On November 4th, CICC research reports pointed out that xcmg construction machinery (000425.SZ) had a third quarter revenue of 19.094 billion yuan, a decrease of 6.4% year-on-year, and a net income attributable to the parent company of 1.603 billion yuan, an increase of 28.3% year-on-year, slightly exceeding expectations. This was mainly due to significant cost control by the company, resulting in a noticeable increase in gross margin. Domestic demand for construction machinery hit bottom, while export demand started to recover in the second half of the year. The company continued to strengthen risk control by strictly managing credit limits, continuously reducing on-balance sheet and off-balance sheet risk assets. Looking ahead, recent policies for comprehensive resolution of local government debt are believed to benefit the company's clients in terms of cash flow returning, reducing the company's credit risk. Furthermore, after state-owned enterprise reform, the company enhanced cost control and optimized the raw material procurement process, leading to a continuous improvement in gross margin. The company is expected to see a sustained increase in profitability. Considering the upward shift in the valuation center, the target price was raised by 11.1% to 10.6 yuan, corresponding to a 20.0x/16.5x P/E for 2024/2025, with a 30% upside potential. The rating of "outperforming the industry" is maintained.