30 May 2025 CMB International Global Markets | Equity Research | Company Update SANY International (631 HK) 1Q25 net profit surged 23% YoY, holding up better-than-feared SANYI's net profit grew 23% YoY in 1Q25 to RMB635mn, delivering a set of better-than-feared results which marks the first quarterly profit growth (YoY) since 3Q23. The earnings growth in 1Q25 was driven by large port machinery, oil & gas equipment, overseas mining trucks and other emerging business. We believe that the results will ease con ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何 部份內容而產生或因依賴該等內容而引致之任何損失承擔任何責任。 SANY HEAVY EQUIPMENT INTERNATIONAL HOLDINGS COMPANY LIMITED 三一重裝國際控股有限公司 （於開曼群島註冊成立之有限公司） （股份代號：631） 內幕消息 截至2025年3月31日止三個月的未經審核財務數據 摘要 以下資料摘錄自本集團於期間的未經審核管理賬目以及2024年相應期間之比較數 據： | | （未經審核） | （未經審核） | | | --- | --- | --- | --- | | | 截至2025年 | 截至2024年 | | | | 3月31日 | 3月31日 | | | | 止三個月 | 止三個月 | 變動率 | | | 人民幣千元 | 人民幣千元 | (%) | | 收入 | 5,876,351 | 5,129,582 | 14.6 | | 毛利 | 1,428,440 | 1,277,520 | 11.8 | | 稅前利潤 ...

Investment Rating - The investment rating for the company is "Buy" [5] Core Views - The company's performance is expected to improve as impairment impacts have bottomed out, with potential growth in the coal machinery and oil and gas sectors [1] - The company reported a 42.9% year-on-year decrease in net profit for 2024, primarily due to goodwill impairment in oil and gas equipment and inventory impairment in real estate [2] - The revenue structure has changed significantly, with a notable decline in profitability due to one-time impairments and reduced profitability in oil and gas equipment [3] Summary by Sections Domestic and International Development - Domestic demand has shown fluctuations, but there is significant potential for diversified development both domestically and internationally. The mining equipment sector is expected to benefit from increased industry concentration, while the logistics equipment sector is gaining overseas orders [1] - The company has expanded into emerging fields, including robotics and new energy equipment, which are expected to provide ongoing growth momentum [1] Financial Performance - For 2024, the company achieved a revenue of 21.9 billion yuan, an 8% increase year-on-year, with overseas revenue growing by 28.4% to 8.17 billion yuan. However, net profit decreased to 1.1 billion yuan, a 42.9% decline [2] - The gross margin for 2024 was reported at 22.4%, down 4.4 percentage points year-on-year, while the net margin was 4.9%, down 4.2 percentage points [3] Profitability Forecast - The company is expected to see a recovery in performance starting in 2025, with projected revenues of 24.2 billion yuan, 29.5 billion yuan, and 33.9 billion yuan for 2025, 2026, and 2027 respectively, reflecting a CAGR of 18% [4] - The forecasted net profits for the same years are 2.19 billion yuan, 2.65 billion yuan, and 2.99 billion yuan, with a CAGR of 17% [4]

Financial Performance - Revenue for 2024 reached RMB 21,909,641, an increase of 8.0% compared to RMB 20,277,944 in 2023[15] - Gross profit decreased by 9.8% to RMB 4,913,363, resulting in a gross margin of 22.4%, down from 26.9% in 2023[15] - Net profit fell by 41.9% to RMB 1,067,986, with a profit margin of 5.0%, down from 9.5% in the previous year[15] - The net profit attributable to the parent company was RMB 1,101.6 million, a decrease of 42.9% compared to the previous year[26] - International sales revenue reached RMB 8,169.7 million, marking a 28.4% year-on-year growth, with logistics equipment international revenue increasing by 25.8% and mining equipment international revenue by 27.5%[27] - Basic earnings per share decreased by 44.8% to RMB 0.32, while diluted earnings per share fell by 42.3% to RMB 0.30[15] - The gross profit margin for 2024 was approximately 22.4%, down 4.5 percentage points from 26.9% in 2023[37] - Other income and gains increased by approximately 14.0% to RMB 815.5 million in 2024, primarily due to increased government subsidies and the sale of SANY Robotics[35] - The sales cost for 2024 was approximately RMB 16,996.3 million, reflecting a 14.6% increase from RMB 14,830.9 million in 2023[36] - The group's profit margin before tax for the year ended December 31, 2024, was approximately 6.5%, a decrease of about 4.6 percentage points from approximately 11.1% for the year ended December 31, 2023, mainly due to goodwill impairment losses of approximately RMB 470.4 million in the oil and gas equipment business[48] Assets and Equity - Total assets increased by 17.1% to RMB 40,927,728, while total equity rose by 5.5% to RMB 12,175,260[15] - As of December 31, 2024, the group's total current assets were approximately RMB 26,227.1 million, up from RMB 20,778.3 million as of December 31, 2023[51] - The group's accounts receivable