Key points of investment
China's leading construction machinery company, product+market continues to expand, gradually becoming a leading international serial company through mixed ownership reform and continuous release of operating vitality. It is a leader in China's construction machinery industry. Its products cover 18 categories of construction machinery and agricultural machinery, and have entered more than 140 countries and regions around the world. The industry boomed in 2017-2021. The company's revenue CAGR reached 30.3% and net profit CAGR to mother reached 47.3%. The company's performance is under pressure during the downturn in 2022, and the industry is expected to gradually bottom up in 2023-2024. The company's market+products expanded rapidly in 2023, achieving revenue of 47.075 billion yuan, a year-on-year increase of 13%, net profit to mother of 3,506 billion yuan, a year-on-year increase of 52%, a gross profit margin of 27.54%, and a net profit margin of 8.01%. 2024Q1 achieved revenue of 11.773 billion yuan, a year-on-year increase of 12.93%, and net profit to mother of 916 million yuan, an increase of 13.06% over the previous year.
Strong overseas growth continued, with 2024Q1's share of revenue rising to 48%, category+market expansion to support development, the company's overseas revenue CAGR was 67% in 2020-2023, increasing from 6% to 38%, and the share of overseas gross profit increasing from 3% to 45%. Overseas revenue for the first quarter of 2024 was 5.7 billion yuan, up 53% year on year, accounting for 48% of total revenue. The company continues to advance its localization strategy. The overseas subsidiary CIFA in Italy has expanded its business to various fields such as construction and construction. It has built more than 30 first-level business airports and more than 350 second-level outlets. The products cover more than 140 countries and regions, and the combination of category+market expansion supports overseas growth.
New categories continue to break through, and earthmoving and aerial machinery are growing rapidly. Agricultural machinery and mining machinery are poised to grow. In 2023, the company's earthmoving and aerial machinery revenue accounted for 14% and 12%, and revenue increased by 89.3% and 24.2% year-on-year. The growth rate of the company's earthmoving machinery was significantly higher than that of the industry, and the relative share of revenue increased from 3% to 9%. In the future, the excavator model spectrum will gradually improve, and the pace of exports will accelerate, and it is expected to become another pillar sector of the company. Hi-Tech has the highest market share of domestic small and medium-sized customers. The subsequent spin-off and listing will enhance its financial strength, and it is expected that it will seize the opportunity to accelerate development.
The company's agricultural machinery revenue in 2023 was 2.09 billion yuan, accounting for about 4% of total revenue. The domestic agricultural machinery market reached 397.7 billion yuan in 2023, and the company still has great potential. In 2023, the sales scale of mining machinery was nearly 800 million yuan, an increase of 140% over the previous year, accounting for about 2% of total revenue. We continue to be optimistic about product development to promote the development of the company's mining machinery.
The domestic bottom-up and export boom of the concrete machinery and hoisting machinery industry continues. Production capacity construction consolidates its dominant position. The domestic concrete and hoisting machinery renewal cycle is similar to that of excavators, and the renewal cycle is gradually starting. The export market space is broad. In May 2024, 890 truck cranes were exported, up 16.6% year on year. The cumulative export was 3,986 units, up 11.7% year on year. The export performance was clearly superior to that of excavators. In 2023, the company's lifting and concrete machinery accounted for 41% and 18% of revenue. Concrete machinery such as mixing plants had the highest market share, and Gongqi maintained a leading market share for lifting machinery. The construction of a truck-mounted crane plant in Chongqing has been fully launched, continuing to consolidate the dominant position of the traditional main business.
Profit forecast and valuation: The company's net profit for 2024-2026 is estimated to be RMB 45.3, 60.2 and 7.69 billion yuan respectively, up 29%, 33% and 28% year-on-year. The corresponding PE is 14, 11, and 9 times. Maintain a buy rating.
Risk warning: Real estate and infrastructure demand recovery falls short of expectations; overseas exports fall short of expectations; raw materials fluctuate.