Another giant announced! The subsidiary plans to IPO in Hong Kong, focusing on the new track of 100 billion!

Recently, Weichai Power announced that it plans to split its subsidiary Weichai Leiwo Smart Agricultural Technology Co., Ltd. (hereinafter referred to as "Weichai Leiwo") and list on the main board of the Hong Kong Stock Exchange. This is the second time in recent years that Weichai Power has promoted Weichai Leiwo to enter the capital market. After more than a year of failure in the GEM, Weichai Leiwo “transferred” to the Hong Kong Stock Exchange.

Behind the IPO in Hong Kong, Weichai Revo has performed well in recent years. The prospectus shows that from 2022 to 2024, the company's revenue was RMB 15.95 billion, RMB 14.676 billion and RMB 17.393 billion, respectively, with agricultural machinery sales revenue accounting for 98.7%, 98.8% and 98.8% respectively; net profit was RMB 772 million, RMB 871 million and RMB 957 million, respectively.

In June 2022, Weichai Power acquired Lewo Heavy Industry and was renamed "Weichai Lewo Smart Agricultural Technology Co., Ltd." in August of the same year. As a smart agricultural machinery and equipment enterprise under Weichai Power, this split will help Weichai Levo further optimize its governance structure and innovative ecological mechanism, use the raised funds to increase investment in scientific and technological innovation, and focus on the two strategic businesses of smart agricultural machinery and smart agriculture.

The importance of agricultural machinery can be seen from its writing to the Central Document No. 1 for many years. The Central Document No. 1 in 2025 emphasizes stabilizing the grain planting area and increasing yields, and clearly states that "support the development of smart agriculture and expand technical application scenarios such as artificial intelligence, data, and low altitudes." These measures indicate an increase in the total demand for agricultural machinery and the upgrading of demand for more advanced and intelligent agricultural machinery.

Cross-border agricultural machinery, a new growth pole in the downward cycle

In contrast, engineering machinery, with the intensification of industry competition and market saturation in recent years, many companies have begun to seek new growth points, and the agricultural machinery industry has undoubtedly become a highly anticipated cross-border field.

In 2011, Zoomlion Heavy Industry established Zoomlion Agricultural Machinery Co., Ltd., and in 2014, it acquired Chery Heavy Industry, firing the first shot in the construction machinery industry to enter agricultural machinery. Next, Railway Construction Heavy Industry in 2015, Liugong in 2016, XCMG in 2020, andIn the field of agricultural machinery manufacturing, new business sectors have been added one after another, and have entered the field of agricultural machinery.

The cross-border agricultural machinery leading enterprises in engineering machinery is not an impulse, but based on multi-faceted considerations.

In recent years, the country's high attention to agriculture has been obvious to all. It has invested real money and began to consciously guide all kinds of capital into the agricultural field. The "14th Five-Year Plan" has clearly listed the upgrading of agricultural machinery and equipment as the focus. Coupled with the acceleration of land transfer and the aging of rural labor, the agricultural machinery market ushered in a new cycle of development.

Construction machinery and agricultural machinery have certain commonalities in technology and manufacturing, such as steel frames, boom transmissions and general technologies. Forklifts, excavators and other engineering machinery equipment are themselves derived from tractors. Therefore, engineering machinery companies have obvious advantages in technology accumulation, production capacity and sales channels, and cross-border agricultural machinery helps to achieve resource sharing and complementary advantages.

In addition, Zoomlion Heavy Industry acquired Chery Heavy Industry and became a leader in the agricultural machinery industry after more than ten years of hard work, giving other companies a sample, allowing engineering machinery giants to see the possibility of successful replication in the agricultural machinery field. In the downward cycle of the industry, entering the agricultural machinery industry has become a new growth point found by major giants in the downward cycle of confrontation, and it is also their outward exploration in a red ocean where the competitive landscape of engineering machinery is solidified.

However, crossing the border is not an easy task. There are significant differences in market demand, product characteristics, user groups, etc. of agricultural machinery and engineering machinery industries. The characteristics of the agricultural machinery market "small scale, low profits, and solidified pattern" are completely different from the "large projects and high gross profit" ecology of engineering machinery. By entering agricultural machinery across borders, engineering machinery companies will inevitably face a new market environment that is completely different from their comfort zone. While bringing new development opportunities to the industry, it will also bring certain challenges and uncertainties.

Policy supports it, and another 100 billion new track

As a major focus in developing new quality productivity, smart agriculture has become the focus of support for national industrial policies in recent years.

Made in China 2025 proposes that agricultural machinery and equipment will develop towards intelligent and advanced manufacturing with information technology as the core; the "14th Five-Year Plan for National Agricultural Mechanization Development" points out that it is necessary to vigorously promote the adaptation of mechanization and intelligent information technology and lead and promote the innovative development of agricultural machinery and equipment; in 2024, the agricultural machinery subsidy policy will gradually tilt towards intelligent models, and the subsidy for power shift tractors will increase by nearly 100%; the "Guiding Opinions on Vigorously Developing Smart Agriculture" clearly states that by 2030, the informatization rate of agricultural production will reach 35%, and by 2035, it will exceed 40%.

With the continuous development of technologies such as the Internet of Things, big data, artificial intelligence, and the continuous support of policies, the scale of China's smart agriculture market has maintained a rapid growth trend. According to data from China Business Industry Research Institute, the scale of China's smart agriculture market exceeded 100 billion yuan in 2024, reaching about 105 billion yuan, and is expected to reach 120 billion yuan in 2025.

The "smart agriculture" track targeted by Weichai Revor is attracting the attention of the entire industry with its potential of a scale of 100 billion. While frequently entering the construction machinery companies will bring about a new competitive landscape, they will also promote the acceleration of technological innovation in the agricultural machinery industry, intensify market competition, and accelerate industry integration. For the industry, the "competition and cooperation" between engineering machinery giants and old agricultural machinery companies may accelerate China's smart agriculture to the forefront of the world.

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