JPMorgan has released a research report announcing an increase in the target price for Weichai Power's H-shares (02338) from HK$40 to HK$52, and for its A-shares (000338.SZ) from RMB 38 to RMB 49. The firm maintains its "Overweight" rating on the stock, citing the company's transformation having reached measurable milestones. Additionally, the bank's valuation model now incorporates a higher-quality, higher-margin profit mix starting from 2027.

The report highlights that the primary incremental driver is expected to be margins. As the scale of Artificial Intelligence Data Centers expands and the roadmap broadens from backup diesel generators to primary natural gas engines and Solid Oxide Fuel Cells, Weichai Power's power and energy business is anticipated to claim a larger share of overall profits.

JPMorgan noted that although Weichai Power's shares have risen significantly year-to-date, outperforming the MSCI China Index, the increase still lags behind other AIDC and SOFC peers, indicating that the valuation reassessment is not yet complete. The bank's target price implies approximately 25 times forward price-to-earnings ratio. Considering the shifts in the company's growth profile, margin structure, and recurring revenue mix, JPMorgan views the current valuation as not excessive.