Group 1 - Heavy machinery stocks in Hong Kong experienced a general rise, with Zoomlion (000157) increasing over 5%, SANY International rising over 4%, and China Longgong up 1.5% [1][2] - CME forecasts that excavator sales will reach 28,500 units by March 2025, representing a year-on-year increase of 14%, with domestic sales expected to be 18,500 units (+22% YoY) and exports at 10,000 units (+2% YoY) [2] - Dongwu Securities predicts a better-than-expected recovery in excavator sales, supported by high growth in water conservancy investment for small excavators, stabilization in real estate and infrastructure for medium excavators, and stable demand from mining for large excavators [2]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected investment return exceeding 15% over the next 6-12 months [5][6]. Core Views - The company achieved a significant increase in net profit, with a 57.8% year-on-year growth, despite a 2.9% decline in revenue [1]. - The domestic engineering machinery demand is recovering, and the company is expected to benefit from this trend, along with the internationalization and electrification of machinery [5]. - The company is positioned to capitalize on the accelerating trend of electrification in loaders, with electric loader sales increasing by 261.2% in early 2025 [4]. Summary by Sections Financial Performance - In 2024, the company reported revenue of 10.21 billion RMB, a decrease of 2.9% year-on-year, while net profit reached 1.02 billion RMB, up 57.8% [1]. - The gross margin improved to 19.6%, an increase of 2.0 percentage points, and the net margin rose to 10.0%, up 3.8 percentage points [1]. - The company plans to distribute a dividend of 0.13 HKD per share, with a payout ratio of 50% and a dividend yield of approximately 6.4% [1]. Product Performance - Revenue from wheel loaders was 3.93 billion RMB, down 3.1% year-on-year, while mini wheel loaders saw a revenue increase of 5.9% to 160 million RMB, indicating strong demand in agriculture and light construction [2]. - Forklift revenue rose by 1.6% to 3.72 billion RMB, driven by increased demand in the logistics and warehousing sector [2]. - Excavator revenue decreased by 16.1% to 1.06 billion RMB, primarily due to a shift to discount promotion strategies [2]. Market Trends - Domestic sales revenue was 7.02 billion RMB, down 5.7% year-on-year, attributed to weakened demand in the construction sector [3]. - The company’s overseas revenue reached 3.19 billion RMB, a year-on-year increase of 3.8%, with overseas sales accounting for 31.2% of total revenue, up 2.0 percentage points [3]. - The government’s fiscal policies are expected to stimulate infrastructure investment, benefiting downstream equipment demand [3]. Electrification Trend - The sales of electric loaders in early 2025 reached 2,413 units, a remarkable increase of 261.2%, with an electrification rate of 14.5%, up 12.0 percentage points year-on-year [4]. - The company is well-positioned as a leading player in the electric loader market, benefiting from the accelerating electrification trend [4].

Group 1 - The rental index for aerial work platforms in February 2025 is projected to be 350 points, reflecting a month-on-month decrease of 21.4% but a year-on-year increase of 34.1% [1] - Excavator sales in March 2025 are expected to reach 28,500 units, representing a year-on-year increase of 14%, with domestic sales of 18,500 units (up 22% year-on-year) and exports of 10,000 units (up 2% year-on-year) [1] - Cumulative excavator domestic sales from January to March 2025 are projected at 35,545 units (up 34% year-on-year), while cumulative exports are expected to be 24,737 units (up 5% year-on-year), indicating a marginal recovery in both domestic and international demand [1] Group 2 - Dongwu Securities predicts that the improvement in excavator sales is primarily due to the replacement of aging equipment, as the previous upcycle lasted from 2015 to 2023, with an average lifespan of 8-10 years for excavators [1] - The financial environment has improved since Q4 2024, providing support for both existing and new projects, which is expected to further bolster demand for excavators [1] - The report anticipates that high growth in water conservancy investment will support small excavators, while stabilization in real estate and infrastructure development will benefit medium-sized excavators, and stable demand from mining will support large excavators [1] Group 3 - Pacific Securities reports that the export data for excavator products in January and February 2025 continues to show high year-on-year growth, contributing significantly to the profits of major manufacturers [2] - The positive trend in exports is expected to enhance profit margins for manufacturers, with a favorable overseas demand environment anticipated to positively impact their performance [2] - The engineering machinery sector is viewed positively by the market, with expectations of continued growth in exports and overall industry performance [2] Group 4 - Related Hong Kong-listed companies in the engineering machinery sector include Zoomlion Heavy Industry (000157), China Longgong (03339), First Tractor Company (00038), Sany International (00631), Zhengzhou Coal Mining Machinery (601717), China National Heavy Duty Truck Group (000951), Weichai Power (000338), and Sany International (02155) [3]

