28 Aug 2026 CMB International Global Markets | Equity Research | Company Update

Weichai Power (2338 HK/000338 CH) WeichaiCH)-NetPowerprofit(2338in2Q26HK/000338+57% YoY helped by other income and expense control; Rising AIDC

Net profit in 2Q26 +57% YoY helped by other power contribution income and expense control; Rising AIDC power contribution

Weichai’s net profit in 1H26 grew 36% YoY to RMB7.7bn, which implies net profit of RMB4.6bn in 2Q26 (+57% YoY). The growth in 2Q26 was driven by investment income and sound expense control. While revenue grew only 9% YoY in 1H26, we continue to see rising contribution of power-related engines, with AIDC backup power engine sales surging 1.3x YoY. We maintain our positive stance on Weichai’s AIDC backup engine and SOFC. Maintain BUY with unchanged SOTP-based TP of HK$45.1/RMB40.2 for Weichai H/A. Weichai remains a key pick in the Capital Goods sector.

China Capital Goods

12-mth Price Performance

 Improved mix in engine segment.Weichai’s total engine sales grew 15% YoY to 415k units in 1H26. Exports of 44k units, which grew 18% YoY, accounted for 11% of total engines sales in 1H26. Large-bore engines grew 31% YoY to 6.7k units, of which engines for AIDC surged 1.3x YoY to 1.4k units. Total power-related engine sales volume grew 31% YoY to 65k units, which accounted for 16% of total engine sales in 1H26.

 Engine EBIT dropped 2% YoY in 1H26. Engine segment revenue grew 15% YoY to RMB37.3bn. However, the segment profit decreased 2% YoY to RMB5.4bn in 1H26 (segment margin -2.5ppt YoY to 14.6%), which is slightly weaker than our expectation.

 Strong HDT segment margin despite slow volume growth. Weichai delivered 76k units of HDTs in 1H26, up only 4% YoY. Sales in China dropped 2% YoY to 45k units, while exports grew 15% YoY to 31k units. The segment EBIT surged 4.6x YoY to RMB1.4bn, with segment margin sharply expanding 3.2ppt YoY to 3.9%.

Source: FactSet

 Forklifts & supply chain solution (KION Group) EBIT continued to recover. The segment EBIT in 1H26 surged 2.1x YoY to RMB3bn, helped by a low base arising from the high expenses related to the “efficiency program” in 1H25. The segment margin reached 6.6% in 1H26.

Earnings Summary - 2338 HK

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 215,691 231,809 251,331 267,680 283,746

Related reports:

YoY growth (%) 0.8 7.5 8.4 6.5 6.0 Adjusted net profit (RMB mn) 11,403.3 10,930.8 14,430.3 17,072.0 19,353.8 EPS (Reported) (RMB) 1.31 1.25 1.66 1.96 2.22

Weichai Power – Positive on SOFC after our London visit to Ceres Power – 13 Jul 2026 (link)

YoY growth (%) 25.4 (4.1) 32.0 18.3 13.4 Consensus EPS (RMB) na na 1.65 2.03 2.43 P/E (x) 20.7 21.6 16.4 13.8 12.2 P/B (x) 2.7 2.5 2.3 2.1 2.0 Yield (%) 2.7 0.0 3.4 4.0 4.5 Net gearing (%) (38.8) (37.1) (42.9) (58.6) (76.0) Source: Company data, Bloomberg, CMBIGM estimates

Ceres Power – Key takeaways from London visit – 13 Jul 2026 (link)

Weichai Power – AIDC power driven rerating to continue; Earnings forecast and TP raised – 2 May 2026 (link)

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

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Figure 1: Weichai 2Q26 results

(RMB mn) 1Q25 1Q26 Chg (YoY) 2Q25 2Q26 Chg (YoY) Revenue 57,464 62,563 9% 55,688 60,600 9% Cost of sales (44,691) (49,155) 10% (43,364) (47,572) 10% Gross profit 12,773 13,408 5% 12,324 13,028 6% Other income 362 283 -22% 739 1,522 106% Other gains and losses (38) 180 n/a (83) 350 n/a S&D expenses (3,237) (3,012) -7% (3,390) (3,016) -11% Administrative expenses (4,091) (2,875) -30% (2,690) (2,621) -3%

