Weichai Power, ten years tenfold, how is it achieved?

Ask AI · How did Weichai Power turn around from the brink of bankruptcy into a global giant?

In the coming period, we plan to write a series of research articles on “ten-year, ten-bagger stocks,” aiming to explore the growth codes of mega enterprises and provide a reference for investment decisions.

The first company in this series we selected is Weichai Power, which has recently drawn significant attention.

Over the past decade, Weichai Power has achieved more than a tenfold increase in its share price. Its development path is driven by both breakthroughs in internal technology and external M&A—at its core, it is a microcosm of how China’s leading companies move toward becoming global giants.

A globalization strategy reflects a country’s overall strength. In past business courses, globalization case studies have mostly featured companies from developed countries such as those in Europe, the US, and Japan. We have reason to believe that more and more Chinese companies will appear in future classrooms.

01 The Three-Stage Growth Arc

As of March 30, 2026, Weichai Power’s closing price was 24.43 yuan, compared with the ten-years-prior adjusted closing price of 2.62 yuan, an increase of nearly 10x. Considering that the recent few weeks’ peak price had exceeded 30 yuan, this is undoubtedly a ten-year ten-bagger stock.

Chart: Weichai Power, ten-year ten-bagger

Judging from the company’s PE band, the current PE is 19.47x, placing it in a relatively overvalued range over the past decade. Within ten years, the PE fluctuation range has been roughly between 7x and 21x. Historically, after the PE breaks above 21x, it is often accompanied by a pullback in the stock price.

Chart: PE band over the past decade

Over the past decade, the company’s PE has risen in a volatile manner. Behind this is sustained high growth in performance. Operating revenue increased from 79.64B yuan in 2014 to 215.69B yuan in 2024, a rise of 1.7x; attributable net profit increased from 5.03B yuan to 11.4B yuan, a rise of 1.3x.

Its growth journey can be roughly divided into “three stages”:

1. From near bankruptcy to listing via mixed-ownership reform

Weichai Power began as a repair shop before the founding of the PRC, and in 1953 it was named the Weifang Diesel Engine Factory.

Before the 1980s, the company mainly produced medium- and small-power diesel engines, accumulating an initial technical foundation. In 1983, the company introduced Austrian Steyr WD615-series diesel engine technology, becoming a core power supplier for domestic heavy trucks and construction machinery.

In the 1990s, constrained by systemic ills commonly seen in state-owned enterprises—such as rigid bureaucracy and inefficiency—Weichai Power was once on the verge of bankruptcy in 1998.

When you’re out of options, you think of change. Under the leadership of Tan Xuguang, the company rolled out a series of reforms, becoming the fundamental turning point from “near bankruptcy” to “a global leader in power equipment.” It achieved a three-step leap: from “staying alive” to “growing stronger,” and then to “leading globally.”

The core of the reforms was to break down the “iron rice bowl,” rebuild a market-oriented mechanism, and reshape a culture of quality and execution. At the corporate strategy level, the company spun off bad assets, focused on its core business, explicitly stated “we will never touch real estate and we won’t engage in financial speculation,” and proposed “to make engines earn more than real estate.”

In 1998, Weichai Power held a “1,000-person quality conference,” demolished more than 100 defective engines. This is similar in spirit to Haier’s refrigerator-busting incident; it established authority by “smashing,” and rebuilt a quality culture.

In March 2004, Weichai Power listed in Hong Kong, becoming the first company in China’s internal combustion engine industry to list in Hong Kong. In 2007, the company returned to the A-share market through a share-swap absorption merger, becoming the first domestic company to achieve “H to A” dual listing via this route.

2. M&A integration and global expansion—building an industrial-chain powerhouse

In terms of product layout, Weichai Power is rooted in its diesel engine business. Through both internal technology R&D and external M&A—especially through its global expansion—it has already formed a diversified energy structure of “traditional power + clean power + new energy power.”

Its products cover multiple fields, from land to marine, and from powertrain assemblies to complete vehicles.

Even more remarkable is that Weichai Power’s success rate in overseas M&A is nearly 100%, breaking the “70/70 rule” in the industry (i.e., 70% of acquisitions fail to achieve the expected value, with 70% due to integration failure).

Weichai Power’s high M&A success rate can be attributed to the following:

First, it has consistently focused on the industrial chain and has not done unrelated diversification. Acquisition targets are mostly aimed at filling technical gaps and have not deviated from the core track of “power equipment.” For example, in 2012, it reorganized the KION Group to enter forklifts and intelligent logistics; in 2022, it reorganized Lovol Heavy Industry to布局 agricultural equipment.

Second, it has taken positions in a counter-cyclical manner, entering at low cost. For example, during the 2009 global financial crisis, the company acquired France’s Baudouin for 2.99 million euros, at a price that was only one-tenth of the assessed value.

Third, R&D underwrites with in-house capabilities to ensure technology digestion and reinvention. Technology is the root difference between manufacturing companies and technology-based enterprises. The purpose of M&A is not simply to adopt a “copy-and-paste” approach, but to use, digest, and surpass based on existing technological foundations. Each year, the company sends 200 Chinese engineers to study overseas, while also localizing and modifying 300 overseas technologies.

Fourth, it combines globalization with localization and deeply binds interests. The localization rate of management teams at overseas subsidiaries reaches 89%. The company retains core members from the original teams, avoids “parachute-style” control, and complements this with equity incentives—effectively unleashing employees’ initiative and drive.

3. Full-scale new energy deployment

Weichai Power started with diesel engines, but amid the wave of new technologies, its strategic layout has quietly extended.

