In the first half of 2024, revenue decreased 2.16% year over year, and net profit to mother increased 4.80% year over year. The company's revenue for the first half of 2024 was 39.006 billion yuan, down 2.16% year on year; net profit to mother was 3.573 billion yuan, up 4.80% year on year. The increase in performance was mainly due to stable domestic demand, increased competitiveness in overseas markets, and continued expansion of market share. The gross margin/net margin was 28.24%/9.42%, with a year-on-year change of +0.03/+0.61 pct. The increase in profitability was mainly due to the increase in the share of high-margin overseas business, while the company continued to promote cost reduction and efficiency measures. The company's financial expense ratio increased by 3.15 pcts year-on-year, mainly due to the company's exchange loss of 0.282 billion yuan in the first half of 2024, and exchange earnings of 1.08 billion yuan in the same period last year.
The share of overseas revenue has increased, and globalization continues to be promoted. In the first half of 2024, the company's overseas revenue was 23.542 billion yuan, up 4.79% year on year, accounting for 60.78% of total revenue, up 4.49 pcts year on year, mainly because the company continued to advance its global strategy and continued to increase its overseas market share. Looking at the subregions, Europe, Asia and Australia achieved slight growth in the first half of 2024, the American region declined slightly, and the African region grew faster. Revenue increased 66.71% year on year, mainly due to the high prosperity of the African market. In addition, the company continues to promote the globalization of manufacturing. The second phase of the Indonesian plant was expanded in the first half of 2024, and the second phase plant in India and the South Africa plant are being built in an orderly manner.
Promote the development of electrification and lead the industry's low-carbon transformation. The company comprehensively promotes the decarbonization of products such as construction vehicles, excavation machinery, loading machinery, and hoisting machinery, focusing on the three major technical routes of pure electricity, hybrid and hydrogen fuel, and continues to iterate on new energy products. In 2024, the company continued to increase the coverage of new energy products. In total, more than 80 new energy products were launched, and many products achieved major breakthroughs.
Domestic demand for construction machinery has bottomed out and stabilized, and the company is expected to fully benefit. Domestic excavator sales declined from 0.2929 million units in 2020 to 0.09 million units in 2023, at the bottom of historical sales. Domestic excavator sales increased 4.66% year-on-year from January to June 2024, showing a steady trend. Domestic demand for construction machinery is expected to continue to pick up with many positive factors, such as the gradual implementation of a series of policies such as the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in”, machinery replacement of labor, and the acceleration of the industry's low-carbon transformation trend. As a leading construction machinery company, domestic sales are expected to continue to stabilize. At the same time, the company currently accounts for about 5% of the overseas market. The overseas market space is vast, and the company's market share is expected to continue to increase.
Risk warning: domestic infrastructure and real estate investment falls short of expectations; exports fall short of expectations; industry competition intensifies.
Investment advice: Considering the domestic macroeconomic downturn, demand in Europe and the US has slowed down. We lowered the company's net profit to mother in 2024-25 and added net profit to the mother in 2026. The company's net profit for 2024-2026 is 6.055/7.738/9.618 billion yuan (8.752/10.592 billion yuan before 2024-2025), corresponding to PE 21/17/14 times, maintaining the “superior to the market” rating.