and notes receivable amounted to approximately RMB 12,823.7 million as of December 31, 2024, an increase of about 15.7% from approximately RMB 11,082.6 million as of December 31, 2023, primarily due to increased sales revenue[52] - The group's cash and cash equivalents, along with term deposits maturing in three months or more, totaled approximately RMB 5,339.5 million as of December 31, 2024[54] - The group has cash and bank balances in foreign currencies equivalent to approximately RMB 2,904.8 million as of December 31, 2024, and will monitor and hedge significant currency risks as necessary[62] Operational Highlights - The first overseas self-operated factory in Indonesia commenced production, with an expected annual capacity of 2,000 units[17] - A new 175-ton grab machine was successfully delivered, offering double the efficiency and half the energy consumption compared to traditional models[18] - High-end fracturing equipment was delivered to Kazakhstan, marking entry into unconventional oil and gas exploration in Central Asia[19] - The company launched its first 300-ton hybrid mining truck, SET320S, showcasing advancements in green mining equipment technology[21] - The company completed its first LNG project, achieving a processing capacity of 2.4 million cubic meters of natural gas per day, demonstrating industry-leading capabilities in LNG solutions[22] - The company’s unmanned mining trucks operated a total of nearly 5 million kilometers, producing approximately 15 million cubic meters with an efficiency rate exceeding 95%[23] - The company delivered the world's largest wind-solar coupled green hydrogen ammonia synthesis project, expected to reduce CO2 emissions by 650,000 tons annually[24] - The company’s new energy segment, including SANY Silicon Energy and SANY Hydrogen Energy, saw significant growth, with SANY Hydrogen Energy's new orders increasing by 200% year-on-year[28] Strategic Initiatives - The company is focusing on digitalization, low-carbon initiatives, and global expansion to enhance product offerings and service quality[7] - The company plans to continue investing in core business areas and aims to achieve leading positions in both mining and logistics equipment sectors while expanding its presence in the photovoltaic energy storage industry[28] - The company anticipates a compound annual growth rate of 20% for overseas mining equipment in the coming years[33] - The company aims to achieve a revenue target of RMB 50 billion and a gross profit margin of 24% by 2027, although these targets may not be guaranteed[33] - The company is actively promoting green, intelligent, and sustainable products and services globally, aligning with its low-carbon development strategy[63] Governance and Management - The company has a strong governance structure with multiple independent non-executive directors serving on various committees, including audit, remuneration, and ESG committees[76][78][84] - The company has a diverse board with members holding advanced degrees in management, economics, and accounting, contributing to its strategic decision-making[78][85] - The company has established a comprehensive management system to enhance corporate governance and operational efficiency[63] - The company has a strong management team with extensive experience in engineering and technology management, contributing to its strategic initiatives[69] - The appointment of the first female director, Ms. Zhou Lan, in December 2024 marks a significant step towards enhancing gender diversity on the board[63] Employee and Community Engagement - The company emphasizes employee development and satisfaction, conducting multiple employee satisfaction surveys annually in mainland China to gather feedback for improving work efficiency and atmosphere[158] - The company has implemented stock option plans in 2019 and 2023 to reward employees for their contributions to growth and development[158] - The company has a commitment to ESG initiatives, with several board members actively participating in the ESG committee since February 20, 2023[76][78] Shareholder Information - The company reported a final dividend of HKD 0.29 per share, totaling approximately HKD 932 million based on 3,213,890,505 shares as of February 28, 2025[97] - The company aims to balance shareholder expectations with prudent capital management through a sustainable dividend policy[96] - The company has not issued any shareholder waivers or consents for dividends[100] - Major shareholders include SANY Hong Kong with 2,568,818,722 shares, representing 79.93% of the voting shares[177] - Liang Wengen holds 2,579,688,722 shares, accounting for 80.27% of the voting shares[177] Risks and Challenges - The company faces risks related to reliance on the Chinese economy, fluctuations in raw material prices, and dependency on third-party suppliers[11] - The company has several subsidiaries in China that benefit from government incentives for product development, but future access to these incentives is uncertain, which may adversely affect its business and financial performance[156]