Core Viewpoint - China Longgong (03339) reported a significant increase in net profit for the fiscal year ending December 31, 2024, with a profit attributable to shareholders of RMB 1.018 billion, representing a year-on-year increase of 57.78% [1][2] Financial Performance - The total revenue for the reporting period was RMB 10.214 billion, a decrease of 2.94% compared to RMB 10.523 billion in the same period of 2023 [2] - The company's earnings per share were RMB 0.24, and a final dividend of HKD 0.13 per share was proposed [1] - The overall gross profit margin for the period was 19.56%, an increase of 2.03 percentage points from 17.53% in the previous year [2] Product Performance - The product structure is primarily focused on loaders and forklifts, with loaders accounting for 41.23% of total sales, a slight increase from 41.19% in 2023 [2] - Forklift sales represented 36.41% of total sales, up by 1.63 percentage points year-on-year [2] - The sales proportion of excavators decreased by 1.61 percentage points to 10.34% due to adjustments in sales strategy [2] Market Dynamics - The domestic market for construction machinery is stabilizing but still in a bottoming phase, while the overseas market continues to grow, albeit at a slower pace [1] - The company has successfully predicted the growth trend of electric products, leading to record monthly production and sales of electric loaders [2] - Export revenue increased by 3.76% year-on-year, reflecting the company's ability to adapt to high baseline conditions in the industry [2] Strategic Focus - The company emphasizes high-quality development principles, actively responding to changing market conditions, and increasing marketing investments [1] - Continuous improvement in product quality and cost control has contributed to the significant increase in net profit [2] - Financial assets generated a net income of RMB 60 million during the reporting period [2]

Financial Performance - For the fiscal year ending December 31, 2024, the total revenue was RMB 10,213,556, a decrease of 2.9% compared to RMB 10,522,925 in 2023[4] - Gross profit increased to RMB 1,998,114, representing a growth of 8.3% from RMB 1,844,980 in the previous year[4] - The net profit for the year was RMB 1,018,639, up 57.7% from RMB 645,544 in 2023[5] - Basic and diluted earnings per share rose to RMB 0.24, compared to RMB 0.15 in the prior year, reflecting a 60% increase[5] - The company reported a total comprehensive income of RMB 1,033,086, compared to RMB 605,216 in the previous year, marking a significant increase[7] - The total revenue for the reporting period was RMB 10,214 million, a decrease of RMB 309 million or 2.94% compared to RMB 10,523 million in the same period last year[57] - Net profit for the year reached RMB 1,019 million, an increase of RMB 373 million or 57.80% compared to RMB 646 million in the previous year[57] Revenue Breakdown - Total revenue for the engineering machinery segment reached RMB 10,213,556 thousand, with a segment profit of RMB 1,041,850 thousand[24] - Revenue from wheel loaders was RMB 4,211,545 thousand, accounting for 41.2% of total revenue, while excavators generated RMB 1,055,621 thousand, representing 10.3%[26] - Revenue from mainland China was RMB 7,023,569 thousand, a decrease from RMB 7,448,464 thousand in the previous year, while revenue from overseas increased to RMB 3,189,987 thousand from RMB 3,074,461 thousand[28] - Sales of wheel loaders accounted for 41.23% of total sales, slightly up from 41.19% in the previous year[57] - Export sales increased by 3.76% to RMB 3,190 million, partially offsetting the decline in domestic sales[58] Expenses and Investments - Research and development expenses were RMB 447,511, slightly up from RMB 437,700 in 2023, indicating continued investment in innovation[4] - Capital expenditures for the year were RMB 68,549 thousand, which included the acquisition of property, plant, and equipment[24] - Capital expenditures for the