Looking to the future, the Middle East oil service market is on the scale of hundreds of billions of dollars, with the oil service equipment market being at least in the tens of billions of dollars. Chinese oil service equipment companies are currently in the initial stage in the Middle East, with a relatively low market share, offering high growth potential and being less affected by industry β (such as oil prices).
According to the Zhito Finance APP, Soochow Securities released a research report stating that from 2020 to 2024, China's investment in energy industry and construction projects in six countries including Saudi Arabia, Iraq, the UAE, Kuwait, Qatar, and Angola (Africa) will reach a total of 50.28 billion USD, of which major oil and gas projects amount to 29.15 billion USD, showing an upward trend year by year, driving rapid growth in oil service equipment exports. Looking to the future, the scale of the Middle East oil service market is in the hundred billion USD range, with the oil service equipment market being at least in the tens of billions. Chinese oil service equipment companies are currently at a starting stage in the Middle East, with a relatively low market share, showing high growth potential and being less affected by industry β (like oil prices).
Soochow Securities' main viewpoints are as follows:
Investment Rating: Shareholding (Maintain)
Recommended Portfolio
NAURA Technology Group (002371.SZ), Sany Heavy Industry (600031.SH), Advanced Micro-Fabrication Equipment Inc. China (688012.SH), Jiangsu Hengli Hydraulic (601100.SH), China International Marine Containers (000039.SZ), Ningbo Tuopu Group (688072.SH), HAITIAN INT'L (01882), Shanghai Friendess Electronic Technology Corporation (688188.SH), Zhejiang Jingsheng Mechanical & Electrical (300316.SZ), Yantai Jereh Oilfield Services Group (002353.SZ), Zhejiang Dingli Machinery (603338.SH), Hangcha Group (603298.SH), Suzhou Maxwell Technologies (300751.SZ), Shanghai SK Automation Technology (300450.SZ), Hangzhou Changchuan Technology (300604.SZ), Centre Testing International Group (300012.SZ), Anhui Heli Co., Ltd. (600761.SH), Nanjing Inform Storage Equipment(Group) (300567.SZ), Neway Valve (603699.SH), Kingsemi Co., Ltd. (688037.SH), Leader Harmonious Drive Systems (688017.SH), Ningbo Haitian Precision Machinery (601882.SH), Zhejiang HangKe Technology Incorporated (688006.SH), Yizumi Precision Machinery (300415.SZ), Kunshan Kinglai Hygienic Materials (300260.SZ), Qingdao Gaoce Technology (688556.SH), Neway CNC (688697.SH), Wuhan Huazhong Numerical Control (300161.SZ).
Investment Highlights
[Oil Service Equipment] China's foreign investment is growing rapidly, making it a good time for oil service equipment exports to the Middle East.
From 2020 to 2024, China's investments and construction projects in the energy sector of Saudi Arabia, Iraq, the UAE, Kuwait, Qatar, and Angola (Africa) will total $50.28 billion, with major oil and gas projects amounting to $29.15 billion, showing an upward trend year by year, driving rapid growth in oil service equipment exports. The oil service equipment industry has high standards, long application cycles, and requires dual certification from both the industry and customers, creating a strong technical barrier while also providing a good competitive landscape. In recent years, leading domestic oil service equipment companies like Yantai Jereh Oilfield Services Group and Neway Valve have seen explosive growth in orders in the Middle East. In 2024, Yantai Jereh’s order value in the Middle East will increase by 100% year-on-year; Neway Valve’s overseas orders in Q1 2025 will grow by 60% year-on-year, with orders from the Middle East and Africa accounting for as much as 44%, up 17 percentage points from the whole of 2024. Looking ahead, the oil service market in the Middle East is worth hundreds of billions of dollars, with the oil service equipment market alone worth at least tens of billions of dollars. Chinese oil service equipment companies are still in the early stages in the Middle East, holding a relatively low market share but exhibiting high growth potential, with minimal impact from industry beta factors (like oil prices).
[Lithium Battery Equipment] The impairment risk is fully released, and domestic and overseas capacity expansion and the industrialization of solid-state batteries are accelerating, benefiting equipment suppliers.
In 2023-2024, the lithium battery equipment industry has made a total impairment provision of 5.7 billion yuan, including credit impairment of 3.3 billion yuan and inventory write-down provisions of about 2.4 billion yuan. With subsequent recovery and capacity expansion down the stream, accounts receivable are expected to be recovered more quickly. Key attention domestically is on Contemporary Amperex Technology's capacity expansion, which has raised 35.3 billion Hong Kong dollars from its IPO in Hong Kong, with approximately 90% of the raised funds (27.6 billion Hong Kong dollars) to be used for the construction of its factory in Debrecen, Hungary. This super factory is planned to have a total production capacity of 72 GWh, built in two phases. The first phase has invested 0.7 billion euros and has a planned capacity of 34 GWh, expected to commence production in 2025; the second phase, with a planned capacity of 38 GWh, is expected to start construction in 2025 and commence production in 2027, reaching production targets to support European automakers like BMW and Mercedes-Benz and service the European market. Internationally, focus is on the expansion of automakers such as Volkswagen and Tata. As solid-state batteries are considered the mainstream direction for next-generation battery technologies, both new and established players are accelerating their layout. BYD plans to start mass demonstration vehicle applications around 2027 for all-solid-state batteries, aiming for large-scale deployment after 2030, with equipment suppliers expected to benefit first. Investment recommendations: Focus on the leading lithium battery equipment manufacturer, Sijin Intelligent Forming Machinery, and the downstream equipment leader linked with top-tier overseas battery factories, Zhejiang HangKe Technology Incorporated; also suggest paying attention to leading laser welding firms like Shenzhen United Winners Laser Co., Ltd, and module/PACK leading companies like Shanghai SK Automation Technology.
