Summary of Weichai Power Conference Call Company Overview - **Company**: Weichai Power - **Industry**: Engine manufacturing, Data center equipment Key Points Financial Performance - In the first half of 2025, Weichai Power's data center business revenue reached **2.33 billion RMB**, a **59%** year-on-year increase [2] - Net profit for the same period was **499 million RMB**, reflecting a **145%** year-on-year growth [2] - Gross margin maintained at **28.83%**, with a net profit margin of **21.47%** [2] Business Segments - **Heavy-duty Engine Business**: - Profitability remains robust despite some fluctuations in natural gas engines [5] - Expected stable growth driven by industry recovery and replacement cycles [5] - **Data Center Engine Sales**: - Sales of data center engines approached **600 units**, marking a **491%** increase year-on-year [3] - **Kion Group Impact**: - Kion Group's new orders totaled **6.2 billion EUR**, a **22%** increase year-on-year, with supply chain systems orders doubling [6] - Kion's revenue for the first half was **5.5 billion EUR**, with net profit at **47.9 million EUR** [6] Future Projections - Expected revenue for Weichai Power in 2025 is approximately **12.5 billion RMB**, with projections exceeding **15 billion RMB** in 2026 [7] - Growth drivers include Kion Group recovery, other segment growth, and rapid expansion in large-bore diesel and natural gas power generation [7] Industry Trends - The data center industry is experiencing strong demand, with expectations for global equipment demand to potentially double to **40-50 billion RMB** by 2028-2030 [2][9] - The industry exhibits high pricing power due to supply-demand imbalances, which will enhance Weichai's product development and profitability [9] Risks - Key risks include potential underperformance in operational growth and significant increases in raw material prices, which could impact overall profitability [10]

Core Viewpoint - The company emphasizes technological innovation and structural adjustment as core drivers, seizing opportunities in overseas markets, high value-added sectors, and the transition to new energy, resulting in stable operational performance [1][5]. Financial Performance - In the first half of 2025, the company achieved operating revenue of 1131.5 billion yuan and a net profit attributable to shareholders of 56.4 billion yuan, with a gross margin of 22.2% [6][1]. - The company proposed a cash dividend of 3.58 yuan per 10 shares, increasing the dividend payout ratio to 57%, with total cash dividends exceeding 19 billion yuan since 2021 [7][1]. Strategic Business Growth - The company reported significant growth in strategic business areas, with high-end M series large-bore engines sales exceeding 5000 units, a 41% increase year-on-year, and data center engine sales up 491% [14][3]. - New energy power technology revenue reached 1.21 billion yuan, a 37% increase, while power battery sales reached 2.3 GWh, up 91% [3][14]. International Expansion - The company’s overseas operations showed strong momentum, with operating revenue of 5.5 billion euros and adjusted EBIT of 390 million euros, alongside new orders of 6.21 billion euros, a 22% year-on-year increase [8][20]. Heavy Truck Market Performance - Heavy truck sales reached 73,000 units, a 15% increase, with new energy heavy truck sales skyrocketing by 255% [15][9]. - The company’s market share in the heavy truck sector continues to rise, with exports of 27,000 units [15][9]. Agricultural Equipment Sector - Despite challenges in the global agricultural machinery industry, the company’s agricultural equipment segment achieved operating revenue of 9.86 billion yuan, with export revenue of 1.15 billion yuan [18][17]. - The company maintains a leading market position in tractors and harvesting machinery in China [18]. Future Outlook - The company aims to tackle high-end markets, core new energy technologies, and overseas breakthroughs in the second half of 2025, focusing on expanding gas engine advantages and large-bore engine exports [21].