period amounted to approximately RMB 69 million, down from RMB 152 million in 2023, aligning with the group's strategic transformation[68] Assets and Liabilities - Total assets decreased to RMB 12,463,367 from RMB 12,480,883 in 2023, showing a marginal decline[8] - Current liabilities decreased to RMB 4,712,868 from RMB 5,591,403, indicating improved financial stability[9] - The company’s net asset value rose to RMB 10,704,093 from RMB 9,981,520, reflecting a solid financial position[9] - Total assets amounted to RMB 15,474,995 thousand, while total liabilities were RMB 4,770,902 thousand[24] - Total assets amounted to RMB 15,623,542 thousand, with total liabilities at RMB 5,642,022 thousand[25] Trade Receivables and Inventory - Trade receivables increased to RMB 2,377,319 from RMB 1,994,901, suggesting growth in sales and credit extension[8] - Trade receivables increased significantly from RMB 1,995 million to RMB 2,377 million, attributed to extended credit terms for high-value products[76] - The company's inventory decreased to RMB 2,287,310,000 in 2024 from RMB 2,876,507,000 in 2023, a reduction of 20.5%[37] Dividends and Shareholder Information - The proposed final dividend per ordinary share for 2024 is HKD 0.13, an increase from HKD 0.08 in 2023, totaling RMB 513,514,000 compared to RMB 310,513,000 in the previous year[33] - The board proposed a final dividend of HKD 0.13 per share for the year ending December 31, 2024, subject to shareholder approval[94] - There was no interim dividend paid during the year[90] Financial Standards and Compliance - The company has adopted revised Hong Kong Financial Reporting Standards, with no significant impact on its financial position or performance[19] - The company has not engaged in supplier financing arrangements, thus the related revisions do not affect its financial statements[19] - The company will apply new and revised Hong Kong Financial Reporting Standards upon their effective date, with no expected significant impact[22] Future Outlook and Strategy - The group anticipates a rebound in domestic demand for construction machinery, supported by government policies aimed at boosting consumption and investment[78] - The company aims to enhance its product offerings with a focus on green, intelligent, and high-end development, while expanding marketing channels and improving operational efficiency[79] - The company aims to strengthen its influence in both domestic and international markets to ensure sustainable growth and profitability[59]

Financial Performance - For the six months ended June 30, 2024, the revenue was RMB 5,360,093 thousand, a decrease of 6.39% compared to RMB 5,726,128 thousand for the same period in 2023[6]. - Operating profit increased by 52.66% to RMB 610,402 thousand, up from RMB 399,834 thousand in the previous year[6]. - EBITDA rose by 38.63% to RMB 740,248 thousand, compared to RMB 533,956 thousand in the prior period[6]. - Net profit attributable to equity holders of the parent increased by 49.11% to RMB 458,353 thousand, up from RMB 307,399 thousand[6]. - Basic earnings per share increased by 57.14% to RMB 0.11, compared to RMB 0.07 in the previous year[6]. - The gross profit margin improved to 18.46%, up from 16.49% in the same period last year, reflecting a 1.97% increase[6]. - The net profit margin increased to 8.55%, up from 5.37%, representing a 3.18% improvement[6]. - Total comprehensive income for the period was RMB 461,221 thousand, compared to RMB 267,799 thousand in the previous year, reflecting significant growth[12]. - The operating profit for the engineering machinery sales segment was RMB 511,766 thousand, while the financial investment segment contributed RMB 50,561 thousand, leading to a total profit before tax of RMB 591,053 thousand[28]. - The company reported a pre-tax profit of RMB 132,545 for the six months ended June 30, 2024, compared to RMB 72,266 for the same period in 2023, marking an increase of approximately 83.5%[37]. Assets and Liabilities - Non-current assets totaled RMB 3,307,777 thousand as of June 30, 2024, an increase of 5.2% from RMB 3,142,659 thousand as of December 31, 2023[13]. - Current assets decreased to RMB 11,712,014 thousand, down 6.2% from RMB 12,480,883 thousand as of December 31, 2023, primarily due to a reduction in inventory[13]. - Total liabilities decreased to RMB 4,830,734 thousand, down 13.6% from RMB 5,591,403 thousand as of December 31, 2023[14]. - The company's equity increased to RMB 10,132,228 thousand as of June 30, 2024, compared to RMB 9,981,520 thousand as of December 31, 2023, reflecting a growth of 1.5%[15]. - Trade receivables rose to RMB 2,520,778 thousand, an increase