Introduction to this report:
As a leading construction machinery company, the company has formulated a “double improvement in quality and return” action plan to highlight the company's own strength, enhance investor confidence, and is optimistic about the company's overseas market expansion in 2024 to drive performance growth.
Key points of investment:
Investment advice: The company formulates a “double improvement in quality and return” action plan. The five major action plans highlight the company's strength, enhance investor confidence, and are optimistic that the company's overseas market expansion will drive the company's performance growth.
Maintain the 2023-25 EPS of 0.40/0.59/0.72 yuan. Refer to comparable companies, give the company 15.70 times PE in 2024, raise the target price to 9.26 yuan, and increase its holdings.
The five major action plans highlight the company's strength and enhance investor confidence. 1) Improve and strengthen advantageous businesses, accelerate the development of emerging momentum, and build a new global business format; 2) Adhere to scientific and technological innovation and high-intensity R&D investment, and continue to advance to the upper end of the global value chain; 3) Accelerate the development of new quality productivity, continuously improve total factor productivity, enable intelligent manufacturing upgrades, and create a new situation of green development; 4) Focus on investor relationship management to effectively deliver company value; 5) Excellent cash dividends and share repurchase policies to share development results with all shareholders and continue to return investors.
A new round of large-scale equipment updates will drive the steady growth of the construction machinery industry. On February 23, the fourth meeting of the Central Committee on Finance and Economics was held. It was proposed to promote a new round of large-scale equipment renewal and trade-in of consumer goods, reduce logistics costs for the whole society, and improve the efficiency of economic operation to promote high-quality development. It will directly expand the market demand of the construction machinery industry, and construction machinery will usher in a new round of equipment renewal demand. We expect the domestic construction machinery industry to recover in 2024.
The growth rate of construction machinery exports has not abated, and high-value categories are an important breakthrough. According to statistics from China's General Administration of Customs, in 2023, China's construction machinery exports reached US$48.66 billion, an increase of 10.4% over the previous year, and domestic construction machinery companies sped up overseas. Large-scale mining equipment and electrification equipment with high entry thresholds and high profit margins may be the next incremental breakthrough in export sales. As an industry leader, the company is expected to lead the industry trend.
Risk warning: Demand for cranes and concrete machinery falls short of expectations, and overseas market expansion falls short of expectations.