Core Viewpoint - SANY International (0631.HK) experienced a significant stock decline of 5.03% on April 3, closing with a market capitalization of HKD 17 billion, following the announcement of ambitious revenue and profit margin targets for 2027 [1]. Group 1: Company Performance - For the fiscal year ending March 31, SANY International reported a revenue of CNY 21.91 billion, reflecting an increase of 8.05% year-on-year [4]. - The company's net profit attributable to shareholders was CNY 1.10 billion, which represents a decline of 42.89% compared to the previous year [4]. Group 2: Strategic Goals - SANY International announced a target to achieve CNY 50 billion in revenue and a gross profit margin of 24% by 2027, with confidence in a compound annual growth rate of 20% for overseas mining equipment in the coming years [1]. - The company clarified that these targets are aspirational and do not constitute a profit forecast as per the Hong Kong Stock Exchange listing rules [1]. Group 3: Corporate Structure - SANY International is a subsidiary of SANY Group, which also includes SANY Heavy Industry (600031.SH) and SANY Energy (688349.SH) as part of its listed companies [4]. - The company operates across four main business segments: mining equipment, logistics equipment, oil and gas equipment, and emerging industries [4].

Core Viewpoint - SANY International reported a revenue increase of 8.05% year-on-year, driven by significant growth in sales of large and small port machinery and solar components, alongside a notable rise in international sales revenue [1] Group 1: Financial Performance - Revenue for the year ending December 31, 2024, reached 21.91 billion RMB, with a gross profit of 4.913 billion RMB [1] - Shareholder profit attributable decreased by 42.89% to 1.102 billion RMB, with basic earnings per share at 0.32 RMB [1] - Proposed final dividend is 0.29 HKD per share [1] Group 2: International Market Expansion - International revenue amounted to 8.17 billion RMB, reflecting a year-on-year growth of 28.4% [1] - International sales of mining equipment reached 3.5795 billion RMB, up 27.5%, while logistics equipment international revenue was 4.471 billion RMB, increasing by 25.8% [1] - Products sold include large port machinery, small port machinery, mining trucks, coal mining machines, and tunneling machines across Asia, Europe, Africa, and the Americas [1] Group 3: Technological Advancements and Product Development - The company leads industry development through digital technology and cross-generation products, enhancing core competitiveness [2] - New electric and intelligent products, such as the 100-ton hybrid rigid mining truck, have become bestsellers, with larger hybrid electric mining trucks also being launched [2] - The company aims for high-quality development, focusing on globalization, digitalization, and low-carbon strategies, while striving for leading market share in coal machinery, mining trucks, and port machinery [2]

Financial Performance - The company achieved a revenue of approximately RMB 21,909.6 million for the year ended December 31, 2024, representing an increase of about 8.0% compared to RMB 20,277.9 million for the year ended December 31, 2023[3]. - The profit attributable to equity holders of the parent company was approximately RMB 1,101.6 million, a decrease of about 42.9% from RMB 1,929.0 million in the previous year[3]. - Basic earnings per share for the year ended December 31, 2024, were RMB 0.32, down from RMB 0.58 in 2023[4]. - The total comprehensive income for the year, after tax, was RMB 1,093.2 million, compared to RMB 1,870.5 million in the previous year[5]. - The operating profit for the year ended December 31, 2024, was RMB 1,421,397,000, compared to RMB 2,260,450,000 in 2023, indicating a decrease of about 37.2%[20]. - The company reported a net profit of RMB 1,067,986,000 for the year ended December 31, 2024, down from RMB 1,838,754,000 in 2023, reflecting a decline of approximately 42%[20]. - Total revenue for the year ended December 31, 2024, reached RMB 21,909,641,000, an increase from RMB 20,277,944,000 in 2023, representing a growth of approximately 8.06%[22]. - The gross profit margin decreased to approximately 22.4%, down 4.5 percentage points from 26.9% in the previous year[85]. - The company reported a pre-tax profit of RMB 16,188,560 thousand for 2024, compared to RMB 14,312,687 thousand in 2023, reflecting an increase of about 13.14%[34]. Assets