On April 29, the company released its quarterly report for the year 24. In 24Q1, the company achieved operating income of 11.773 billion yuan, +12.93% year over year; realized net profit of 916 million yuan, +13.06% year over year; net profit after deduction was 777 million yuan, +19.45% year over year, in line with market expectations.
Overseas accounts for nearly 50%, driving a continuous increase in profitability. According to the announcement, 24Q1 company's gross profit margin and net interest rate reached 28.65%/8.67%, respectively, +2.26/0.36pcts. Excluding the impact of share payment fees, the 24Q1 company's net interest rate reached 9.62% (+1.38pcts year over year), and the significant increase in profitability was mainly due to an increase in overseas revenue share; according to the announcement, 24Q1's overseas market was 5.703 billion yuan, +52.85% year-on-year, and the share of overseas revenue reached 48.43%, up 10.39 pcts from the end of 23. Among them, the gross margin of the overseas market reached 32.23% in '23, which is 7.57pcts higher than the domestic market; the share of overseas revenue boosted the overall gross profit margin.
Products have achieved diversified development, and excavators, high machinery, and agricultural machinery are developing rapidly. According to the announcement, earthmoving machinery and high machinery achieved 6.648/5.707 billion yuan respectively, or +89.32%/24.16%. The above two fields accounted for 14.12%/12.12% of revenue and increased 5.69/1.08pcts respectively, promoting the diversified development of the company. Among them, the earthmoving machinery sector progressed rapidly, adhering to the medium and large excavation strategy, and continued to increase its market share, achieving countercyclical growth in the domestic excavator market.
The signs of bottoming out in the domestic excavator market are clear, and the company is expected to benefit from the start of a new renewal cycle. According to CME data, domestic sales of 23M4 excavators are expected to achieve two consecutive months of flat/positive growth. The downward cycle of the domestic excavator market may have ended, and the signs of sector bottoming out are clear. With the implementation of the “trade-in” policy, the sector renewal cycle is expected to start early. The company has vigorously developed the field of earthmoving machinery in the past two years, and is expected to fully benefit from the recovery of the domestic excavator market.
We adjusted the profit forecast according to the announcement. We expect the company's revenue for 2024-2026 to be 583.50/721.47/85.716 billion yuan, and net profit to mother will be 43.90/61.09/7.814 billion yuan. The corresponding PE is 17/12/9X, maintaining the “increase in holdings” rating.
Risk warning
Demand for downstream real estate and infrastructure falls short of expectations, increased competition in overseas markets, risk of rising raw material prices, and risk of exchange rate fluctuations.