Daily Investment Strategy
Daily focus：Weichai Power（2338）
Under Chairman Ma Changhai's leadership, Weichai Power is implementing a strategic transformation from pure hydrogen energy to comprehensive solutions including battery technology. The company focuses on four growth areas: battery technology, large-bore engines, export expansion, and aftermarket services. In 2024, large-bore engine business achieved breakthroughs with data center products growing 148%, while agricultural equipment exports reached 16,000 units, up 37% year-on-year. Financially, Weichai maintains a robust balance sheet with net cash equivalent to 50% of market capitalization and has increased its dividend payout ratio to 55%, offering approximately 6% yield. As China's heavy-duty truck engine market leader with 40% market share, analysts project 15% earnings CAGR for 2025-2027, positioning the company for a "dual breakthrough" in revenue and profit.
US new round of tariff effective soon
President Trump is set to announce his comprehensive “reciprocal tariffs” policy on April 2, 2025, which he has dubbed “Liberation Day.” The plan includes a 25% tariff on all imported vehicles and parts (effective April 3), with additional tariffs expected on countries with persistent trade surpluses with the U.S., potentially targeting Australia, Brazil, Canada, China, the EU, India, Japan, Mexico, South Korea, Russia, and Vietnam. Some economists project these tariffs could raise average U.S. tariff rates by 15 percentage points, significantly impacting inflation. The investment bank has revised its core PCE inflation forecast upward to 3.5% by year-end (from 3%), well above the Federal Reserve’s 2% target. Federal Reserve Chair Jerome Powell confirmed that “a significant portion of our elevated inflation projection is attributable to tariffs,” as they function essentially as a tax on imported goods that gets passed to consumers. For the auto industry specifically, these tariffs could inflate vehicle prices by $10,000 to $20,000 according to some estimates, exacerbating the already 20% increase in vehicle costs since the pandemic.
Hong Kong Stock Connect recorded a net inflow of HK$2.91bn on Monday, of which China Mobile (0941) recorded the largest net inflow of HK$810mn, followed by China Resources Gas (1193); Tracker Fund of Hong Kong recorded the largest net outflow of HK$4.76bn, followed by Hang Seng China Enterprises (2828).
Cheung Cho Shing, Joseph is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/ACQ030/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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