and Liabilities - Non-current assets increased to RMB 14,700.6 million in 2024 from RMB 14,184.7 million in 2023[6]. - Current assets rose significantly to RMB 26,227.1 million in 2024, up from RMB 20,778.3 million in 2023[6]. - The total assets as of December 31, 2024, amounted to RMB 40,927,728,000, an increase from RMB 34,963,011,000 in 2023, showing a growth of about 17%[20]. - The total liabilities increased to RMB 28,752,468,000 as of December 31, 2024, compared to RMB 23,424,614,000 in 2023, representing a rise of approximately 22.8%[20]. - The inventory balance as of December 31, 2024, totals RMB 5,047,840,000, an increase from RMB 3,432,210,000 in 2023[58]. - Trade receivables increased to RMB 11,692,009,000 in 2024 from RMB 10,016,434,000 in 2023, with a provision for impairment of RMB 718,022,000[60]. - The total trade payables and notes payable as of December 31, 2024, is RMB 11,213,230,000, compared to RMB 8,098,198,000 in 2023, indicating a rise of about 38.5%[71]. Cash Flow and Financing - The company reported a net cash and cash equivalents balance of RMB 5,339.5 million as of December 31, 2024, compared to RMB 3,241.1 million in 2023[6]. - The net cash inflow from financing activities for the year ended December 31, 2024, was approximately RMB 894.5 million, a significant decrease from RMB 2,960.6 million for the year ended December 31, 2023[100]. - The company’s total liabilities include secured bank loans of RMB 2,686,554,000 and unsecured bank loans of RMB 423,978,000 due in 2025[73]. - The company has guaranteed bank loans totaling RMB 6,657,126,000 as of December 31, 2024, up from RMB 6,111,645,000 in 2023[75]. Dividends and Shareholder Returns - The company proposed a final dividend of HKD 0.29 per share for the year ended December 31, 2024[3]. - The proposed final dividend for ordinary shares is HKD 0.29 per share, totaling RMB 932,028,000, an increase from RMB 606,036,000 in 2023[42]. Segment Performance - The group has expanded its reportable operating segments from two to four, reflecting an enlarged business structure[15]. - The reportable segments include Mining Equipment, Logistics Equipment, Oil and Gas Equipment, and Emerging Industry Equipment[16]. - The Mining Equipment segment focuses on the production and sale of coal machinery, non-coal mining, and related services[16]. - The Logistics Equipment segment is involved in the production and sale of container equipment and general equipment[16]. - The Oil and Gas Equipment segment produces and sells fracturing equipment and provides related services[16]. - The Emerging Industry Equipment segment specializes in lithium battery manufacturing equipment and solar components[16]. Research and Development - Research and development costs for 2024 were RMB 1,524,346 thousand, down from RMB 1,681,623 thousand in 2023, a decrease of approximately 9.35%[34]. - Research and development expenses were approximately RMB 1,524.3 million, a decrease of 9.4% from RMB 1,681.6 million in the previous year, with R&D expenses accounting for 7.0% of revenue[87]. Taxation - The total tax expense for the year is RMB 353,411,000, a decrease from RMB 421,696,000 in the previous year, representing a reduction of approximately 16.2%[39]. - The effective tax rate for 2024 is 24.8%, compared to 18.6% in 2023, indicating an increase in the tax burden[41]. - The company’s subsidiaries in China are subject to a corporate income tax rate of 25%, with certain high-tech enterprises benefiting from a reduced rate of 15%[37]. Strategic Initiatives - The company continues to focus on manufacturing and selling mining equipment, logistics equipment, and new energy manufacturing equipment in China[8]. - The company plans to expand its market presence in regions outside of mainland China, particularly in Asia and Europe, to drive future growth[26][27]. - The company aims to strengthen its core business and enhance its global market share, particularly in coal machinery, mining vehicles, and port machinery[81]. - The company has committed to low-carbon development and has implemented intelligent control technology in coal mining, significantly improving automation and efficiency[110]. - The company is actively promoting green and sustainable products, including electric port machinery, to lead the electrification sector[110]. Governance and Compliance - The audit committee, consisting of four independent non-executive directors, has reviewed the financial performance for the year ending December 31, 2024[122]. - The company has adopted the standard code for securities trading by directors, ensuring compliance throughout the year[121]. - The company aims to enhance board diversity with the appointment of its first female director, Ms. Zhou Lan, in December 2024[110].