Core Viewpoint - Weichai Power Co., Ltd. reported strong financial performance for the first half of 2025, with total revenue of 113.15 billion yuan and a net profit of 5.64 billion yuan, while maintaining a high dividend payout ratio of 57% [1] Group 1: Financial Performance - The company achieved a revenue of 113.15 billion yuan and a net profit of 5.64 billion yuan in the first half of 2025 [1] - A cash dividend of 3.58 yuan per 10 shares (including tax) is proposed, reflecting a dividend payout ratio increase to 57% [1] Group 2: High-end Power Products - Weichai Power sold 362,000 engines in the first half of the year, with heavy truck engine sales reaching 125,000 units and high-end M series engines exceeding 5,000 units, marking a 41% year-on-year increase [2] - Sales of data center engines surged by 491% year-on-year, with nearly 600 units sold, driven by the rapid expansion of the data center backup power market [2] Group 3: New Energy Business - The company’s subsidiary, Shaanxi Heavy Duty Automobile Co., Ltd., sold 73,000 heavy trucks, a 14.6% increase year-on-year, with a market share of 13.5% [2] - Sales of new energy heavy trucks exceeded 10,000 units, a remarkable 255% increase year-on-year [2][3] - The Weichai (Yantai) New Energy Power Industrial Park was completed and put into operation, with battery sales reaching 2.32 GWh, a 91% increase year-on-year [3] Group 4: High-end Intelligent Equipment Manufacturing - Weichai Power's agricultural equipment business achieved revenue of 9.86 billion yuan, with export revenue of 1.15 billion yuan, despite overall industry pressure [4] - The company’s subsidiary, Weichai Lovol, launched a flagship intelligent tractor manufacturing base, enhancing its global reputation in agricultural machinery [4] Group 5: International Expansion - The German subsidiary KION Group reported revenue of 5.5 billion euros and an adjusted EBIT of 385 million euros, with record-high new orders in the second quarter [4] - The American subsidiary PSI Power Systems achieved revenue of 330 million USD, a 59% increase year-on-year, and a net profit of 70 million USD, a 145% increase year-on-year [5] Group 6: Future Outlook - The company aims to continue leveraging technological innovation and a global perspective to strengthen its diversified business structure and resilience against economic cycles [5]

Group 1: Engine and Data Center Business Development - The M series large-bore engines have seen significant production and sales growth in 2025, particularly for data center engines, driven by strong industry demand [1] - The company aims to leverage its technological performance, production capacity, and delivery efficiency to achieve its annual sales targets and expand into strategic high-end markets [1] Group 2: Heavy Truck Industry Outlook - In the first half of 2025, China's heavy truck market recorded cumulative sales of approximately 539,000 units, a year-on-year increase of about 7%, with exports reaching around 156,000 units, up about 3% [2] - The heavy truck market is expected to improve gradually, supported by the implementation of vehicle replacement policies, with June sales showing a year-on-year growth of 37% and a month-on-month increase of 10% [2] Group 3: Dividend Policy and Shareholder Returns - The company plans to maintain a cash dividend and share buyback strategy, with a projected dividend payout ratio of 55% for the full year of 2024, and cumulative dividends since listing nearing 35 billion yuan [2] - A share buyback plan of 1 billion yuan is set for 2025 to enhance investor satisfaction, while the company will continue to balance development needs and shareholder interests [2]

Group 1: Weichai Power - Weichai Power plans to achieve a dividend payout ratio of 55% in 2024, with cumulative dividends nearing 35 billion yuan, and will introduce a share repurchase plan worth 500 million to 1 billion yuan in 2025 [1] - The heavy truck market in China saw sales of approximately 530,000 units in the first half of the year, reflecting a year-on-year growth of 6%, and the company remains optimistic about the industry's development [1] - By the end of 2024, Weichai Power will launch a full range of new energy power battery products, achieving breakthroughs in thermal management and intelligent management [1] Group 2: Foton Motor - Foton Motor has implemented several marketing reforms, including breaking the vertical management model and establishing a customer-centric digital management system [2] - The company has enhanced its competitiveness in the overseas heavy truck market by efficiently coordinating domestic and international resources, launching high-end products, and strengthening local production and sales teams [2] - Foton Motor is building a comprehensive value chain that includes new energy ecosystems such as vehicle networking, battery leasing, and microgrid services, as well as after-market services like financial insurance and used vehicle operations [2] Group 3: Huapengfei - After selling part of its stake in Hongtu Chuangzhan in September 2023, Huapengfei will no longer consolidate it, leading to a decline in revenue for the year, but confirmed investment income has improved net profit attributable to shareholders [3] - The company primarily serves manufacturing clients in sectors such as industrial components, precision instruments, new energy lithium batteries, and high-end consumer electronics [3] - Huapengfei has a strong cash flow and is investing in fixed assets to support business operations without affecting its ongoing viability [3]