of 26.3% from RMB 1,994,901 thousand as of December 31, 2023[13]. - The total amount of other payables decreased to RMB 683,765,000 from RMB 793,904,000, indicating a reduction of approximately 14%[52]. - The total liabilities as of June 30, 2024, amounted to RMB 4,090,686, a slight increase from RMB 4,090,686 as of December 31, 2023[65]. Cash Flow - Net cash flow from operating activities was RMB 316,244 thousand for the six months ended June 30, 2024, a significant decrease from RMB 918,814 thousand for the same period in 2023[21]. - Cash flow from investing activities showed a net outflow of RMB 528,162 thousand, compared to an inflow of RMB 742,576 thousand in the previous year[22]. - The net cash and cash equivalents decreased by RMB 496,092 thousand, down from an increase of RMB 1,642,075 thousand in the same period last year[22]. - The total cash and cash equivalents, including time deposits, decreased to RMB 2,979,841,000 from RMB 3,470,777,000, reflecting a decline of approximately 14%[51]. - The company’s financing activities resulted in a net cash outflow of RMB 284,174 thousand, compared to RMB 19,315 thousand in the same period last year[22]. Inventory and Receivables - Inventory turnover days decreased by 11 days to 110 days, while trade payables turnover days increased by 23 days to 157 days[6]. - Inventory decreased to RMB 2,397,703 thousand, down 16.7% from RMB 2,876,507 thousand as of December 31, 2023[13]. - The total inventory as of June 30, 2024, was RMB 2,397,703, down from RMB 2,876,507 as of December 31, 2023, indicating a decrease of about 16.7%[40]. - Trade receivables increased to RMB 3,145,337 as of June 30, 2024, compared to RMB 2,559,621 as of December 31, 2023, representing an increase of approximately 22.9%[41]. Corporate Governance and Strategy - The board of directors has maintained high standards of corporate governance and has complied with the relevant corporate governance codes, with some deviations noted[96][97][101]. - The company is focusing on reducing costs and improving operational efficiency in response to the declining revenue trends observed in the first half of 2024[59]. - The company aims to enhance its focus on the engineering machinery sector, particularly in the production of loaders, forklifts, excavators, and road machinery, while expanding overseas market channels[95]. - The company has committed to enhancing corporate governance and transparency while participating in social welfare initiatives[105]. - The company has strengthened its internal control system, focusing on procurement, supply chain management, and quality improvement[103]. Employee and Management - The total remuneration paid to key management personnel for the six months ended June 30, 2024, was RMB 8,909,000, a decrease from RMB 9,430,000 in the same period of 2023, indicating a reduction of 5.5%[60]. - The total short-term employee benefits for the six months ended June 30, 2024, was RMB 8,804,000, down from RMB 9,344,000 in the same period of 2023, representing a decline of 5.8%[60]. - The company employed approximately 6,932 employees as of June 30, 2024[114]. Market and Sales - Sales in mainland China accounted for RMB 3,892,804 thousand, while sales outside mainland China were RMB 1,467,289 thousand for the six months ended June 30, 2024[29]. - Sales of wheel loaders accounted for 40.4% of total machinery sales, generating RMB 2,160,912, while forklift sales contributed 38.4% with RMB 2,058,326, indicating a shift in product demand[32]. - Sales revenue from the forklift segment grew by 6.36% to RMB 2,058 million, accounting for 38.40% of total revenue[81]. - The sales revenue from wheel loaders contributed 40.31% of total revenue, amounting to RMB 2,161 million, a decline of 10.74% year-on-year[80]. - Excavator sales revenue decreased by 24.64% to RMB 506 million, representing 9.45% of total revenue, primarily due to reduced construction activity[82]. Other Financial Metrics - The company reported a significant increase in financial asset investment returns, amounting to RMB 304 thousand, compared to RMB 89 thousand in the previous year[22]. - Other income increased significantly by 170.10% to approximately RMB 64 million, compared to RMB 24 million in the same period of 2023, driven by the implementation of the VAT input tax credit policy for high-tech enterprises starting in the second half of 2023[91]. - Financial asset impairment losses turned positive, shifting from a loss of approximately RMB 39.6 million in the first half of 2023 to a gain of RMB 22.5 million in the same period of 2024, attributed to improved recovery of previously written-off high-risk receivables[92].

