The high-quality development of the new “three modernizations” strategy shows that the leading domestic company Xingwen Zhiyuan is a domestic industry leader. Its products include concrete machinery, excavation machinery, lifting machinery, pile construction machinery, pavement machinery, etc. Among them, concrete equipment is the number one brand in the world. Leading products such as excavators, large tonnage cranes, rotary drilling rigs, and complete pavement equipment have become the number one brand in China.
The company's operating performance is limited by the industry cycle, but it continues to achieve high-quality development through globalization, digital intelligence, and low carbon, and crosses the industry cycle with excellent manufacturing. Furthermore, the company has issued employee stock ownership plans for many years, which deeply bind employees' interests while demonstrating confidence in future development.
When the domestic industry bottomed out and rebounded, and overseas expansion continued
Domestic: From the downstream side, construction side, and sales side, we judge that the domestic construction machinery industry is expected to gradually enter an upward channel after experiencing a downward adjustment, while the superposition policy of equipment replacement demand promotes large-scale equipment updates to jointly help the industry enter an upward period; according to Off-HighwayResearch's forecast, the domestic construction machinery market will gradually pick up this year, and the market size is expected to reach 19.2 billion US dollars in 2027, with a CAGR of 19.73% in 24-27; as the leader in the domestic industry, the company's business performance is expected to gradually enter an upward channel. ascending resonance.
Overseas: At present, there is a clear trend of construction machinery companies going overseas independently. In 2022, China's construction machinery export value increased by 30.20% year on year to 44.302 billion US dollars. In 2023, the overseas market still maintained a high level of prosperity, with an export value of 48.552 billion US dollars. The overseas market has achieved remarkable results in overseas expansion; moreover, the gross margin of the overseas market is significantly higher than domestic, and the profit margin is considerable. The overseas market has become one of the main growth drivers for the domestic construction machinery industry in the future.
With an overseas market space of 700 billion yuan in the next few years, the two markets of North America and Europe will account for about half of the market, and there is still plenty of room for domestic companies to expand in the future. By comparing the financial indicators of leading companies in the same industry, we see that the company is leading the industry in the overseas market and is focusing on mature markets in Europe and the US. In 2020-2023, the company's revenue share from the European and American markets is still at a low level, and there is plenty of room for improvement in the future.
Profit forecast: We believe that the construction machinery industry is expected to bottom up and enter a new round of upward channels; at the same time, the company's global, digital intelligence, and low-carbon “three modernization” strategies will develop with high quality to help future performance; therefore, we expect the company's 2024-2026 revenue to be 841.1, 972.3, and 115.08 billion yuan, respectively, yoy +13.64%, +15.59%, and +18.36%; net profit to mother is 60.1 billion yuan, 77.4 billion yuan, and 10.01 billion yuan, respectively, yoy is +32.77%, + 28.73%, +29.39%; continues to be optimistic and maintains a “buy” rating.
Risk warning: policy risk, market risk, exchange rate risk, raw material price fluctuation risk, risk that globalization/electrification progress falls short of expectations, estimation is subjective risk, etc.