Goldman Sachs recently released a research report summarizing the performance of the china state construction engineering corporation machinery industry in the third quarter of 2024, pointing out that the domestic market is recovering, but at a slow pace.
Key Points:
The company's performance declined due to the impact of orders from US customers. According to the company's 23-year annual report, the company achieved a revenue of 471 million yuan (YOY-1.31%); net income attributable to the parent company was 146 million yuan (YOY-20.19%), and the 23-year performance decline was mainly due to (1) The company's endoscope body shipments increased significantly, and the actual launch time of the new system for US customers was postponed compared to the original plan, affecting the company's shipment volume; (2) The company implemented stock-based incentives in 23 years, resulting in an increase in share-based payment expenses; gross margin was 63.72% (YOY-0.63pp). According to Wind, the company achieved a revenue of 118 million yuan in 24Q1 (YOY-20.74%), net income attributable to the parent company was 38 million yuan (YOY-20.68%), and the decline in performance was mainly due to the scale of lens body shipments in 23Q1, which doubled compared to previous years, and the high base period had an impact on this period's performance.
1. The type of products significantly affects market share. Companies focusing on earthmoving machinery (such as excavators and wheel loaders), such as sany heavy industry and guangxi liugong machinery, have strong domestic sales performance, while companies focusing on later cyclic categories of machinery such as cranes, concrete machinery, and pavers, such as xcmg, zoomlion, and dingli, have sustained weak domestic business.
3. The growth in overseas markets indicates an increase in market share. Chinese customs data shows a significant increase in excavator exports, with Chinese companies increasing their share in the global excavator market.
4. In terms of profitability, cash flow, and balance sheet, non-covered companies have increased their gross margin due to increased contributions from overseas sales, while covered companies have experienced a decrease in gross margin due to unfavorable product mix and forex fluctuations.
5. Domestic demand is expected to continue recovering, especially in earthmoving machinery, while other machinery categories may bottom out. Overseas markets are projected to face continued pressure, but the rate of decline will shrink, with expectations for double-digit growth in Chinese companies' overseas sales.
