Kingwu Finance News | HSBC issued a research report stating that in September this year, the wholesale volume of heavy-duty truck industry continued to decline. Industry sources indicate that it is expected that the domestic sales volume of heavy trucks in China will decrease by 46% year-on-year, mainly due to weak domestic demand and slow implementation of subsidy policies. In addition, many provinces in the mainland did not announce specific guidance until the end of September, delaying renewal demand until the fourth quarter of this year. Therefore, the bank has revised down its forecast for China's heavy truck sales from 1 million vehicles to 0.905 million vehicles this year, meaning domestic sales growth in the fourth quarter of this year will be 14%; export sales growth will be 1%.

The bank stated that the narrowing gap between liquefied natural gas and diesel prices in China, and the exclusion of liquefied natural gas heavy-duty truck engine replacement from the updated subsidy policy, will reduce the upgraded rate of liquefied natural gas heavy-duty truck engines from 35% to 27% this year. Therefore, the bank has lowered the profit forecasts of Weichai Power (02338) and Sinotruk (03808) by 2% respectively.

The bank further pointed out that considering Weichai Power's diversified business to streamline the heavy truck cycle, inclusion in multiple stock indices, attractive valuations even after rebound, and strong dividend payment performance, they still bullish on Weichai Power's performance. The bank also believes that Sinotruk's valuation is reasonable, and any improvement in heavy truck sales, performance, and stimulus plans in the fourth quarter of this year will be a catalyst for the next stock price. The bank has lowered Weichai Power's H-share target price from HK$19 to HK$17.5, maintaining a "buy" rating; and raised Sinotruk's target price from HK$21 to HK$22.