Investment Rating - Maintains a "Buy" rating with projected EPS for 2024-2026 at RMB 0.21, 0.23, and 0.26 respectively [6] Core Views - Net profit surged by 49.1% YoY to RMB 460 million in H1 2024, driven by downstream recovery and electrification of loaders [2] - Gross margin improved to 18.5%, up 2.0 percentage points YoY, while net margin rose to 8.6%, up 3.2 percentage points [2] - The company is expected to benefit from the recovery in construction machinery demand and the acceleration of loader electrification [4][5] Financial Performance - Revenue in H1 2024 was RMB 5.36 billion, down 6.4% YoY, with a significant decline in wheel loader and excavator revenues [2][3] - Forklift revenue grew by 6.4% YoY to RMB 2.06 billion, while other segments faced pressure due to industry slowdown [3] - Overseas revenue declined slightly by 1.68% YoY to RMB 1.47 billion, but its share of total sales increased to 27.4% [4] Industry and Market Outlook - The construction machinery industry is expected to stabilize and recover, supported by increased special bond issuance and improved equipment utilization [4] - The company is strategically adjusting to maintain international market share and competitiveness, with potential for overseas revenue growth [4] - The electrification of loaders is accelerating, with electric loader sales reaching 5,114 units in H1 2024, a 361.1% YoY increase, and an electrification rate of 9.0% [5] Future Growth Drivers - The company is well-positioned to benefit from the electrification trend, with a leading market share in large loaders (3 tons and above) [5] - Long-term growth is supported by stable domestic demand, policy support, and expanding export opportunities [6] Financial Projections - Revenue is projected to grow at a CAGR of 7.3% from 2024E to 2026E, reaching RMB 13.47 billion by 2026E [7] - Net profit is expected to grow at a CAGR of 13.7% from 2024E to 2026E, reaching RMB 1.13 billion by 2026E [7] - ROE is forecasted to improve from 8.4% in 2024E to 9.8% in 2026E [7]

Revenue and Sales Performance - Revenue for the six months ended June 30, 2024, was RMB 5,360,093 thousand, a decrease of 6.4% compared to RMB 5,726,128 thousand in the same period of 2023[2] - Revenue from external customers for engineering machinery sales decreased to RMB 5,360,093 thousand in H1 2024 from RMB 5,726,124 thousand in H1 2023, a decline of 6.4%[12] - Total revenue for the first half of 2024 was RMB 5,360 million, a decrease of 6.39% compared to RMB 5,726 million in the same period of 2023[32] - Revenue decreased by 6.39% to RMB 5,360 million in H1 2024, primarily due to reduced domestic infrastructure and real estate investments and international sales impacted by geopolitical tensions[43] - Revenue from mainland China decreased to RMB 3,892,804 thousand in H1 2024 from RMB 4,234,347 thousand in H1 2023, a decline of 8.1%[14] - Revenue from regions outside mainland China decreased slightly to RMB 1,467,289 thousand in H1 2024 from RMB 1,491,781 thousand in H1 2023[14] - Domestic sales in China decreased by 8.07%, with significant declines in the northwest (-23.69%) and southwest (-25.36%) regions[33] - Overseas sales decreased by 1.68% to RMB 1,467 million, but the proportion of overseas sales increased to 27.37% from 26.05% in the same period last year[33] Profitability and Income - Gross profit increased by 4.8% to RMB 989,459 thousand in 2024 from RMB 944,452 thousand in 2023[2] - Profit before tax for the six months ended June 30, 2024, was RMB 591,053 thousand, a significant increase of 55.7% compared to RMB 379,670 thousand in 2023[3] - Net profit attributable to owners of the parent company was RMB 458,353 thousand, up 49.1% from RMB 307,399 thousand in the same period last year[3] - Total comprehensive income for the period was RMB 461,221 thousand, a 72.3% increase from RMB 267,799 thousand in 2023[4] - Pre-tax profit increased to RMB 591,053 thousand in H1 2024 from RMB 379,670 thousand in H1 2023, a growth of 55.7%[12] - Segment profit for engineering machinery sales increased to RMB 511,766 thousand in H1 2024 from RMB 329,145 thousand in H1 2023[12] - Financial investment segment profit increased to RMB 50,561 thousand in H1 2024 from RMB 14,097 thousand in H1 2023[12] - Net profit increased