JP Morgan raises Weichai Power's target price to 52 Hong Kong dollars, transition has reached a measurable milestone.

JPMorgan Chase releases research report, stating that the target price for Weichai Power (02338) H shares has been raised from HK$40 to HK$52, and the target price for Weichai Power (000388.SZ) A shares has been raised from RMB 38 to RMB 49, both maintaining a "overweight" rating. This is due to the company's transformation reaching measurable milestones, and the bank's valuation model incorporating a higher quality and more profitable earning mix starting from 2027. The report mentions that the main driver of growth is profitability. With the expansion of the Artificial Intelligence Data Center (AIDC), the roadmap has expanded from backup diesel engines to primary gas engines and solid oxide fuel cells (SOFC). It is expected that the company's power and energy business will account for a larger share of overall profits. The bank points out that while Weichai Power's stock has risen significantly since the beginning of the year, outperforming the MSCI China Index, the increase still lags behind other AIDC and SOFC peers, reflecting incomplete revaluation of valuation. The bank's target price corresponds to a forecast P/E ratio of approximately 25 times, considering the company's growth, profitability, and transformation of its recurring revenue mix, it believes that the valuation is not high.