抢占国四市场先机，市占率有望逐步提升。公司为国内领先的农业机械设备供应商，2023 年行业受国四排放标准升级，加速向环保+智能化+高端化转型，公司把握先发优势积极布局国四产品的生产组织与国内相关产品上市，同时加大海外市场的推广力度。公司2023 年销售大中拖产品7.23 万台，市占率居于行业领先地位；海外地区公司主要覆盖亚洲区、俄语区、南美区、非洲区及“一带一路”沿线国家和地区。公司聚焦大马力机械与丘陵山区的小型机械，开展技术攻关；大马力无级变速拖拉机LW3204 完成整机试验并实现小批量销售验证。此外，公司YTN3 柴油机智能生产线以及智能多用途拖拉机能力提升等智能制造项目逐步落地，进一步推进降本增效。Incidents:
Recently, the company released its quarterly report for 2024Q1. In 2024Q1, the company achieved operating income of 4.656 billion yuan, about +11% year-on-year; net profit to mother was 599 million yuan, +23.40% year-on-year.
The gross margin increased, and the cost ratio remained basically the same during the period. In 2023, the company's gross sales margin was about 15.89%, about +0.16pct year on year; the net profit margin was about 8.58%, +3.43pct year on year. As cost reduction and efficiency continue to advance in the future, profitability is expected to increase further. The company's cost ratio for the period was 8.83%, -0.04pct year on year. Sales/management/R&D/finance expenses accounted for 2.09%/3.13%/4.00%/-0.39% of operating income, mainly due to sales and R&D expense ratios of +0.32pct and -0.21pct year over year, and overall cost control was good. In 2023, the company achieved net operating cash flow of 1,056 million yuan, and achieved net operating cash flow of 24Q1 million yuan.
Seizing opportunities in the national four markets, the market share is expected to gradually increase. The company is a leading supplier of agricultural machinery and equipment in China. In 2023, the industry was upgraded to national four emission standards to accelerate the transformation to environmental protection, intelligence, and high-end. The company seizes the first-mover advantage to actively organize the production organization of national four products and the listing of domestic related products, and at the same time increase promotion efforts in overseas markets. The company sold 72,300 units of large and medium towing products in 2023, leading the market share in the industry; overseas companies mainly cover Asia, Russian, South America, Africa, and countries and regions along the “Belt and Road”. The company focused on high-horsepower machinery and small-scale machinery in hilly mountainous areas to carry out technical research; the high-horsepower stepless variable speed tractor LW3204 completed complete machine tests and achieved small-batch sales verification. In addition, the company is gradually implementing intelligent manufacturing projects such as an intelligent production line for YTN3 diesel engines and improving the capacity of intelligent multi-purpose tractors, to further promote cost reduction and efficiency.
The policy side has been catalyzed significantly, and large-scale equipment updates continue to advance. With the issuance of the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in” by the State Council, it proposes to solidly promote the scrapping and renewal of old agricultural machinery in the agricultural machinery sector, speed up the structural adjustment of agricultural machinery, and promote equipment renewal and transformation in the important direction of energy saving and carbon reduction, safe production, digital transformation, and intelligent upgrading to help the agricultural machinery industry develop rapidly with new quality productivity. The company actively lays out high-end intelligent agricultural machinery and equipment, and is expected to continue to benefit from the renewal cycle.
Investment rating: The company's net profit for 2024-2026 is estimated to be $1,141 billion, $1,324 billion, and $1,564 billion, respectively. Corresponding PE is 19x, 16x, and 14x, respectively, covered for the first time, giving it an “increase in wealth” rating.
Risk warning: risk of changes in overseas trade policies; risk of failure of profit forecasting and valuation models
