AIDC business: 60x 2026e P/E, considering strong net profit growth of approximately 100% year-on-year [10] Conclusion WeiChai Power is positioned for moderate growth in the HDT market, with significant advancements in its new energy segment. The company is focusing on stabilizing its market share in LNG HDT engines while expanding its presence in the AIDC generator market. However, it faces risks related to market dynamics and competition.

Core Viewpoint - BlackRock has increased its long position in Weichai Power Co., Ltd. H-shares from 6.97% to 7.04% as of February 4, 2026 [1] Group 1 - BlackRock's long position in Weichai Power reflects growing confidence in the company's performance [1] - The increase in holdings indicates a strategic investment move by BlackRock in the automotive and power equipment sector [1]

Core Viewpoint - The demand for off-grid power supply in North American data centers is rapidly increasing, leading to the adoption of natural gas medium-speed and high-speed engines as primary power sources [1][2]. Group 1: Industry Trends - The global electricity consumption of data centers is projected to reach approximately 415 TWh in 2024, doubling to 945 TWh by 2030 [2]. - The share of engines used in data centers is expected to rise significantly, from 28.6% in 2020 to 53.7% in 2024, corresponding to a market size of 300 billion RMB, and further to 70.8% by 2030, equating to 1018 billion RMB [4]. Group 2: Company Insights - Wärtsilä, a leader in medium-speed marine engines, holds a market share of about 45% and anticipates a robust annual growth rate of 6% in demand for marine medium-speed engines [1]. - The backlog of orders for Wärtsilä's power generation business is expected to double from 2024 to 2025, reaching 800 million euros [1]. Group 3: Technological Developments - Caterpillar has formed a strategic alliance with AIP and Boyd CAT to secure a multi-billion dollar order for 2 GW of rapid-response natural gas generator sets for the Monarch data center project [3]. - Medium-speed engines are projected to grow from 4 GW in 2024 to 19 GW by 2030, with a compound annual growth rate (CAGR) of 28%, primarily driven by the U.S. market [4]. Group 4: Advantages of Medium-Speed Engines - Medium-speed engines offer several advantages, including shorter delivery times (as fast as 18 months), operational capability in high-temperature and high-altitude environments, and modular design for high availability and redundancy [5][6]. - Cost-effectiveness is highlighted, with capital expenditures (CAPEX) reduced by 20-30% compared to heavy gas turbines, and fuel consumption lower by 20-35% [5].

Core Viewpoint - The report highlights the AH premium rates of various companies, indicating significant discrepancies between their H-shares and A-shares, with some companies showing extremely high premiums while others exhibit negative premiums [1]. Group 1: Top AH Premium Rates - Northeast Electric (00042) has the highest AH premium rate at 831.03%, with H-share priced at 0.290 HKD and A-share at 2.25 CNY [1]. - Sinopec Oilfield Service (01033) follows with a premium rate of 296.70%, H-share at 0.910 HKD and A-share at 3.01 CNY [1]. - Beijing Jingcheng Machinery Electric (00187) ranks third with a premium of 285.05%, H-share at 4.280 HKD and A-share at 13.76 CNY [1]. Group 2: Lowest AH Premium Rates - Contemporary Amperex Technology (03750) has the lowest AH premium rate at -13.27%, with H-share priced at 511.000 HKD and A-share at 370 CNY [1]. - China Merchants Bank (03968) shows a premium of -4.06%, H-share at 49.300 HKD and A-share at 39.49 CNY [1]. - WuXi AppTec (02359) has a premium of -2.14%, with H-share at 120.800 HKD and A-share at 98.7 CNY [1]. Group 3: Top Deviation Values - Jinju Group (02009) has the highest deviation value at 24.42%, with a premium of 212.05% [1]. - Beijing Jingcheng Machinery Electric (00187) has a deviation value of 21.92%, with a premium of 285.05% [1]. - Longpan Technology (02465) ranks third with a deviation value of 19.68%, and a premium of 101.01% [1]. Group 4: Lowest Deviation Values - JunDa Co., Ltd. (02865) has the lowest deviation value at -70.56%, with a premium of 176.15% [2]. - Changfei Optical Fiber (06869) follows with a deviation of -45.38%, and a premium of 105.94% [2]. - Chenming Paper (01812) has a deviation of -26.81%, with a premium of 190.80% [2].

