Summary:
Leading companies have accumulated, and the performance is resilient. In 2023, the domestic construction machinery industry continued to adjust, and the company still achieved relatively good results, benefiting from the international layout and leading advantages.
In 2023, the company achieved operating income of 92,848 billion yuan, a slight decrease of 1.03% year on year, and achieved net profit of 5.326 billion yuan, up 23.51% year on year; in 2024 Q1, revenue of 24.174 billion yuan, up 1.18% year on year, realized net profit of 1.6 billion yuan, up 5.06% year on year. In 2023, the company's gross margin was 22.38%, and the net margin was 5.64%, +2.17pct/+1.06pct year-on-year.
Policies continue to be favorable, and demand expectations have improved marginally. In the context of the infrastructure direction and steady growth policy, central government spending is expected to increase in 2024. At the same time, the proposed trillion special treasury bonds will further increase the scale of infrastructure capital. It is expected that infrastructure investment will continue to grow in 2024.
In the real estate direction, a number of real estate policy “combo punches” have recently been introduced, including not granting loans, lowering interest rates on existing mortgages, and reducing down payment ratios. Real estate easing policies have ushered in a peak of popularity. The “combo punch” of real estate support policies is expected to boost demand for construction machinery and drive the industry to recover.
The overseas economy remains the same, and overseas travel is expected to grow at a high rate. There are two main reasons why China's construction machinery overseas has maintained a good trend: first, thanks to loose monetary policies after the outbreak of the epidemic, the boom in real estate and infrastructure investment in European and American countries, combined with a sharp rise in global resource prices during the economic recovery period, led to a rise in demand for mining in Africa, South America and other regions; second, domestic enterprises represented by Xugong and Sany actively carried out overseas channel layout, and brand recognition continued to increase. In 2023, the company's foreign revenue was 37.22 billion yuan, up 33.7% year on year, and the share of overseas revenue increased to more than 40%.
Profit forecast and investment rating: Assuming that the company's traditional machinery such as earthmoving and lifting grows steadily, new businesses such as fire fighting and mining will grow rapidly. According to this estimate, the company's net profit for 2024-2026 was 65.79/76.34/8.916 billion yuan respectively, with year-on-year growth rates of 23.5%/16%/16.8%, respectively. The corresponding PE price is 14.4/12.4/10.6 times, respectively. Covered for the first time, a “gain” rating was given.
Risk warning: risk of economic fluctuations, risk of market competition, risk of raw material prices, risk of tightening international trade policies, risk of exchange rate fluctuations, etc.