Shares of Weichai Power Co.,Ltd. (HKEX: 02338) have risen more than 5%. At the time of writing, the stock was up 4.97% to HK$39.74, with a trading turnover of HK$72.96 million.

Catalyst for the Move

A recent research report from Morgan Stanley highlighted that the progress of Weichai Power's primary power source, the gas turbine, is ahead of schedule. The first product is now expected to be launched by the end of June 2026, with customer validation also moving forward. Consequently, initial small-batch deliveries, originally slated for the fourth quarter, are anticipated to be brought forward to the third quarter of 2026.

Projected Volumes and Strategy

The investment bank forecasts shipments of at least 200 units in 2026, with a sharp increase to 1,000 units projected for 2027. The company's pricing strategy is reportedly 5% to 10% lower than mainstream competitors, aiming to capture market share.

Expanding Production Capacity

On the capacity expansion front, Weichai Power's production capacity for AIDC engines is expected to reach 5,000 units by 2026. This is set to expand further to between 8,000 and 10,000 units in 2027, including overseas capacity, to meet persistently strong market demand.

Investment Rationale

Morgan Stanley views the recent pullback in Weichai Power's share price as creating a buying window. The core investment thesis is based on the anticipated explosive growth of its AIDC backup power and main gas engine businesses, alongside the potential for solid oxide fuel cell (SOFC) technology to exceed expectations.