• R&D expenses (2,040) (2,010) -1% (2,096) (1,969) -6% Taxes and surcharges (190) (238) 25% (211) (239) 13% Impairment loss of assets (570) (479) -16% (535) (327) -39% EBIT 2,971 5,257 77% 4,058 6,728 66% Other expenses (32) (19) -40% (33) (57) 69% Net finance cost 208 (364) n/a 261 (283) n/a Share of profit of JV and associates (17) 4 n/a (25) 109 n/a Pretax profit 3,129 4,878 56% 4,261 6,497 52% Income tax (308) (895) 191% (519) (940) 81% After tax profit 2,822 3,983 41% 3,742 5,557 49% MI (111) (897) 708% (809) (941) 16% Net profit 2,711 3,086 14% 2,933 4,616 57%

Key ratios Chg (ppt) Chg (ppt) Gross margin 22.2% 21.4% -0.8 22.1% 21.5% -0.6

• S&D expense ratio 5.6% 4.8% -0.8 6.1% 5.0% -1.1 Administrative expense ratio 7.1% 4.6% -2.5 4.8% 4.3% -0.5 R&D expense ratio 3.5% 3.2% -0.3 3.8% 3.2% -0.5 Effective tax rate 9.8% 18.3% 8.5 12.2% 14.5% 2.3

Source: Company data, CMBIGM estimates

Figure 2: Key assumptions for Weichai

2023 2024 2025 2026E 2027E 2028E

(RMB mn) Revenue

HDT and machinery engine - - - 59,917 63,606 67,545 Pow er related engine - - - 17,223 24,580 31,274

Large bore engine - - - 9,736 15,596 20,943 AIDC - - - 8,008 13,453 18,322 Non-AIDC - - - 1,728 2,143 2,621

Non-large bore pow er related engines - - - 7,487 8,984 10,330 Diesel engines 60,775 59,409 64,025 77,140 88,186 98,819 Automobiles and major components 65,098 61,838 70,803 73,134 75,540 77,918 Forklift trucks & supply chain solution 87,521 88,777 91,131 95,688 98,558 101,515 Agricultural machinery 16,200 18,546 19,169 20,127 21,133 22,190 Intersegment sales -15,635 -12,879 -13,318 -14,758 -15,737 -16,695

Total revenue 213,958 215,691 231,809 251,331 267,680 283,746

Growth (YoY)

Diesel engines 55.2% -2.2% 7.8% 20.5% 14.3% 12.1% Automobiles and major components 39.1% -5.0% 14.5% 3.3% 3.3% 3.1% Forklift trucks & supply chain solution 10.8% 1.4% 2.7% 5.0% 3.0% 3.0% Agricultural machinery -8.6% 14.5% 3.4% 5.0% 5.0% 5.0% Intersegment sales 107.1% -17.6% 3.4% 10.8% 6.6% 6.1%

Average 22.2% 0.8% 7.5% 8.4% 6.5% 6.0%

Segment profit

Diesel engines 7,719 10,395 10,608 13,499 16,755 19,270 Automobiles and major components 594 563 1,420 1,097 1,133 1,169 Forklift trucks & supply chain solution 4,920 5,971 3,869 5,741 5,914 6,091 Agricultural machinery 671 796 801 865 909 954 Intersegment sales -822 -611 -1,302 -708 -755 -801 Total segment profit 13,082 17,115 15,396 20,495 23,955 26,682

Segment margin

Diesel engines 12.7% 17.5% 16.6% 17.5% 19.0% 19.5% Automobiles and major components 0.9% 0.9% 2.0% 1.5% 1.5% 1.5% Forklift trucks & supply chain solution 5.6% 6.7% 4.2% 6.0% 6.0% 6.0% Agricultural machinery 4.1% 4.3% 4.2% 4.3% 4.3% 4.3%

Average 6.1% 7.9% 6.6% 8.2% 8.9% 9.4%

Source: Company data, CMBIGM estimates

Figure 3: KION’s guidance for 2026E

Figure 4: KION’s quarterly financials

2Q25 3Q25 4Q25 1Q26 2Q26

2024 2025 2026E guidance

(EUR mn) Order intake 3,500 2,676 2,823 2,985 2,809

(EUR mn) Low-end High-end Order intake 10,321 11,705 - -

Growth (YoY) 33% 10% 0% 10% -20% Revenue 2,708 2,704 3,097 2,771 2,916 Growth (YoY) -6% 0% 1% -1% 8% Adjusted EBIT 189 190 213 205 224