by 49.19% to RMB 458 million, up from RMB 307 million in the same period last year[32] - Gross profit margin improved to 18.46%, up 2 percentage points from 16.49% in the same period of 2023[32] - Gross profit increased by 4.77% to RMB 989 million in H1 2024, driven by higher export revenue and lower raw material costs[44] - Other income increased significantly to RMB 63,775 thousand in H1 2024 from RMB 23,612 thousand in H1 2023, driven by VAT deductions and government subsidies[17] - Other income surged 170.10% to RMB 64 million in H1 2024, benefiting from VAT deduction policies for high-tech enterprises[45] Assets and Liabilities - Total non-current assets increased to RMB 3,307,777 thousand as of June 30, 2024, from RMB 3,142,659 thousand as of December 31, 2023[5] - Total current assets decreased to RMB 11,712,014 thousand as of June 30, 2024, from RMB 12,480,883 thousand as of December 31, 2023[5] - Total equity increased to RMB 10,132,228 thousand as of June 30, 2024, from RMB 9,981,520 thousand as of December 31, 2023[7] - Total assets decreased to RMB 15,019,791 thousand as of June 30, 2024, from RMB 15,623,542 thousand as of December 31, 2023[15] - Inventory as of June 30, 2024, was RMB 2,397,703 thousand, a decrease from RMB 2,876,507 thousand as of December 31, 2023[23] - Trade receivables as of June 30, 2024, were RMB 3,145,337 thousand, an increase from RMB 2,559,621 thousand as of December 31, 2023[24] - Cash and cash equivalents as of June 30, 2024, were RMB 2,979,841 thousand, down from RMB 3,470,777 thousand as of December 31, 2023[28] - Prepayments, deposits, and other receivables totaled RMB 386,609 thousand as of June 30, 2024, up from RMB 339,039 thousand as of December 31, 2023[26] - The company's trade receivables aged 0 to 90 days increased to RMB 1,633,030 thousand as of June 30, 2024, from RMB 1,029,410 thousand as of December 31, 2023[25] - Trade payables and notes decreased to RMB 3,645,476 thousand from RMB 3,869,222 thousand at the end of 2023[29] - Other payables and accruals decreased to RMB 683,765 thousand from RMB 793,904 thousand at the end of 2023[30] - Cash and bank balances decreased by RMB 491 million to RMB 2,980 million as of June 30, 2024, due to net cash outflows from investing and financing activities[39] - Shareholders' equity increased by 1.51% to RMB 10,132 million as of June 30, 2024, compared to RMB 9,982 million at the end of 2023[40] - Total debt-to-asset ratio improved to 32.54% as of June 30, 2024, down from 36.11% at the end of 2023[41] - Inventory decreased by 16.65% to RMB 2,398 million, reflecting effective inventory management and higher turnover rates[47] - Trade receivables increased by 26.36% to RMB 2,521 million, mainly due to extended credit periods from installment sales[47] Business Segments and Product Sales - The company's main business includes manufacturing and distributing wheel loaders, forklifts, excavators, road rollers, and other construction machinery, as well as providing financial leasing for construction machinery[8] - Sales of wheel loaders accounted for 40.4% of total engineering machinery sales in H1 2024, down from 42.3% in H1 2023[16] - Forklift sales increased to 38.4% of total engineering machinery sales in H1 2024, up from 33.8% in H1 2023[16] - Loader sales accounted for 40.31% of total revenue, a decrease of 1.97 percentage points from 42.28% in 2023[32] - Forklift sales increased by 6.36% to RMB 2,058 million, accounting for 38.40% of total revenue[35] - Excavator sales declined by 24.64% to RMB 506 million, representing 9.45% of total revenue[36] Corporate Governance and Compliance - Independent non-executive directors Qian Shizheng and Wu Jianming have served for over nine years and were re-elected at the 2024 Annual General Meeting[52] - Chairman Li Xinyan concurrently serves as CEO, deviating from corporate governance code C.2.1, but the board deems it appropriate for policy continuity and business stability[53] - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance during the year[54] - The interim results for the six months ended June 30, 2024, were reviewed by external auditor Ernst & Young, with figures consistent with unaudited interim financial data[55] - No purchase, sale, or redemption of the company's listed