[Humanoid Robots] Fula New Materials launched its second-generation electronic skin, and Tesla's Optimus production is accelerating.
1) On June 5, Fula New Materials launched its second-generation electronic skin, which has three key features: ① It can achieve full-dimensional curved surface integration, making it easy to fit the surface of humanoid robots; ② It can perceive three-dimensional force vectors and detect vertical and shear forces; ③ It integrates multiple physical modalities, including force perception, tactile perception, and temperature. Compared to the first-generation product, the core improvements are in enhanced flexibility and increased dimensionality of force perception. 2) Tesla is speeding up factory inspections in China, and the mass production of Optimus is continuing to accelerate. The main catalysts for the industry in the future are still expected to come from the T chain.
Core recommendation: Remain optimistic about key large-cap stocks in the T chain, and recommend companies such as Jiangsu Hengli Hydraulic, Leader Harmonious Drive Systems, Zhejiang Sanhua Intelligent Controls, Ningbo Tuopu Group, and Shanghai Beite Technology. The favorable marginal change direction covers three major sectors—① electronic skin: recommended companies include Fula New Materials, Hanwei Electronics Group Corporation, Jiangsu Riying Electronics, Xingyuan Zhuomei, and Ningbo Xusheng Group; ② lightweight: focus on magnesium alloys from Ningbo Xusheng Group, Xingyuan Zhuomei, and Weike Technology; ③ screw device: recommended companies include TSUGAMI CHINA, Zhe Jiang Headman Machinery Co.,Ltd., Hangzhou XZB Tech, Sijin Intelligent Forming Machinery, and Hiecise Precision Equipment Co.,Ltd.
[Construction Machinery] The domestic construction machinery market saw a decline in excavator sales in May, but non-excavation and other sectors continue to recover, presenting undervalued investment opportunities in this sector.
According to statistics from the China Construction Machinery Industry Association, in May 2025, the average monthly working hours of major domestic construction machinery products was 84.5 hours, a decrease of 3.86% year-on-year and 6.25% month-on-month, indicating a decline in the popularity of excavators. However, non-excavator performance has started to improve. In April 2025, the sales of road rollers, pavers, and graders were 1713, 200, and 756 units respectively, showing year-on-year increases of +36%, +52%, and +22%, with cumulative year-on-year increases from January to April of +30%, +38%, and +20%. From January to April 2025, the cumulative sales of truck cranes, crawler cranes, and truck-mounted cranes were 7355, 1021, and 9014 units respectively, with year-on-year changes of -9%, +0%, and -0%, showing continuous improvement compared to 2024. In terms of exports, from January to April 2025, excavator export sales increased by 9.0% year-on-year. Exporting is a major profit source for domestic manufacturers, and the recovery in export performance strongly supports the sector's overall performance. Due to recent fluctuations in domestic excavator demand, stock prices in the sector have adjusted, and current valuations have reached low levels, suggesting a focus on key stocks. Relevant individual stocks include Sany Heavy Industry, a leading company in various categories, ZOOMLION, Guangxi Liugong Machinery, Shantui Construction Machinery, and Jiangsu Hengli Hydraulic.
[Forklift] AI-driven logistics and warehousing industry is accelerating its transformation towards intelligence and automation, suggesting attention to leading symbols in the industry chain.
In the era of large language models, the rapid development of artificial intelligence models provides a realistic background and technical support for the "AI + Logistics" development model. Forklifts are the core handling equipment in the warehousing and logistics industry, and the push for automation and intelligence is ongoing. The core links of the unmanned forklift industry chain mainly include controller suppliers, vehicle body suppliers, and integrators: (1) Controllers: The "brain" of unmanned forklifts, integrating perception positioning, intelligent decision-making, and motion control modules, equipped with SLAM, natural environment navigation, environmental perception, and obstacle avoidance functions, capable of realizing visual semantic recognition, operation, and configuration of robot and model parameters. According to the prospectus of XianGong Intelligent, the gross margin of the company’s controllers reached as high as 81% in 2024. (2) Vehicle body suppliers: Composed of traditional forklift manufacturers and suppliers focusing on AGV/AMR, competition is fierce, with gross margins mostly ranging from 15% to 20%. (3) Integrators: Provide customized complete solutions based on customer needs. At present, leading technology and logistics companies are increasingly collaborating with forklift manufacturers. It is suggested to focus on (1) Forklift leaders: Anhui Heli Co., Ltd. has strategic cooperation agreements with Huawei, SF Express, and JD.com, conducting all-round cooperation centered on smart logistics. Hangcha Group has established three major business groups: Hangcha Intelligent, Hangao Intelligent, and Hanhe Intelligent, forming an overall intelligent logistics solution that includes AGV, upright storage, and software integration systems. Zhongli Co., Ltd. has successively invested in Chengdu Ruixinxing (smart vision safety and positioning), Zhejiang Keti (unmanned forklift and logistics automation solutions), and Shenzhen Youguang Imaging (VSLAM positioning and navigation technology), with leading technical reserves. (2) Leading integrators: Kunshan Intelligent, Nanjing Inform Storage Equipment(Group), Bluesword Intelligent Technology. (3) Core controller suppliers: XianGong Intelligent (planned to go public).