Key Points Industry or Company Involved - **Company**: Energy Equipment Division of a listed company - **Industry**: Energy equipment, gaming equipment, real estate development Core Views and Arguments - **2024 Annual Report Impact**: The company announced a video editing project valued at 4.7 billion yuan, which is expected to reduce the 2024 annual operating income by 25% to 45% compared to the 18.4 billion yuan in 2023 [1]. - **Business Impairment**: The company incurred a business impairment due to the underperformance of the gaming equipment business acquired in the second quarter of 2023. The main reasons include increased trade terms to control accounts receivable risks, industry-wide decline, and increased competition [2]. - **Strategies for Gaming Equipment**: The company will continue to invest in the gaming equipment business and has implemented measures to improve future performance, including setting performance targets for 2025 and 2027, and matching incentives [3]. - **Real Estate Development**: The company developed a residential project for employees of the Zhuhai Industrial Park, with most of the residential units sold to employees [4]. - **Operational Performance**: The mining equipment business maintained good performance in the face of the overall downward trend in the domestic media industry. The overseas business of mining equipment grew rapidly, and the logistics equipment business maintained a growth rate of more than 20% [5]. - **Financial Performance**: The company suggested increasing the dividend payout ratio for 2024 based on the 0.19 USD/HKD dividend paid in 2023 [6]. - **Apology for Performance**: The company expressed regret for the performance and promised to take action to maintain its image and market trust [6]. - **2025 Outlook**: The company is optimistic about the future and has implemented measures to improve performance, including price changes, cost control, new product development, and international expansion [8]. - **Business Impairment for Oil Equipment**: The company believes that the business impairment for oil equipment is reasonable and that there is a low probability of further impairment [9]. - **2025 Revenue and Profit Estimate**: The company is unable to provide specific data due to compliance reasons, but expects stable growth in key business segments such as mining equipment and logistics equipment [11]. - **Photovoltaic Industry**: The company believes that the photovoltaic industry will achieve break-even in 2025 [12]. - **Business Impairment for Photovoltaic Industry**: The company does not expect any business impairment for the photovoltaic industry and believes it will perform well under the leadership of the industry team [14]. - **Domestic Market Trends**: The domestic market for engineering equipment and logistics is expected to remain stable, with overseas markets contributing significantly to growth [20]. - **Port Equipment**: The overseas market for port equipment is expected to grow in 2025, with a focus on overseas operations [21]. - **Mining Equipment**: The domestic sales structure of mining equipment may change, with increased demand for wide-body trucks in Xinjiang and Inner Mongolia [23]. - **Capital Expenditure**: The company's capital expenditure for 2024 is expected to decline by 10% compared to 2023, mainly due to reduced capital expenditure by domestic oil and gas companies [28]. Other Important Points - **Dividend Payout Ratio**: The company suggested increasing the dividend payout ratio for 2024 based on the 0.19 USD/HKD dividend paid in 2023 [6]. - **Management Incentive Plan**: The management incentive plan includes 50% cash and 50% stock, with the final form subject to approval [27]. - **Capital Expenditure for 2025**: The company will provide detailed information on capital expenditure for 2025 after obtaining data from domestic oil and gas companies [28]. - **Communication with Investors**: The company plans to hold a large-scale communication and exchange meeting after the disclosure of the 2024 annual report, inviting investors to participate [31].

