On the evening of December 24, Weichai Power (SZ000338, share price: CNY 17.55, market cap: CNY 152.9 billion) announced that it received a letter from its controlling shareholder, Shandong Heavy Industry Group Corporation (Shandong Heavy Industry), proposing to extend the fulfillment period of its non-competition commitment by another five years.
The issue dates back to 2019 when Shandong Heavy Industry acquired control of China National Heavy Duty Truck Group (Sinotruk Group) through equity transfers and entrusted management. This created overlapping heavy-duty truck operations between Weichai Power and certain subsidiaries of Sinotruk Group.
In early 2021, Shandong Heavy Industry made a formal commitment to "resolve the competition issue within five years." According to the latest announcement, Weichai Power received Shandong Heavy Industry's letter requesting a five-year extension to fulfill this commitment.
The origin of this competition traces to September 2019, when Jinan SASAC transferred 45% of Sinotruk Group's equity to Shandong Heavy Industry. By December that year, Shandong Heavy Industry officially gained control of Sinotruk Group through additional transfers and entrusted shares.
Notably, both Weichai Power (through subsidiaries like Shaanxi Heavy Duty Automobile Co.) and Sinotruk Group operate mature heavy-duty truck businesses, creating operational overlaps.
To protect listed company interests, Shandong Heavy Industry issued a Non-Competition Commitment on February 1, 2021, pledging to "implement feasible solutions within five years" to resolve competition between Sinotruk Group subsidiaries and Weichai Power's operations.
In a May 2021 announcement, Shandong Heavy Industry further committed to addressing business overlaps within five years through regulatory-compliant methods, considering industry characteristics and market conditions.
However, with the five-year deadline approaching, the commitment remains unfulfilled. Weichai Power's announcement cited multiple challenges: the competition stems from state-owned asset transfers, involves multiple listed entities across Shenzhen and Hong Kong, spans different provincial regulators, and faces complex market and regulatory hurdles.
Weichai Power emphasized that the extension doesn't constitute commitment withdrawal or exemption, complies with regulatory requirements, and won't impact normal operations or harm shareholder interests.
Separately, Weichai Power's core heavy-truck asset, Shaanxi Heavy Duty Automobile, faces production certification transfer difficulties. While Shaanxi Automobile Group pledged to facilitate the certification transfer, director Yuan Hongming disputed the commitment's validity, citing unsuccessful regulatory approvals and legal restrictions on production license transfers. Other board members maintain the commitment remains legally binding, highlighting historical complexities surrounding this key asset.
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