HSBC Research expects the heavy truck sector in mainland China to thrive in the first half of this year, optimistic about Weichai Power and SINOTRUK

HSBC's research report indicates that the heavy-duty truck (HDT) sector in mainland China is expected to remain stagnant in the first half of this year until catalysts emerge in the second half of 2026. Although the bank has raised its 2026 heavy-duty truck sales forecast from 980,000 units to 1.05 million units based on the continuation of subsidy policies, it still expects an annual decline of 8% (excluding National I vehicles), particularly considering the low base of National IV vehicle stock; domestic sales are expected to decline by 13% year-on-year.

However, the bank holds a positive outlook on domestic sales for 2027 to 2028, expecting growth in the mid-teens to 800,000 to 900,000 units, due to the implementation of relevant catalysts, including the revision of the GB1589 standard and the National VII emission standards.

The bank is optimistic about Weichai Power (02338.HK), based on its exposure to AIDC generators and the low base effect of its subsidiary Kion, raising Weichai Power's H-share target price from HKD 21.4 to HKD 25.8, and its A-share target price from RMB 20.4 to RMB 24.3, maintaining a "Buy" rating.

At the same time, the bank is also optimistic about SINOTRUK (03808.HK) due to its export dominance and potential catalysts in the second half of 2026. Based on higher heavy-duty truck sales forecasts, the target price has been raised from HKD 27.2 to HKD 34, maintaining a "Buy" rating. For the first half of this year, the bank prefers Weichai Power over SINOTRUK; while for the second half, it holds a constructive view on both