Citigroup: Lowering the target price of Weichai Power (02338) to HK$48 and reaffirms the “buy” rating

The Zhitong Finance App learned that after the analyst briefing and KION model update, Citi lowered the revenue forecast for Weichai Power (02338) by 3% to 8% from 2026 to 2028, and lowered the 2026 and 2027 net profit forecasts by 5% and 1%, respectively; based on the forecast 2026 price-earnings ratio of 23 times unchanged, the target price was lowered from HK$50 to HK$48, maintaining the “buy” rating. The dividend yield for 2026 and 2027 is expected to be 5% and 7%, respectively.

The bank pointed out that the reduction was mainly due to KION's revenue forecast falling 1% to 2%; vehicle and key components segment revenue falling 1% to 3% due to pressure on LNG heavy truck engines; and agricultural equipment revenue forecast falling 1% to 2% due to weak competitiveness of high-end products compared to global manufacturers. Meanwhile, the bank raised AIDC-related revenue by 2% to 7% from 2026 to 2027 to reflect the gas engine shipment guidelines (2,000 units expected in 2027), but lowered the 2028 revenue forecast due to market concerns about the sustainability of AI capital expenditure and the slowing pace of shipments. The gross margin forecast was also lowered in line with the KION cut and gross margin normalization in 2028.