Morgan Stanley: Weichai Power (02338) Q3 results in line with the bank's expectations; maintain "Overweight" rating.

Morgan Stanley issued a research report stating that Weichai Power's (02338) Q3 2026 results were in line with the bank's expectations; the bank maintains its "Overweight" rating with a target price of HK$46. The bank noted that Weichai Power's Q3 revenue rose 1% year-on-year to RMB56.008 billion, reflecting weak heavy truck industry sales in Q3 (particularly LNG and diesel trucks), partially offset by AIDC revenue growth. The bank pointed out that Weichai Power's gross margin expanded 1.5 percentage points year-on-year to 22.9%, and was 1.7 percentage points above the bank's expectation, possibly benefiting from an improved revenue mix (higher proportion of AIDC engines). AIDC diesel engine sales accelerated to approximately 1,300 units (versus 800 units in Q2 and 600 units in Q1); if growth continues in Q4, sales are expected to exceed the full-year target of 4,000 units. Net profit declined year-on-year, with reported net profit of RMB2.957 billion, down 9% year-on-year, slightly below market expectations, mainly due to one-off factors, but in line with the bank's estimate. In Q3, a fair value loss of approximately RMB390 million was recorded due to the decline in Ballard's share price; excluding this item, net profit would have risen approximately 3% year-on-year, broadly in line with market expectations.