Summary of Conference Call Notes Industry Overview - The report focuses on the North American electricity shortage, driven by the non-linear growth of AI power demand and aging power grid infrastructure [1] - The demand side sees a surge in AIDC projects in the U.S., leading to a significant increase in electricity demand [1] - On the supply side, while total supply is expected to meet short-term demand by 2025, long-term challenges include a decline in stable supply and regional electricity shortages [1] Key Points Supply Challenges - **Decline in Stable Supply**: The aging power grid leads to frequent outages, failing to meet AIDC's requirement for 100% reliable power. The upcoming retirement peak of coal power plants and the instability of wind and solar energy further exacerbate the situation. Only natural gas can currently fill the gap [1][2] - **Regional Electricity Shortages**: By 2024, over 50% of data centers are expected to be located in Texas, California, and Virginia, putting significant pressure on regional power supplies. The fragmented nature of the U.S. power grid and poor interconnections have led to emergency controls due to power imbalances [1] Future Projections - NERC forecasts an average peak gap of over 20 GW in the U.S. from 2027 to 2030, with Texas, the Mid-Atlantic, the Midwest, and California facing significant risks. The DOE predicts an average peak gap of 20-40 GW by 2030 [1] Technology Solutions - **Gas Turbines**: Considered the optimal solution for AIDC self-built power, with efficiency exceeding 60% and the lowest cost per kWh. The global installation of gas turbines is accelerating, with major manufacturers like GE, Siemens, and Mitsubishi Heavy Industries having orders scheduled until 2029 [2] - **Gas Internal Combustion Engines**: Slightly lower efficiency than gas turbines but offer rapid deployment. Leading company Wärtsilä saw a 111% year-on-year increase in new orders for Q1-Q3 2025, with deliveries extending to 2028 [2] - **Solid Oxide Fuel Cells (SOFC)**: High efficiency but currently in early commercialization stages, making it less viable in the short term due to cost and capacity constraints [2] - **Diesel Generators**: Optimal for backup power due to quick start-up capabilities, with Cummins reporting a revenue growth of approximately 20% year-on-year for related products in Q1-Q3 2025 [2] Investment Recommendations - Investment opportunities are expanding from gas turbines to gas internal combustion engines and SOFCs, as the current electricity shortage in North America exceeds the total production capacity of various technologies [3] - **Gas Turbines**: Recommended companies include Jerry Holdings, Yingliu Co., Dongfang Electric, Linde Co., and Haomai Technology [3] - **Gas Internal Combustion Engines**: Focus on Linde Co., with additional attention to Weichai Power and Eagle Precision [3] - **SOFC**: Suggested to monitor Weichai Power [3] - **Diesel Generators**: Recommended companies include Linde Co., with additional focus on KOTAI Power, Weichai Power, and Eagle Precision [3] Risk Factors - Potential risks include lower-than-expected investment in AI data centers, international trade tensions, and slower-than-anticipated capacity ramp-up [4]

Investment Rating - The industry investment rating is "Overweight," indicating an expected outperformance of the industry index relative to the benchmark by more than 5% over the next six months [35]. Core Insights - The report highlights a recovery in the passenger vehicle sector, driven by the implementation of subsidy policies and a shift in consumer demand. It emphasizes the importance of focusing on high-end electric vehicle manufacturers that are less sensitive to policy fluctuations, such as Jianghuai Automobile and Geely [25][26]. - In the heavy truck segment, the report anticipates a positive outlook for 2026, projecting domestic sales to reach 800,000 to 850,000 units, a year-on-year increase of 3% [30][28]. - The bus market is expected to see growth in 2026, with a conservative estimate of 40,000 units sold, reflecting a 40% year-on-year increase, supported by the continuation of subsidy policies [30][29]. - The motorcycle sector is projected to achieve total sales of 19.38 million units in 2026, a 14% increase year-on-year, with a significant focus on the large-displacement motorcycle market [26]. Summary by Sections Passenger Vehicles - Short-term recovery is anticipated in the passenger vehicle sector due to established subsidy policies, with a focus on high-end electric vehicles and companies less affected by policy changes [25][26]. - Key companies to watch include Jianghuai Automobile, Geely, Great Wall Motors, and BYD, among others [25]. Heavy Trucks - In 2025, wholesale heavy truck sales reached 1.144 million units, a 26.8% increase year-on-year, with domestic sales of 799,000 units, up 32.8% [30]. - The report recommends leading heavy truck manufacturers such as China National Heavy Duty Truck Group, Weichai Power, and FAW Jiefang [30][28]. Buses - The bus market saw a slight decline in 2025, with sales of 29,000 units, down 6% year-on-year. However, a rebound is expected in 2026, with a projected 40% increase in sales [30][29]. - Recommended companies include Yutong Bus and King Long [30]. Motorcycles - The motorcycle industry is forecasted to grow, with total sales expected to reach 19.38 million units in 2026, a 14% increase year-on-year, driven by large-displacement models [26]. - Recommended companies include Chunfeng Power and Longxin General [26].

Core Viewpoint - The Shenzhen State-Owned Enterprises ESGR Index (470055) experienced a positive performance, closing at 1744.44 points with a 1.76% increase on February 9, 2023, indicating a favorable market sentiment towards state-owned enterprises [1]. Group 1: Index Performance - The ESGR Index recorded a trading volume of 37.188 billion yuan and a turnover rate of 1.45% on the same day [1]. - Among the constituent stocks, 41 companies saw an increase, with Weichai Power leading the gainers at an 8.24% rise, while 8 companies experienced declines, with Dongfang Tantalum leading the losses at a 2.14% drop [1]. Group 2: Capital Flow - The net capital outflow from the main funds for the ESGR Index constituents totaled 37.5203 million yuan, while retail investors saw a net outflow of 84.8906 million yuan [2]. - Conversely, the index experienced a net inflow of 122 million yuan from speculative funds [2].