Investment Rating - The report maintains a "Buy" rating for the company [3]. Core Views - The company's performance continues to decline, with a slight revenue increase but a significant drop in profitability. For the three months ending September 30, 2024, the unaudited consolidated revenue was approximately RMB 5.154 billion, a 3.1% increase from RMB 4.998 billion in the same period of 2023. However, the gross profit decreased by 12.7% to RMB 1.289 billion from RMB 1.476 billion in the previous year, and the net profit attributable to shareholders fell by 37.3% to RMB 0.357 billion from RMB 0.570 billion [3]. - The decline in performance is primarily attributed to the mining equipment sector, which has faced significant setbacks due to falling coal prices, leading to reduced purchasing intentions from coal enterprises. The company’s revenue from tunneling machines and comprehensive mining equipment has also decreased year-on-year [3]. - New business ventures, including the oil equipment business acquired in 2023, have not met expectations and are currently incurring losses, further dragging down overall performance [3]. Financial Summary - Revenue projections for 2024 and 2025 are estimated at RMB 21.324 billion and RMB 23.229 billion, respectively, reflecting year-on-year growth rates of 5.16% and 8.93% [3]. - The net profit attributable to shareholders is projected to be RMB 1.956 billion in 2024 and RMB 2.231 billion in 2025, with growth rates of 1.38% and 14.09% respectively [3]. - Key financial metrics indicate a net profit margin of 9.17% for 2024, increasing to 10.04% by 2026 [5]. Key Financial Indicators - The company’s revenue for 2023 is reported at RMB 20.278 billion, with a growth rate of 30.52%. The EBITDA for the same year is RMB 2.846 billion, with a projected increase to RMB 3.108 billion in 2024 [4][5]. - The return on equity (ROE) is expected to be 15.24% in 2024, slightly decreasing from 15.94% in 2023 [5]. - The company’s total assets are projected to grow from RMB 34.963 billion in 2023 to RMB 50.266 billion by 2026 [4]. Market Context - The mining equipment market outlook remains uncertain, with the company’s growth heavily reliant on the performance of its mining vehicle products and new product launches [3]. - The report highlights the challenges faced by the coal mining sector, which is expected to continue impacting the company’s performance in the short term [3].

Financial Performance - For the nine months ended September 30, 2024, the unaudited consolidated revenue was approximately RMB 15,909,955,184, an increase of about 0.5% compared to RMB 15,836,777,908 in the same period of 2023[1] - The unaudited consolidated gross profit for the nine months ended September 30, 2024, was approximately RMB 3,914,218,906, a decrease of about 9.1% from RMB 4,308,415,189 in the same period of 2023[1] - The unaudited consolidated net profit for the nine months ended September 30, 2024, was approximately RMB 1,342,665,104, down approximately 22.3% from RMB 1,727,001,087 in the same period of 2023[1] - For the three months ended September 30, 2024, the unaudited consolidated revenue was approximately RMB 5,153,899,596, an increase of about 3.1% compared to RMB 4,997,589,897 in the same period of 2023[2] - The unaudited consolidated gross profit for the three months ended September 30, 2024, was approximately RMB 1,288,650,407, a decrease of about 12.7% from RMB 1,476,474,209 in the same period of 2023[2] - The unaudited consolidated net profit for the three months ended September 30, 2024, was approximately RMB 355,709,965, down approximately 34.6% from RMB 543,695,593 in the same period of 2023[2] - The net profit attributable to the parent company for the nine months ended September 30, 2024, was approximately RMB 1,389,870,880, a decrease of about 21.6% from RMB 1,771,789,739 in the same period of 2023[2] Business Segments - The company experienced a decline in profitability primarily due to decreased domestic revenue in the mining equipment segment influenced by the coal industry’s performance[3] - The company reported continuous high growth in revenue from logistics equipment and overseas mining equipment during the period[5] Strategic Focus - The company aims to integrate operational resources and optimize business structure to enhance corporate value and focus on shareholder returns[5]