On July 5th, Guolonghui | Guotou Securities research report pointed out that XCMG Construction Machinery (000425.SZ) has a stable market position in traditional business and is expected to benefit from future cyclical recovery, while the introduction of emerging business injects new growth momentum and actively deploys global strategy. Continuously deepening reform of state-owned enterprises promotes profit improvement, with both growth and certainty, and prominent undervaluation characteristics; giving a buy-A investment rating, with a 6-month target price of 8.4 yuan, equivalent to a dynamic PE ratio of 15 times in 2024. From the perspective of certainty, XCMG's profit improvement has certain certainty and space: Compared with the three leading complete machine factories with perfect business structures, XCMG Construction Machinery, Sany Heavy Industry, and Zoomlion have gross margins of 22.38%, 27.71%, and 27.54% respectively in 2023. With the deepening of state-owned enterprise reform in XCMG, the reform of salary system and incentive mechanism has been carried out to stimulate the vitality of enterprise operation. At the same time, multidimensional cost reduction in R&D/manufacturing/purchasing has been started from the organizational structure, which is expected to open up the space for the company's profit improvement.