The triple logical resonance of mixed reform, electrification, and internationalization maintained the “buy” rating. Loaders in the entire industry increased 15% year on year in August 2024. Among them, electric loaders increased 280% year on year, and the penetration rate reached 11.5%. The company is a leading domestic loader. The coverage of electric loader products is complete, leading the wave of electrification of loaders, and is expected to continue to benefit in the future. The company's mixed reform, electrification, and internationalization have continued to optimize its profitability. We have raised our profit forecast. The company's net profit for 2024-2026 is 1.54/2.03/2.71 billion yuan (the original value was 1.34/1.791/2.253 billion yuan), the corresponding EPS is 0.78/1.03/1.37 yuan, and the corresponding PE is 12.2/9.2/6.9 times, respectively, maintaining the “buy” rating.

Sales in the loader industry increased 15% year on year in August. The company led the wave of electrification of loaders. In August 2024, the loader industry sold 8,329 units, up 15.2% year on year, and both domestic and foreign markets achieved growth.

Its domestic market sales volume was 4,036 units, up 8.99% year on year; export sales volume was 4,293 units, up 21.8% year on year.

From January to August 2024, the industry sold a total of 7,3726 loaders, up 4.7% year on year. Its domestic market sales volume was 37,388 units, up 0.57% year on year; export sales volume was 36,338 units, up 9.33% year on year. Electric loaders performed well. In August 2024, the industry sold 955 electric loaders. Electric loaders increased 280% year on year, and the penetration rate reached 11.5%. The company is a leading domestic loader. The coverage of electric loader products is complete, leading the wave of electrification of loaders, and is expected to continue to benefit in the future.

2024H1's performance was high, and mixed reforms increased profitability. 2024H1 achieved operating income of 16.06 billion yuan, an increase of 6.8% year on year; net profit to mother was 0.98 billion yuan, an increase of 60.2% year on year. 2024H1's gross sales margin was 23.4%, +3.3 pct year on year; net sales margin was 6.3%, up 2.2 pct year on year, and profitability continued to increase. In 2022, the company completed mixed reform and overall listing to achieve equity optimization. In 2023, the company released a stock option incentive plan. For the first time, the number of stock options was granted to 53.14 million shares. The incentives covered the company's core employees, and performance assessment indicators were set to stimulate employees' enthusiasm. In March 2023, the company issued 3 billion yuan of convertible bonds for factory upgrades and component capacity expansion to further enhance overall manufacturing capacity. Considering that Liugong's net interest rate in 2023 was only 3.4%, there is great potential for future performance to release flexibility.

Risk warning: The industry cycle fluctuates greatly; international trade frictions; industry competition intensifies; the electrification process falls short of expectations; the results of mixed reform fall short of expectations.