Weichai Power (000338.SZ): Generac's generator supply agreement with Amazon strengthens long-term visibility; reiterate Buy

Generac (GNRC, not covered), a global leader in backup power systems and a key US partner of Weichai Power (via Baudouin-branded large diesel engines), announced a long-term back-up generator supply agreement with Amazon after market close on September 16 (US local time). Per the deal terms, Generac issued Amazon a warrant to purchase up to 1.69 million shares at $200.93/share, with 307,954 shares vesting upfront and the remainder vesting in tranches tied to up to $8bn of aggregate payments from Amazon and its affiliates for backup generators used in Amazon data centers. Alongside the warrant, the parties signed a long-term supply agreement, with initial generator deliveries expected to total $2.4bn in 2027-28. We see positive implications for Weichai Power: the initial $2.4bn deliveries look substantial versus the $1.6bn data center backlog Generac had coming out of 2Q and 5x+ the company's FY26 data center revenue guidance of $450mn;