Key points of investment

Construction machinery: leading tower crane leasing in China, industry clearance helps increase market share 1) Backed by Shaanxi Coal Group: The majority shareholder of the company is Shaanxi Coal Group, a state-owned enterprise in Shaanxi Province; Pangyuan Leasing, a wholly-owned subsidiary, is the leader in China's tower crane leasing industry, contributing 89% of the company's revenue in 2023.

2) Leading tower crane rental: In 2023, Pangyuan Leasing ranked second in the world in the tower crane tonnage index (IC Tower Index) and number one among Chinese lessors.

3) Increased real estate policy: 2024H1's revenue reached 1.318 billion yuan, down 16% year on year; net profit to mother reached -0.421 billion yuan, down 88% year on year, mainly affected by factors such as the downturn in the real estate industry. At present, demand for tower cranes has basically bottomed out, and industry clearance is expected to help increase market share. At the same time, real estate policies continue to be favorable recently, and downstream demand is expected to improve marginally. At the same time, the company is actively developing businesses such as pavers and new energy mining trolleybuses, etc., and is expected to open up market space in the future.

Real estate policies have gone hand in hand, and real estate demand is expected to improve marginally, and the recent real estate policy will continue to be favorable. On September 24, the central bank announced policies such as lowering interest rates, and reducing stock mortgage interest rates. On September 26, the Politburo held its first meeting to push the real estate market to stop falling and stabilize. On September 29, the People's Bank of China, together with the General Financial Supervisory Authority, introduced four financial policies to support real estate, including improving the interest rate pricing mechanism for commercial personal housing loans, optimizing the minimum down payment ratio policy for personal housing loans, optimizing requirements related to affordable housing reloans, and extending the term of some real estate finance policies. From September 29 to September 30, we went north to Guangzhou and Shenzhen to adjust and optimize policies related to real estate.

The utilization rate of Pangyuan tons of rice continues to increase, and the industry's leading share is expected to increase tower cranes inflection point sequential interpretation: new volume inflection point → utilization rate inflection point → price inflection point → gross margin inflection point 1) Pangyuan ton rice utilization rate: From March to September, the utilization rate of Pangyuan ton rice continued to increase for 7 consecutive months, and in September, the utilization rate of Pangyuan ton rice reached 55.0% (1.6 pct year-on-year increase).

2) Pangyuan Index: The basic data of the Pangyuan Index is the new daily rent unit price of bare metal tonne rice without tax (daily rent per tonne of bare metal without tax). On October 4, the Pangyuan Index dropped to 432 points and continued to bottom out.

At present, the tower crane utilization rate may have reached an inflection point. As the effects of real estate policies gradually become apparent, the tower crane leasing industry is expected to gradually recover steadily, and an inflection point in tower crane rental prices and gross margin is expected to gradually emerge in the future.

3) Increase in leading share: Currently, the competitive pattern in the domestic tower crane leasing industry is relatively scattered. As of May 2023, the company's domestic market share was about 4%, and there is great potential for future growth. Currently, the tower crane leasing industry has bottomed out, and the market is in a clear state. As a leading tower crane leasing company, the company is expected to continue to increase its market share and continuously consolidate its market position with advantages such as capital, management, and scale.

The industry explores potential for transformation, increases production and operation efficiency to expand the market, and internal management enhances efficiency 1) Seek transformation: the company integrates to form a new “integrated two-wing and three-wheel drive” industrial pattern based on the “manufacturing+leasing service+remanufacturing” integrated industrial chain, supported by “two major diversified businesses” of steel structure and pavement machinery construction, and driven by the “three main products” of asphalt concrete pavers, tower cranes, and new energy mining trolleybuses.

2) Increase operating efficiency and expand the market: The company is deeply involved in domestic and international “two markets” and makes good use of the “two resources” within and outside the Coal Chemical Group. Internally, it develops the manufacture of underground auxiliary transportation equipment for trial coal mines, and broadens the scope of steel structures, equipment leasing and pavement machinery business. Externally, the company adheres to the big customer strategy and has successively signed strategic cooperation agreements with major customers such as China Railway 10th Bureau, Shaanxi Traffic Control, and Shaanxi Construction Engineering Group to dig deeper into the stock market. At the same time, we will coordinate the layout of overseas incremental markets and increase the export of products.

3) Internal management improves efficiency: 2024H1 has obvious cost pressure reduction effects such as the company's financial management, “ten expenses”, and “two financial shares”; effectively optimizes the asset structure, accelerates the revitalization of fixed assets, regional asset allocation, and disposal of idle assets, and continuously improves asset operation efficiency.

Profit forecasting and valuation: If the company benefits from real estate policy+undervaluation+overfalling the bid, industry clearance is expected to help increase the company's market share. Net profit due to mother in 2024-2026 is expected to be -0.598 billion, -0.259 billion, 0.041 billion yuan. Profit is expected to be achieved in 2026, and the PB in 2024 is 0.8 times. Maintain a “buy” rating.

Risk warning: Real estate policy implementation falls short of expectations; risk of bad debts in accounts receivable.