It is expected that 24Q2 will achieve net profit of 0.392-0.546 billion yuan (yoy +31%-83%). Liugong released a 2024 semi-annual performance forecast. 2024H1 is expected to achieve net profit to mother of 0.89-1.044 billion yuan (yoy +45%-70%), deducting non-net profit of 0.826-0.979 billion yuan (yoy +58%-88%). Among them, 24Q2 is expected to achieve net profit of 0.392-0.546 billion yuan (yoy +31%-83%), after deducting non-net profit of 0.369-0.522 billion yuan (yoy +49%-110%). We raised the company's profit forecast. We expect the company's EPS for 2024-2026 to be 0.76/1.04/1.33 yuan, respectively (previous value: 0.63/0.83/1.04 yuan). Comparatively, the company's 2024 Wind unanimously expected an average PE value of 15.81 times. Considering the profit margin elasticity brought about by the continuous improvement in the company's overall operating efficiency after listing, the company was given 18 times PE in 2024, raised the target price to 13.66 yuan (previous value 12.70 yuan), and maintained a “buy” rating.
In 24Q2, overseas sales remained resilient, and domestic demand bottomed out and rebounded
1) Domestic: The market sentiment index and construction data show that demand for construction machinery is still low, but according to data from the China Construction Machinery Association, domestic excavator sales were growing for four consecutive months from March to June 2024. We believe this fully shows that domestic demand is resilient; from the downstream investment side, real estate investment has yet to improve, and investment in infrastructure and mining continues to grow. As industry confidence restoration drives renewal demand, the “combo punch” of large-scale equipment renewal policies and real estate policies resonates, and domestic construction machinery is expected to start a new upward cycle. 2) Overseas: Economies accounting for more than 40% of global GDP in 2024 will hold a general election. In the election year, the government will promote projects or be suppressed. Overseas aggregate demand will be under pressure in the short term. With the gradual implementation of the general election, overseas demand is expected to rise in 2025.
The “combo punch” of large-scale equipment renewal policy+real estate policy. The inflection point of domestic multi-factor resonance sales is on March 27, 2024. The Ministry of Housing and Construction issued the “Notice on Promoting the Implementation Plan for the Renewal of Construction and Municipal Infrastructure Equipment”. The document specifically mentions construction equipment. Construction machinery and equipment that has been in use for more than 10 years, with high pollution and high energy consumption, must be updated and eliminated in accordance with relevant requirements. On May 17, a real estate policy package with both down payment and interest rate cuts was launched, which is expected to boost demand for construction machinery and drive the industry to recover. The “combo punch” of large-scale equipment renewal policy+real estate policy is imminent due to multiple factors resonating with domestic sales.
Risk warning: The competitive landscape of the industry worsened beyond expectations; overseas business expansion fell short of expectations.