Growth (YoY) -5% 13% - Revenue 11,503 11,297 11,525 12,025 Growth (YoY) 1% -2% 2% 6% Adjusted EBIT 917 789 880 980

Growth (YoY) -14% -14% -15% 5% 19% Adjusted EBIT margin 7.0% 7.0% 6.9% 7.4% 7.7% Net income 95 119 73 92 115

Growth (YoY) 16% -14% 12% 24% Adjusted EBIT margin 8.0% 7.0% 7.6% 8.1% Net income 370 240 - -

Growth (YoY) 34% 61% -36% n/a 22%

Source: Company data, CMBIGM

Growth (YoY) 18% -35% - -

Source: Company data, CMBIGM

Figure 5: SOTP valuation

SOTP valuation Valuation methodology Target multiple

EBITDA Estimated EV Net cash / (Net debt)

Equity value Equity value breakdown

(x) 2026E (RMB mn) (RMB mn) (RMB mn)

Weichai traditional business EV/EBITDA 10.0 15,479 154,785 39,264 194,049 55.3% Weichai power engines EV/EBITDA 35.0 4,133 144,669 - 144,669 41.2% KION Group Proportionate market value - - - - 22,027 6.3% Ballard Power Systems Proportionate market value - - - - 1,461 0.4% Ceres Power Proportionate market value - - - - 2,246 0.6% Share of JV/associates P/B 2.8 - - - 15,218 4.3% Minority interest in core business -28,470 -8.1% Total NAV 351,201 100.0% NAV per share (RMB) 40.2

H discount to A 0% NAV per share (HK$) 45.1

Source: Company data, CMBIGM estimates

• Note 1: Weichai owns 46.5% interest in KION, 20% interest in Ballard Power and ~17.8% interest in Ceres Power.

• Note 2: Share of JV/associates excludes Ballard Power and Ceres Power

Key risks: 1) lower-than-expected AIDC power demand; 2) unexpected slowdown in HDT engine demand; 3) increase in raw material costs.

Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 213,958 215,691 231,809 251,331 267,680 283,746 Cost of goods sold (168,842) (167,305) (182,027) (196,038) (207,452) (218,485) Gross profit 45,116 48,386 49,782 55,293 60,228 65,262 Operating expenses (31,238) (30,368) (33,681) (34,207) (35,583) (37,891) Operating profit 13,878 18,018 16,101 21,086 24,645 27,371 Share of (losses)/profits of associates/JV (13) (45) (51) 109 110 111 EBITDA 25,867 30,744 29,699 35,057 40,003 42,816 Depreciation 11,989 12,726 13,598 13,971 15,358 15,445 Interest income 2,818 3,781 3,561 2,343 2,829 3,600 Interest expense (3,378) (4,011) (3,107) (1,289) (1,292) (1,296) Net Interest income/(expense) (560) (231) 454 1,054 1,537 2,304 Other income/expense (154) (421) (291) (251) (268) (284) Pre-tax profit 13,151 17,322 16,214 21,997 26,024 29,503 Income tax (1,940) (3,044) (2,534) (3,960) (4,684) (5,311) Minority interest (2,198) (2,874) (2,750) (3,608) (4,268) (4,838) Adjusted net profit 9,014 11,403 10,931 14,430 17,072 19,354

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 197,925 184,750 186,524 190,217 230,786 240,321 Cash & equivalents 92,857 72,067 68,713 77,699 99,112 125,892 Account receivables 23,754 30,877 34,355 17,977 43,626 15,455 Inventories 37,930 35,675 35,236 46,402 39,989 50,996 Prepayment 1,691 1,368 1,412 1,331 1,250 1,169 Other current assets 41,693 44,762 46,808 46,808 46,808 46,808 Non-current assets 136,322 159,130 180,952 176,508 169,179 161,762 PP&E 44,073 47,301 53,667 50,447 44,428 38,408 Investment in JVs & assos 5,175 4,915 5,435 5,482 5,529 5,577 Intangibles 23,071 22,205 22,063 20,793 19,436 17,991 Goodwill 24,858 24,561 25,269 25,269 25,269 25,269 Other non-current assets 39,145 60,148 74,517 74,517 74,517 74,517 Total assets 334,247 343,879 367,475 366,726 399,964 402,084

