UBS is bullish on China heavy truck demand in the April peak season and reiterates Buy ratings on Sinotruk A/H

Overview

This report focuses on April 2026 peak-season demand in China’s heavy truck industry and earnings expectations for major companies in 1Q26. UBS believes that replacement subsidies implemented since late March have driven a demand recovery, declining LNG prices have improved usage economics, logistics customers have begun trying 513 kWh new-energy heavy trucks, and export orders remain at high levels, further strengthening industry conditions during the peak season.

Core views

The core view is that China’s heavy truck industry has strong short-term sales momentum, with exports, LNG heavy trucks, and electric heavy trucks as the key highlights. The report expects industry sales of about 150,000 units in April, up more than 70% YoY; March industry wholesale sales had already risen 25% YoY to about 139,000 units, of which exports rose 51% YoY. At the company level, UBS is more positive on Sinotruk A/H benefiting from export growth and improved cost efficiency, and reiterates Buy ratings; Weichai Power is supported by KION and data center engine businesses, but margins in the traditional engine business remain under pressure; Yutong Bus may see a YoY profit decline in 1Q due to a high base from last year’s non-recurring impairment reversals.

Analysis framework

The report draws conclusions by combining dealer feedback, monthly wholesale sales, domestic registrations, powertrain mix, export data, company market share, and 1Q earnings estimates, and uses valuation methods such as sum-of-the-parts, PE, and DCF depending on the company in the valuation section.

Methodology notes

• Industry conditions trackingDealer feedback and monthly sales validation

  Use end-market feedback, wholesale sales, domestic registrations, and export orders to cross-check demand strength.

  The report confirms through dealer feedback the impact of replacement subsidies, LNG prices, and trial use of new-energy heavy trucks on demand, and then uses March sales and the April forecast to validate the recovery trend in the peak season.

• Valuation methodPE valuation method

  Derive the target price using a price-to-earnings framework.

  The report states that Sinotruk A/H target prices are based on the PE valuation method, with major risks centered on industry sales, LNG heavy truck quality, engine supply, and the pace of earnings improvement.

• Valuation methodSum-of-the-parts valuation

  Value different business segments separately and then add them up.

  The report states that Weichai A/H target prices are based on a sum-of-the-parts valuation, taking into account the different earnings and valuation characteristics of commercial vehicle engines, KION, and other businesses.

• Valuation methodDCF valuation method

  Derive the target price by discounting future cash flows.

  The report states that Yutong’s target price uses the DCF method, with risks mainly coming from new-energy bus orders, exports, raw material prices, and trade protection.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sinotruk A/H (000951.SZ/3808.HK)

  Core recommended target

  Strengths

  High export growth, leading March market share, and lower costs plus improved efficiency may drive earnings growth.

  Weaknesses

  Domestic sales still face year-over-year pressure, and some businesses are affected by engine supply and LNG heavy truck quality.

  Comparison

  The report expects Sinotruk A-share 1Q net profit to rise 30%-50% YoY, outperforming some peers.

  Risks

  Heavy truck industry sales falling short of expectations, LNG heavy truck quality issues, and Weichai Power engine supply affecting shipments of in-house engines.

• Weichai Power A/H

  Beneficiary target in the heavy truck value chain

  Strengths

  Commercial vehicle internal combustion engine sales rose 29% YoY in March, while KION and data center engine businesses support earnings.

  Weaknesses

  Traditional engine margins are under pressure.

  Comparison

  The report expects 1Q net profit to rise nearly 20% YoY to about RMB 3.2 billion.

  Risks

  Heavy truck sales below expectations, FAW Jiefang adopting more in-house engines leading to share loss, and product quality risks in the China VI stage.

• Yutong Bus

  Related commercial vehicle company

  Strengths

  Growth in bus exports may offset part of the mild decline in domestic demand.

  Weaknesses

  Last year’s non-recurring impairment reversals created a high base, and 1Q net profit is expected to decline 5%-10% YoY.

  Comparison

  Compared with Sinotruk and Weichai, short-term earnings momentum is weaker.

  Risks

  New-energy bus orders below expectations, exports below expectations, high battery and raw material prices, and rising tariffs due to global trade protection.

• China heavy truck industry

  Industry allocation backdrop

  Strengths

  Replacement subsidies, improved LNG economics, higher electric heavy truck penetration, and high export orders are jointly supporting demand.

  Weaknesses

  The industry is highly cyclical, and demand is heavily affected by the macro environment and construction project progress.

  Comparison

  Wholesale sales in March 2026 rose 25% YoY, while export and electric heavy truck growth outpaced the industry average.

  Risks

  Economic growth deviating from expectations, changes in infrastructure project completion timing, changes in environmental standards and traffic restriction policies, and changes in logistics industry fundamentals.

Key data

• Forecast for China heavy truck sales in April 2026150k unitsUBS expects YoY growth of more than about 70% and MoM growth of about 10%.
• China heavy truck wholesale sales in March 2026138,946 units; +25% YoY; +89% MoMSales rebounded significantly during the March peak season.
• China heavy truck sales in 1Q26317,851 units; +20% YoYGrowth in electric heavy trucks and exports exceeded the industry average.
• Heavy truck exports in March 202641,691 units; +51% YoYMonthly exports exceeded 40,000 units for the first time.
• LNG heavy truck sales in March 202631,952 units; +48% YoYA wider diesel-LNG price spread improved the economics of LNG heavy trucks.
• Electric heavy truck sales in March 202620,404 units; +36% YoYDomestic electric heavy truck penetration was about 23%.
• Sinotruk March exports18,503 units; +61% YoYGrowth outpaced industry export growth.
• Sinotruk 1Q exports48,616 units; 48% market shareExport share remained in a leading position.

Impact & implications

If April sales reach about 150,000 units as expected, it would strengthen market confidence in the recovery of China’s heavy truck industry and the resilience of exports. For investment, Sinotruk A/H benefits more directly because of its strong performance in exports and heavy truck vehicle market share; Weichai Power is supported by the recovery in industry demand but pressure on traditional engine margins needs to be monitored; Yutong Bus is more affected by bus exports and last year’s high base.

Risks

• China’s heavy truck industry is cyclical, and the strength of macroeconomic growth may significantly affect sales.
• If the pace of construction project completion is faster or slower than expected, it will affect the release of heavy truck demand.
• Changes in policies such as environmental standards, heavy truck traffic restrictions, and replacement subsidies may alter the demand pace.
• Changes in logistics industry fundamentals will affect long-haul transport and heavy truck purchasing demand.
• LNG heavy truck quality, engine supply, raw material prices, and trade protection may all affect the earnings of related companies.

What to watch

• Whether China heavy truck sales in April reach about 150,000 units.
• The sustained pull-through effect after replacement subsidies were implemented from late March.
• Whether the price spread between LNG and diesel continues to support LNG heavy truck demand.
• Acceptance of 513 kWh new-energy heavy trucks among express delivery and logistics customers, and penetration in long-haul logistics.
• Whether heavy truck export orders remain at high levels in April and beyond.
• Sinotruk’s export share, domestic sales, and progress in profitability improvement.