Daiwa Hikes Weichai Power Target 67% to HK$40 on AI Demand

Daiwa Raises Weichai Target 67% Citing AI Power Demand

On March 3, Daiwa raised its price target for Weichai Power (02338) by 67% to HK$40, up from a previous target of HK$24. The investment bank reaffirmed its "Buy" rating, signaling strong confidence in the company's growth trajectory. This upgrade stems from Weichai's improved visibility in capturing a larger share of the global power generation market, specifically driven by the escalating power needs of AI Data Centers (AIDC). Daiwa has positioned Weichai Power as a top pick since late 2025, viewing it as a primary beneficiary of this powerful technological trend.

Engine Business Valuation Boosted by AIDC Outlook

The significant price target adjustment is underpinned by a change in Daiwa's valuation methodology. The bank now applies a higher 12x enterprise value multiple to Weichai's core engine business, reflecting the high-growth potential linked to AIDC infrastructure. In contrast, the valuation for its auto parts and agricultural equipment segments remains at a 9x price-to-earnings ratio. Alongside the valuation change, Daiwa has also slightly increased its revenue forecasts for Weichai by 1% for the 2026-2027 period, anticipating a re-rating of the stock as the market recognizes its pivotal role in the AI supply chain.