Nomura Weichai Power (000338): AIDC and New Energy Rev Up; ICE Holds Firm
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Nomura initiates coverage on Weichai Power (000338.SZ) with a Buy rating and a target price of RMB 36.30, implying 22.1% upside from the July 8 closing price of RMB 29.72. The positive outlook is driven by rapid growth in AI data center (AIDC) power solutions and robust momentum in the new energy segment. Nomura projects 2026-2028 revenue and net profit CAGRs of approximately 9% and 20%, respectively.
AIDC demand is fueling large-cylinder engine shipments, with 2025 data center sales reaching roughly 1,400 units, up 259% year-over-year. First-quarter 2026 sales exceeded 500 units. The average selling price exceeds RMB 500,000, significantly above the segment's 2025 average of RMB 35,800. Meanwhile, the new energy business generated RMB 3.04 billion in 2025 revenue, doubling year-over-year, and surged roughly 200% in the first quarter of 2026.
Solid oxide fuel cells (SOFC) represent a long-term growth vector following Weichai's strategic investment in Ceres Power, though short-term profit contributions remain limited. The traditional internal combustion engine (ICE) business demonstrates strong resilience, with heavy-truck engine market share rising from 32.2% in 2022 to 34% in 2025. The target price is based on 22x 2026E EPS of RMB 1.65, a discount to the peer average of 26.4x.