As a leader in the domestic mining equipment and logistics equipment industry, it has maintained a growing trend for many years, proving to the market its growth and ability to cross the cycle.
The current external environment is still uncertain, and most companies have not fully recovered at the operating level. For the current Hong Kong stock market, the long-term logic behind a target is increasingly being tested.
For example, Sany International (0631.HK), as a leader in the domestic mining equipment and logistics equipment industry, has maintained a growth trend for many years, proving to the market its growth and ability to cross the cycle. Meanwhile, with the newly announced 2023 results, on the basis of continued growth, emerging businesses are also gradually freeing up huge room for imagination.
The high-quality development behind the overall growth of core indicators
According to the announcement, in 2023, Sany International achieved operating income of 20.3 billion yuan (RMB, same unit), an increase of 31% year on year; net profit due to mother during the same period was 1.93 billion yuan, up 16% year on year. Net profit to mother after excluding dividends and acquisitions was 2.04 billion yuan, an increase of 23% year on year.
(Photo source: Public Information)
As can be seen, the core performance indicators have all achieved high double-digit growth, and have continuously broken through record highs in recent years.
Looking back at 2019 to 2023, it is calculated that the CAGR (compound annual growth rate) of the company's operating income reached 26%; the CAGR of net profit to mother reached 17%. This can show that Sany International's long-term and firm strategic layout has delivered excellent business results, and also indicates future growth potential.
More importantly, Sany International's performance growth is becoming more and more solid, showing high-quality development.
In 2023, the company's gross margin reached 27%, an increase of 3.5 PP over the previous year; the most important indicator for value investors, ROE was 17.68%. Since 2017, it has been showing a steady upward trend.
At the same time, the company's inventory turnover rate continued to rise from 3.86 times at the end of 2022 to 4.08 times, reflecting the improvement in inventory management standards, and the operating capacity is constantly improving.
(Photo source: Public Information)
In terms of R&D investment, the company's share of R&D expenses increased to 8.3%. In particular, R&D investment in emerging businesses increased by nearly 50%. Sany International continues to innovate around intelligent, electrified, and international products, while maintaining a forward-looking vision for emerging fields. In the long run, R&D investment will be transformed into an endogenous driving force for future growth.
Therefore, the overall progress of the above data is inseparable from the company's long-term pursuit of high-quality development goals and exploring new possibilities at the business level. As such, the ceiling for growth of Trinity International is constantly being raised.
Dual core driving force drives value increase
What is the core driving force behind Sany International being able to hand over such a high-quality performance report card? The author believes that it is specifically reflected in the following three aspects, and it is also the long-term logic behind Sany International's potential for development.
1. “mining equipment+logistics equipment” two-wheel drive
In 2023, the mining equipment business achieved revenue of 11.8 billion yuan, an increase of 19% over the previous year; the logistics equipment business achieved revenue of 5.8 billion yuan, an increase of 26% over the previous year.
The steady performance of these two major sectors of business is closely related to Sany International actively grasping the industry's electrification and intelligence trends, promoting product innovation and iteration, and seizing the downstream equipment replacement cycle. As related products continue to penetrate the market, it has led to a significant increase in revenue and orders.
In terms of mining equipment, overall sales reached 13 billion yuan, of which sales of mining vehicles exceeded 5 billion yuan for the first time, and Sany International has become the largest supplier of mining vehicles in China.
In terms of logistics equipment, the market share of Xiaogang Electric's front cranes and forklifts increased to 68% and 67% respectively, maintaining its leading position in the market; Dagang Electric signed 2.64 billion orders last year, reaching a record high, providing strong support for the certainty of subsequent revenue growth.
In the long run, China is the world's largest energy consumer and producer. Coal is the basic guarantee of energy security. Assured supply is the main policy line for future coal, and its position is difficult to shake. The increase in profits of coal companies will support their subsequent expansion of investment in production equipment, which in turn will push upstream industry leaders, led by Sany International, to achieve steady revenue growth.
Furthermore, the logistics equipment business is expected to continue to maintain double-digit growth in the future. Last year, macroeconomics clearly supported port demand. In the future, under the “combo punch” of various policies to stabilize the economy and stabilize foreign trade, port demand will continue to grow, and the company's share of the HAECO market is expected to increase further.
It is worth mentioning that in the face of growing demand, Sany International already has sufficient production capacity guarantees. Guided by the “digital intelligence” strategy, Sany Smart Equipment Xi'an Industrial Park and Sany Offshore Intelligent Manufacturing Industrial Park will push production capacity to a new level, and capacity supply will better meet market demand.
2. Diversified industrial layout constructs a new development curve
In recent years, Sany International has continued to expand and acquire overseas, covering various businesses such as technical equipment and petroleum equipment. The volume of new business orders in the future will become a flashpoint for performance growth.
In 2023, petroleum equipment business revenue was 1.5 billion yuan, and revenue from emerging business was 1.2 billion yuan. Currently, the share of emerging businesses is small, but they are all highly focused on cutting-edge technology fields, such as artificial intelligence, new energy, etc., and the development prospects are naturally immeasurable. Furthermore, it can have a synergy effect with the intelligence and electrification of the company's two core businesses, and accelerate the penetration of the company's core products in the market.
As the industrial layout continues to expand, it also provides strong support for the company to explore the global market.
In 2023, Sany International's overseas revenue was 6.362 billion yuan, an increase of 50.7% over the previous year, accounting for 31% of total revenue. Among them, overseas sales of mining equipment increased 33% year on year to 2.81 billion yuan. In particular, large mining vehicle products performed strongly, up 311% year on year; overseas sales of logistics equipment increased 69% year on year to 3.55 billion yuan, and sales of telescopic arm products increased 260% year on year.
Guojin Securities pointed out that judging from export data, domestic construction machinery manufacturers continue to increase their export value by exporting high value-added products. Currently, domestic enterprises are still at a low level of global market share. Domestic manufacturers are exporting smoothly to countries along the “Belt and Road”, and they are optimistic about opportunities for construction machinery manufacturers to go overseas in the medium to long term.
Moreover, against the backdrop of the acceleration of global energy transformation, all countries are improving the competitiveness of the entire industry chain in the field of new energy, and the electrification of the global construction machinery industry is already a general trend.
It can be predicted from this that as overseas customer resources and channel capabilities continue to accumulate, and with the technical advantages of popular products, overseas markets will further open up space and become an important engine for Sany International to achieve high-quality development.
epilogue
Overall, Sany International continues to consolidate its market position in its original business and expand into other new fields to ensure strong momentum for subsequent growth. This is the key to why it can grow and move through cycles. At the same time, given that its business layout is moving towards a blue ocean under the trend of electrification and intelligence, the capital market is expected to give it more expectations.