Key points of investment:
Anhui Heli: A leading domestic forklift enterprise, the actual controller is the Anhui Provincial State-owned Assets Administration Commission. The company's predecessor was founded in 1958. The company's main economic indicators ranked first in the national forklift industry in 1991, and since then it entered the top ten industrial vehicle industry in the world in 2006, ranked among the top seven in the world's industrial vehicle industry in 2016 and has remained so far. According to the China Construction Machinery Industry Association and company data, the company's forklift sales market share was 24.9% in 2023, ranking first in the country. Benefiting from steady growth in the scale of the industry and the electrification and internationalization of its products, the company's revenue grew steadily from 6.553 billion yuan to 17.471 billion yuan in 2013-2023, with a CAGR of 10.30%; net profit to mother increased from 502 million yuan to 1,278 million yuan, and the CAGR reached 9.79%.
Forklift market: Domestic and external demand resonates, and the general trend of electrification and internationalization. As an important material handling equipment, forklifts have a wide range of applications and are growing steadily along with the development of various downstream industries. We judge that domestic forklift demand is related to the manufacturing boom and is expected to benefit from GM's recovery. Future industry growth points mainly come from electrification and global trends: 1) The growth rate of domestic forklift sales changes cyclically, which is highly correlated with manufacturing PMI and logistics sentiment. Future demand is expected to benefit from the recovery of the GM cycle. 2) Electrification: In 2022, the electrification rate of counterweight forklifts in China was 26.14%, lower than the global level of 36.18%. There is still room for improvement for Class I forklifts in China to replace Class IV and Class V forklifts. Compared with internal combustion forklifts, lithium-electric forklifts are clearly economical, and are expected to accelerate the electrification process of forklifts. 3) Internationalization: Compared with overseas brands, domestic forklifts have the three major advantages of cost performance, delivery, and lithium battery industry chain leadership. Electrification has enabled domestic forklifts to take turns in the globalization process, and overseas markets have become the core driving force for the growth of domestic manufacturers. Due to the high value and profit margin of exported forklifts, it is expected to promote the optimization of the forklift product structure and drive the scale and profit margin of the industry upward.
Adapt to the trend of electrification and improve the global layout and industrial structure. Electrification: In line with the trend of electrification in the industry, the company actively transformed and broke through many core electric technologies. In 2023, the company's electric forklift sales accounted for 57.17% and revenue accounting for 31.12%.
Globalization: The company has an independent marketing network at home. It has seven overseas centers, and has formed a complete domestic and foreign marketing service system. Products are sold to more than 150 countries and regions. Forklift exports are increasing year by year. The export volume of complete machines increased 21% year on year in 2023. In 2017-2023, the company's overseas revenue increased from 1,322 billion yuan to 6.113 billion yuan, and the CAGR reached 29.1%. Industrial chain layout: The company lays out parts, aftermarket, intelligent logistics and other businesses around forklifts to create large-scale, intelligent, and flexible machine and parts industry chain synergies to help reduce internal costs and increase efficiency and external revenue. In 2023, the company's aftermarket business accounted for 17% of revenue. Compared with the Toyota Group's 43% level, there is still plenty of room for improvement. The profit level of the aftermarket business is high, and it is expected that the company's profit center will be further improved.
First coverage, giving a “buy” rating. The company's net profit is expected to be 15.5/18.3/2.16 billion yuan in 2024-2026. The company's current stock price (2024/6/25) corresponds to PE of 11x/10x/8x, respectively, and the average PE value of comparable companies in 24/25/26 is 14/11/9x, respectively. The company's PE is lower than the industry average. As one of the top ten forklift manufacturers in the world, the company has a complete product range, strong market competitiveness, and has maintained the number one sales volume in the country for many years. Future demand is expected to continue to benefit from electrification and globalization trends, and for the first time, it has been covered with a “buy” rating.
Risk warning: risk of fluctuations in raw material prices; risk of external business environment risk; risk of increased market competition; risk of slowing macroeconomic growth.