| 证券代码 | 股票简称 | 权重 | 最新价 | 涨跌幅 | 总市值(亿元) | | 所属行业 | | --- | --- | --- | --- | --- | --- | --- | --- | | sz000725 | 京东方A | 8.99% | 4.35 | -0.46% | | 1611.43 | 电子 | | sz000858 | 五粮液 | 8.58% | 107.36 | 0.34% | | 4167.29 | 食品饮料 | | sz000338 | 潍柴动力 | 7.98% | 25.74 | 8.24% | ﮯ | 2242.88 | 汽车 | | sz002415 | 海康威视 | 7.28% | 32.54 | -0.31% | A | 2982.25 | 计算机 | | sz000425 | 徐工机械 | 5.93% | 11.86 | 3.58% | | 1393.90 | 机械设备 | | sz000568 | 泸州老窖 | 5.67% | 121.29 | -1.25% | | 1785.32 | 食品饮料 | | sz000807 | 云铝股份 | 4.62% | 31 ...

Investment Rating - The report maintains a "Positive" investment rating for the industry [6] Core Insights - In January 2026, the domestic heavy truck wholesale sales are expected to reach approximately 100,000 units, representing a year-on-year increase of 39% and remaining stable compared to December 2025. The terminal sales are projected to be between 30,000 to 32,000 units, reflecting a decrease of 5% to 10% year-on-year. Export sales are expected to exceed 26,000 units, showing a growth of over 20% [2][10] - The sales of new energy vehicles have significantly declined, with January 2026 sales falling below 7,000 units, a month-on-month decrease of about 85%. The penetration rate of new energy heavy trucks is approximately 21%, down about 33 percentage points [2][10] - The "old-for-new" policy is expected to support domestic demand, while exports are anticipated to grow due to favorable conditions in overseas markets. Heavy truck companies are likely to maintain high growth in performance, coupled with high dividends, enhancing their investment value. Additionally, the ongoing demand for primary and backup power sources in the context of North America's electricity shortages is expected to remain robust, with key recommendations for investment in China National Heavy Duty Truck Group and Weichai Power [2][10] Summary by Sections Sales Performance - The heavy truck market in China sold around 100,000 units in January 2026, a significant increase from 72,200 units in the same month last year, marking a 39% year-on-year growth [4][10] - Terminal sales are estimated to be between 30,000 to 32,000 units, which is a decrease of 5% to 10% compared to the previous year [10] New Energy Vehicles - New energy heavy truck sales have seen a drastic decline, with January 2026 sales below 7,000 units, a month-on-month drop of approximately 85% [10] - The penetration rate for new energy heavy trucks has decreased to about 21%, down 33 percentage points from the previous period [10] Investment Recommendations - The report suggests that the "old-for-new" policy will bolster domestic demand, while export growth will be supported by favorable conditions in international markets. Heavy truck manufacturers are expected to achieve high growth in their financial performance, making them attractive investment opportunities [10]

Investment Rating - The report suggests a positive investment outlook for the North American electricity sector, particularly focusing on gas turbines and related technologies due to the ongoing electricity shortage driven by AI data center demands [2][6][30]. Core Insights - The North American electricity shortage is characterized by a contradiction between the non-linear growth of AI electricity demand and the aging infrastructure of the power grid. The demand side sees a surge in AIDC projects, while the supply side faces challenges with declining stable supply and regional electricity shortages [2][6][24]. - The report highlights that gas turbines are currently the optimal solution for AIDC self-built power generation, with gas internal combustion engines, SOFC, and diesel generation serving as effective supplements [2][37]. - The North American Electric Reliability Corporation (NERC) predicts an average peak electricity gap of over 20GW from 2027 to 2030, with significant risks in Texas, the Mid-Atlantic, the Midwest, and California [2][32]. Summary by Sections Section 1: Current Electricity Shortage in North America - The electricity shortage is driven by the non-linear growth of AI demand and the aging power grid infrastructure. The electricity consumption in the U.S. is expected to reach historical highs in 2025-2026, with data centers' planned installed capacity increasing from 5GW in early 2023 to over 245GW by October 2025 [6][19]. - The average lifespan of power infrastructure in the U.S. is around 35-40 years, leading to frequent outages and an inability to meet the reliability demands of AIDC [15][19]. Section 2: Power Source Selection - Gas turbines are identified as the primary power source, with gas internal combustion engines, SOFC, and diesel generation as supplementary options. The report emphasizes the efficiency and cost-effectiveness of gas turbines, which can achieve over 60% efficiency and have the lowest cost per kilowatt-hour [2][37]. - The report also discusses the expected increase in gas turbine installations, with global new installations projected to approach previous cycle peaks by 2025, driven by the surge in AIDC electricity demand [48][52]. Section 3: Investment Recommendations - The report recommends focusing on various technologies due to the ongoing electricity shortage, suggesting investments in gas turbines, gas internal combustion engines, SOFC, and diesel generation. Specific companies are highlighted for potential investment opportunities, including Jerry Holdings, Yingliu Co., Dongfang Electric, and others [2][37][39].