Weichai Power Co.,Ltd. (000338) has released its first-quarter report for 2026. The company reported revenue of 62.6 billion yuan, representing a year-on-year increase of 9%. Net profit attributable to shareholders reached 3.09 billion yuan, up 14% compared to the same period last year. After excluding non-recurring gains and losses, the net profit was 2.99 billion yuan, a significant increase of 20% year-on-year.

The first-quarter revenue growth aligns with the full-year incentive target expectations. Revenue for the first quarter of 2026 was 62.6 billion yuan, up 9% year-on-year and 2% quarter-on-quarter. This performance corresponds to a 20% year-on-year increase and a 1% quarter-on-quarter decrease in the industry's wholesale sales of heavy-duty trucks. The company's revenue incentive target for 2026 requires approximately 9% year-on-year growth, making the Q1 performance consistent with expectations.

Weichai Power maintained its leading position in the engine market, with total engine sales reaching 221,000 units in the first quarter. The new energy power business experienced rapid growth, with revenue from new energy power systems surging to 1.69 billion yuan, a remarkable increase of approximately 200% year-on-year.

The power energy segment remains a core driver of the company's growth. Sales of power energy products exceeded 30,000 units in Q1 2026, a 21% increase year-on-year. Sales of the M-series large-bore engines surpassed 3,000 units, also up 21% compared to the prior year. Within this category, sales of products used for data center power generation exceeded 500 units, marking a surge of over 240% year-on-year. For the full year of 2025, sales of this product category reached approximately 1,400 units, a 259% increase, indicating it has entered a phase of scaled volume expansion.

First-quarter profits were in line with forecasts. The net profit attributable to shareholders of 3.09 billion yuan increased by 14% year-on-year and 50% quarter-on-quarter. The adjusted net profit saw a 20% year-on-year and 77% quarter-on-quarter rise. The total profit margin was 7.8%, improving by 2.4 percentage points year-on-year and 1.9 percentage points quarter-on-quarter. The full-year 2026 incentive target for the profit margin is 9%.

A detailed breakdown shows: 1) Gross margin stood at 21.4%, down 0.8 percentage points year-on-year but up 1.2 percentage points quarter-on-quarter. The year-on-year decline was influenced by price promotions, while the low base in Q4 2025 was due to significant rebate expenditures. 2) The period expense ratio was 13.2%, decreasing by 2.7 percentage points year-on-year and 1.0 percentage points quarter-on-quarter. Specifically, the sales expense ratio was 4.8%, the management expense ratio was 4.6%, and the financial expense ratio was 0.6%. The increase in financial expenses was primarily attributed to exchange losses caused by the depreciation of the Euro. 3) Total impairment losses amounted to -480 million yuan, a reduction of 90 million yuan year-on-year but an increase of 150 million yuan compared to the previous quarter. 4) Income tax expense was 900 million yuan, an increase of 590 million yuan year-on-year and 100 million yuan quarter-on-quarter.

The AIDC (AI Data Center) business continues to achieve breakthroughs, exceeding expectations once again. In 2025, sales of the company's large-bore engines surpassed 11,000 units, a 32% year-on-year increase. Notably, sales of engines applied as backup power sources for AIDCs reached 1,400 units, a 2.6-fold increase. Regarding technological reserves, the company successfully launched the world's first 5MW-class high-speed diesel power generation product, the 20M61, which leads the industry in power density per liter. In November 2025, Weichai Power further strengthened its collaboration with a UK-based partner, achieving a full industry chain layout encompassing SOFC cells, stacks, and systems. The company is currently accelerating the construction of production lines for cells and stacks, with potential for large-scale application in AIDC primary power systems in the future.

Investment risks include macroeconomic conditions falling below expectations, slower-than-expected overseas economic growth, potential natural gas price increases exceeding forecasts, and delays in the implementation of emission standard-related policies.