occurrences

1) On November 27, 2024, the company announced the return plan for global investors for the next three years; 2) On November 26-29, 2024, the company attended the Shanghai BMW Show, and orders were very popular.

Key investment points

The company officially announced the return plan for global investors for the next three years (2025-2027):

1) Continuously improve profitability indicators such as gross profit margin and net interest rate of listed companies, continuously improve the cash flow of the company's operating activities, and improve the quality of the company's assets;

2) In the next three years (2025-2027), the total amount of the company's annual cumulative cash dividends (including share repurchases and cancellations) will not be less than 40% of the distributable profit achieved in the current year;

3) XCMG Group promises that over the next three years, the average annual cash dividend of no less than 20% from listed companies will be used to increase its holdings of listed company XCMG Machinery shares.

The company signed an intended order of nearly 10 billion at the BMW Show; signed the largest export order for 3 billion electric mining machinery

1) Completed batch delivery of high-end complete equipment such as the XCA4000 wheel crane and the XC9260 oversized electric drive loader, and reached an intended order of more than 6,000 units during the exhibition, with a total amount of nearly 10 billion yuan; 2) announced a partnership with Fords River and signed a potential green mining equipment supply contract totaling 3 billion yuan, which is the largest domestic export order for new energy heavy equipment; 3) A joint venture agreement was signed with Qingshan Group to complete the formal signing of Xugong Qingshan's new energy construction machinery manufacturing project in Indonesia.

Listed among the top 5 global mining surface mining equipment manufacturers for the sixth year in a row, and the mining machinery sector is making great strides

In 2024, the company ranked fourth in the global list of open pit mining equipment manufacturers, after Caterpillar, Komatsu, and Hitachi. This is the sixth year in a row that the company has been on the list, and it is the only Chinese company on the list.

The company's mining machinery sector has developed rapidly. In 2019-2023, revenue from the mining machinery sector increased from 1.35 billion yuan to 5.86 billion yuan, 4-year CAGR = 44.3%; 2024H1, the company's mining machinery sector achieved revenue of 3.54 billion yuan.

At present, the company has formed a complete construction solution for large-scale open pit mines covering the entire process scenario of “drilling, digging, transporting, breaking, leveling, pushing, and sprinkling”. Open-pit mining machinery has been exported to markets such as Africa, Europe, South America, etc., continuously expanding its global footprint, and becoming the mainstream supplier of high-end mining machinery in the world.

Profit forecasting and valuation

The company's 2024-2026 revenue is expected to be 91.6, 105.4, and 128.9 billion yuan, up -1%, 15%, and 22% year on year; net profit to mother will be 6.2, 7.8, 9.8 billion yuan, up 17%, 26%, 25% year on year, corresponding to PE of 15, 12, 10 times. The compound net profit growth rate for 2023-2026 is 22%, maintaining a “buy” rating.

Risk warning

1) Investment in infrastructure and real estate falls short of expectations; 2) Exports fall short of expectations; 3) Exposure to risks such as accounts receivable