Current liabilities 146,215 154,839 161,534 149,091 168,927 156,243 Short-term borrowings 16,949 22,772 15,915 16,015 16,115 16,215 Account payables 60,127 58,033 68,037 55,494 75,229 62,446 Other current liabilities 69,139 74,034 77,583 77,583 77,583 77,583 Non-current liabilities 75,346 67,081 74,879 74,879 74,879 74,879 Long-term borrowings 26,745 15,633 18,248 18,248 18,248 18,248 Other non-current liabilities 48,601 51,448 56,632 56,632 56,632 56,632 Total liabilities 221,561 221,921 236,413 223,971 243,806 231,123

Total shareholders equity 79,335 86,696 93,190 101,275 110,411 120,375 Minority interest 33,351 35,262 37,872 41,479 45,747 50,586 Total equity and liabilities 334,247 343,879 367,475 366,726 399,964 402,084

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 13,151 17,322 16,214 21,997 26,024 29,503 Depreciation & amortization 11,909 12,668 13,438 13,890 15,277 15,364 Tax paid (1,940) (3,044) (2,534) (3,960) (4,684) (5,311) Change in working capital 6,089 (6,811) 6,764 (7,331) 499 4,381 Others (1,738) 5,959 (5,201) 1,260 1,263 1,266 Net cash from operations 27,471 26,094 28,682 25,858 38,379 45,202

Investing Capital expenditure (4,633) (6,600) (6,670) (9,400) (7,900) (7,900) Acquisition of subsidiaries/ investments (156) (584) (855) 0 0 0 Others (947) (21,727) (9,103) 62 63 63 Net cash from investing (5,737) (28,911) (16,628) (9,338) (7,837) (7,837)

Financing Dividend paid (4,175) (7,769) (9,373) (6,345) (7,937) (9,390) Net borrowings (969) (5,289) (4,244) 100 100 100 Proceeds from share issues 92 0 0 0 0 0 Others (7,977) (780) (4,704) (1,289) (1,292) (1,296) Net cash from financing (13,029) (13,838) (18,320) (7,534) (9,129) (10,585)

Net change in cash Cash at the beginning of the year 70,842 92,857 72,067 68,713 77,699 99,112 Exchange difference 13,310 (4,135) 2,913 0 0 0 Cash at the end of the year 92,857 72,067 68,713 77,699 99,112 125,892

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue 22.2% 0.8% 7.5% 8.4% 6.5% 6.0% Gross profit 44.8% 7.2% 2.9% 11.1% 8.9% 8.4% Operating profit 153.1% 29.8% (10.6%) 31.0% 16.9% 11.1% EBITDA 55.5% 18.9% (3.4%) 18.0% 14.1% 7.0% Adj. net profit 83.8% 26.5% (4.1%) 32.0% 18.3% 13.4%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 21.1% 22.4% 21.5% 22.0% 22.5% 23.0% Operating margin 6.5% 8.4% 6.9% 8.4% 9.2% 9.6% EBITDA margin 12.1% 14.3% 12.8% 13.9% 14.9% 15.1% Adj. net profit margin 4.2% 5.3% 4.7% 5.7% 6.4% 6.8%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Net debt to equity (x) (0.6) (0.4) (0.4) (0.4) (0.6) (0.8) Current ratio (x) 1.4 1.2 1.2 1.3 1.4 1.5 Receivable turnover days 38.5 46.2 51.4 38.0 42.0 38.0 Inventory turnover days 77.1 80.3 71.1 76.0 76.0 76.0 Payable turnover days 114.2 128.9 126.4 115.0 115.0 115.0

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E 26.0 20.7 21.6 16.4 13.8 12.2 P/B 3.0 2.7 2.5 2.3 2.1 2.0 Div yield (%) 1.9 2.7 0.0 3.4 4.0 4.5

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

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CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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