The company released a three-quarter report with excellent performance!

24Q1-3:

Revenue 58.361 billion yuan, yoy +3.92%, net profit attributable to mother 4.868 billion yuan, yoy +19.66%, after deducting non-attributable net profit of 4.628 billion yuan and yoy +9.42%. The gross margin/net margin was 28.27% and 8.6%, respectively, -0.23pct and +1.13pct year-on-year, respectively.

The cost rate for the period was 18.5%, yoy+0.3 pct. Among them, the sales/management/R&D/finance expenses rates were 8.0, 3.4, 6.6, and 0.5%, respectively, and -0.1, -0.1, -0.9, and +1.4pct, respectively.

Operating cash flow improved dramatically. Net operating cash flow for the first three quarters was 12.375 billion yuan, up 151.74% year on year, mainly due to an increase in operating profit, a decrease in purchase payments, and an increase in net repayments from subsidiary companies Sany Auto Gold and Sany Financial Leasing.

24Q3:

Revenue of 19.3 billion yuan, yoy +18.87%, was the first correction in four consecutive quarters; net profit to mother was 1.295 billion yuan, yoy +96.49%, after deducting non-return net profit of 1.502 billion yuan and yoy +310.59%.

The gross margin/net margin was 28.32% and 6.95%, respectively, -0.87pct and +2.89pct year-on-year, respectively. The cost ratio for the period was 18.3% and yoy-6.6pct. Among them, the sales/management/R&D/finance expense ratios were 8.4, 3.5, 6.4, and 0.1%, respectively, and -1.3, -0.5, -1.9, and -2.9 pct, respectively.

When the domestic industry bottomed out and rebounded, and overseas expansion continued

Domestic: From the downstream side, construction side, and sales side, we judge that the domestic construction machinery industry is expected to gradually enter an upward channel after experiencing a downward adjustment. At the same time, the superposition policy of equipment replacement demand promotes large-scale equipment updates to jointly help the industry enter a period of growth; as a domestic industry leader, its operating performance is expected to resonate with the upward cycle.

Overseas: The gross margin of the overseas market is significantly higher than domestic, and the profit margin and market space are considerable; the company leads the industry in the overseas market and focuses on developing mature markets in Europe and the US. In 2020-2023, the company's revenue from the European and American markets averaged more than 50%, but at present, the company's market share in the European and American markets is still low, and there is plenty of room for future improvement.

Profit forecast: We expect the company's net profit to be 6.06, 8.64, and 12.28 billion yuan respectively for 2024-2026 (previous values were 6.26, 7.77, and 9.9 billion yuan, respectively; considering the impact of foreign exchange and lowering this year's performance expectations, we are optimistic about factors such as the scale effect brought about by the subsequent correction of revenue and the company's continued cost reduction and fee control), and the corresponding valuations will be 26, 18, and 13 times, respectively; continue to be optimistic and maintain a “buy” rating.

Risk warning: policy risk, market risk, exchange rate risk, risk of raw material price fluctuations, risk that the company's globalization/electrification progress falls short of expectations, etc.