Key points:
1. The company is currently the leading operating rental enterprise for aerial work platforms in Asia
The company is a professional platform for construction equipment operation under Yuandong Hongxin. It is the largest equipment operation service provider in China. As of 2022, it is the largest aerial work machinery leasing company in Asia, ranked 14th in the Global Top 100 Rental List (IRN100), 131,000 aerial work platforms, assets of 30.6 billion yuan, and a total of 191,000 customers.
The company successfully landed on the Hong Kong Stock Exchange in May 2023 and was spun off and listed. The company is mainly engaged in operating leasing, engineering technology services, platforms and other services. Among them, the operating leasing business mainly focuses on operating leasing of aerial work platforms (AWP), new support systems, and new mold frame systems.
2. In the future, the penetration rate of aerial work platforms (AWP), new support systems, and new mold frame systems will continue to increase
A series of policies, such as the “12th Five-Year Plan for the Development of the Construction Industry”, clearly require the construction industry to drastically reduce the number of deaths due to safety accidents in engineering production. However, high-altitude falls account for more than half of the total production of housing and municipal engineering accidents in China, so the introduction of relevant safety policies has provided favorable support for the application of aerial work platforms and encouraged downstream enterprises to further increase the usage rate of related equipment.
Supply-side structural reforms focus on removing backward production capacity and strengthening professional services. More and more enterprises tend to reduce fixed asset investment and leverage ratios. At the same time, with the transformation and upgrading of the construction industry, more and more equipment users will prefer to hire professional equipment operation service providers to provide related services without the need to independently purchase equipment and reduce their costs.
3. Profit forecast
We believe that aerial work platform leasing is the main source of revenue from operating leasing services. The industry consulting company analyzed that the compound annual growth rate of the aerial work platform business reached 21.98% in 2023-2025. As China's urbanization process continues and supply-side structural reforms promote specialization in the industry, equipment users prefer leasing equipment to reduce costs, and operating rental service revenue is expected to increase further. We assume that the rental business growth rate in 2023-2025 will be 15.50%/14%/12.50%.
Risk warning
the risk that equipment rents will fall beyond expectations;
Industry competition increases risk;
Managing the risk of rising costs;
the risk of rising costs;