As AI computing power develops rapidly and the lack of electricity supply at data centers becomes increasingly prominent, energy storage and diesel engine-based power for AIDC have become the data centers’ most core backup power source. This trend has also become an important driver behind Weichai Power’s recent share price rise.

In the power battery sector, in May 2023, the company jointly invested with BYD to develop batteries for heavy-duty trucks. In March 2025, the first batch of battery products rolled off the production line at Weichai Verde (Yantai) New Energy Power Industrial Park, and the first-phase project officially commenced production.

In the fuel cell sector, in May 2018 the company acquired 20% of Ceres Power’s shares. In February 2023, it released the world’s first commercialized high-power metal-supported solid oxide fuel cell product. In November 2025, it signed a manufacturing license agreement with Ceres, planning to build a stack production line for the stationary power generation market. The products will be applied in scenarios such as AI data centers, commercial buildings, and industrial parks.

From diesel engines to new energy, Weichai Power’s technology map is expanding in an orderly way.

02 Financial Performance and Growth Logic

From the revenue structure perspective, Weichai Power continues to extend within the industrial chain. Its main businesses come from three major segments: heavy-duty trucks, smart logistics, and agricultural equipment.

Among them, heavy-duty trucks and agricultural equipment show strong cyclical characteristics; smart logistics grows steadily; and businesses such as new energy have gradually started to ramp up since the first half of 2025.

Chart: Product revenue composition, unit: 100 million yuan

Looking at attributable net profit, 2022 was the performance low point, mainly due to headwinds in the heavy-duty truck business. In the trough of the industry, the company did not passively contract; instead, it increased investment in areas such as new energy, high-end hydraulic systems, and intelligent logistics. Starting in 2024, capital expenditures have accelerated significantly, with key focus on a two-track technology layout advancing both hydrogen fuel and pure electric.

Chart: Both revenue and net profit show a certain level of cyclicality, unit: 100 million yuan

Chart: Capital expenditures accelerating since 2024, unit: 100 million yuan

In recent years, the company’s gross margin on sales has remained stable between 19% and 22%, while the selling expense ratio has stayed around 5% to 6%. Since 2024, it has dipped slightly.

Chart: Sales gross margin, net profit margin, ROE, unit: %

The management expense ratio ranges between 3.96% and 5.4%. The 25Q3 report shows that the year-on-year growth in management expenses is notable, related to the efficiency plan of the KION Group. In the 2025 fiscal year (January 1, 2025 to December 31, 2025), the company needs to accrue a one-time expense of approximately EUR 240 million to EUR 260 million (about 1.87 billion to 2.03 billion yuan RMB).

This spending is mainly used for:

•Europe organizational structure optimization: including severance compensation, factory layout adjustments, etc.

•Technology upgrade investments: such as integrating AI automation technology

•Supply-chain efficiency improvement: optimizing logistics and inventory management

Weichai Power’s R&D expense has long remained at a level around 3.6% of operating revenue.

From the company’s operating cycle perspective, in recent years, the number of days for deposits and accounts receivable turnover has, compared with before 2021, been extended to some extent.

Overall, since 2024 the company has accelerated its expansion, with its focus concentrated on a two-track layout in hydrogen energy and pure electric. According to consistent forecasts from institutions, in 2026 the company’s revenue and net profit are expected to grow by about 7% and 15%, respectively. In 2027, they are expected to grow by about 6.6% and 11.7%, respectively.

03 Valuation and Market Expectations

As of March 30, 2026, Weichai Power’s market cap was 212.8 billion yuan, with a PE of 19.4x. Based on the company’s net profit growth rate and ROE, the current PEG is 0.73x and the price-to-sales ratio is 1.48x.

On a horizontal comparison, the current PE in the construction machinery and heavy truck industry ranges from 12x to 45x. If we combine 2026 earnings expectations, the expected PE values range from 11x to 32x, with most companies clustered around 15x PE. Weichai Power is roughly at the industry average level.

From the PEG indicator, the company is undervalued to some degree. The market’s consistent expectations for its business highlights concentrate on new energy segments such as SOFC and natural gas heavy-duty trucks, as well as AIDC data centers’ back-up power field. The current and past ROE levels are not particularly high, and the price-to-earnings sales multiple is at a slightly higher level within the industry. For future new energy business to generate stronger scale and profitability, it needs to ramp up. In recent years, the company’s dividend payout ratio has been maintained at around 50%, and the dividend yield TTM is 2.66%. The market still prices it using the logic of a growth stock.

Considering the update cycle of heavy-duty trucks, based on monthly sales, 2018 to the first half of 2021 were the peak period for heavy-truck sales. Using an 8-year replacement cycle, it is expected that the replacement cycle will start to roll out from 2026. Starting in 2025, the acceleration of the phase-out of China IV emission standard vehicles will coincide with the industry’s demand for updates. Therefore, it is expected that the company’s traditional businesses will still have some performance upside.

Overall, over the past year the company’s share price has accumulated a relatively high rise, to some extent pricing in future share price expectations in advance.

Chart: Valuation status of some listed companies in the construction machinery and heavy truck industry as of March 4, 2026

There is no doubt that Weichai Power is a jewel in China’s industrial system and a witness to China’s enterprises deeply participating in the globalization process. Under the leadership of the first generation of leaders, the company has established a relatively complete corporate governance and M&A integration system. The future development is worth期待, and the key consideration factor is the current match between price and value.

This article is written based on publicly available information, and is only for information exchange purposes; it does not constitute any investment advice.