securities occurred during the six months ended June 30, 2024[56] - No interim dividend was recommended for the six months ended June 30, 2024, consistent with the same period in 2023[21] - No interim dividend was recommended for the six months ended June 30, 2024 (same as the previous year)[57] - The 2024 interim report will be distributed to shareholders and published on the HKEX website[57] Investments and Financing - The company purchased assets (including property, plant, and equipment) worth RMB 35,782 thousand in the six months ended June 30, 2024, down from RMB 76,513 thousand in the same period in 2023[22] - The company provided loans to sales agents amounting to RMB 443,938 thousand as of June 30, 2024, to assist in repaying lease payments[27] Future Outlook and Strategy - The company expects domestic demand for construction machinery to improve in H2 2024, supported by government policies and infrastructure investments[48] - The company is focusing on expanding overseas markets, enhancing product quality, and controlling costs to drive high-quality development[48]

Financial Performance - For the year ended December 31, 2023, the company achieved a revenue of HKD 11.604 billion, with a net profit of HKD 0.712 billion, representing a year-on-year growth of 61%[8]. - The company's operating cash flow was HKD 2.188 billion, and total cash and financial assets at the end of the period amounted to HKD 7.645 billion[8]. - The export revenue reached HKD 3.39 billion, reflecting a 20% increase compared to the previous year[8]. - The gross profit margin improved to 17.53%, up from 16.74% in the previous year, indicating a 0.79% increase[5]. - The basic earnings per share increased to RMB 0.15, a rise of 66.67% from RMB 0.09 in the previous year[5]. - The total revenue for the year was RMB 10,523 million, a decrease of 5.63% compared to RMB 11,150 million in the previous year[11]. - The net profit increased by 61.25% to RMB 646 million, up from RMB 400 million in the previous year[11]. - The comprehensive gross profit margin rose to 17.53%, an increase of 0.79 percentage points from 16.74% in the previous year[11]. Market Position and Strategy - The company has focused on enhancing product research and development, particularly in fuel product improvements and the continuous development of new energy products[8]. - The company aims to enhance product competitiveness and market share despite the ongoing industry downturn[11]. - The company plans to continue expanding its international market presence and improving product competitiveness[12]. - The company aims to expand its sales and service network both domestically and internationally to increase market penetration[61]. Inventory and Receivables Management - The inventory turnover days decreased to 136 days, down from 150 days, indicating improved management efficiency[5]. - Trade receivables decreased by 18.69% to approximately RMB 1,995 million, down from RMB 2,453 million, attributed to reduced domestic sales and slower collection of receivables[29]. - Inventory decreased by 19.90% year-on-year to approximately RMB 2,877 million, down from RMB 3,591 million, due to a more cautious procurement plan[28]. Financial Health and Ratios - The company maintained a debt-to-asset ratio of 36.1%, which is considered healthy and among the best in the industry[8]. - The total asset-liability ratio as of December 31, 2023, was approximately 36.11%, a slight improvement from 36.64% on December 31, 2022[22]. - The company’s net asset value reached RMB 9,981,520,000, up from RMB 9,751,155,000, indicating a growth of approximately 2.4%[150]. Dividends and Reserves - The company plans to distribute a dividend of HKD 0.08 per share, with a payout ratio of 48% of net profit[8]. - As of December 31, 2023, the company's distributable reserves amounted to approximately RMB 7,206 million, an increase from RMB 7,022 million in 2022[40]. - The board proposed a final dividend of HKD 0.08 per share for the fiscal year ending December 31, 2023[38]. Corporate Governance - The board is committed to enhancing corporate governance and transparency to build trust with shareholders and stakeholders[63]. - The board is responsible for reviewing and monitoring compliance with legal and regulatory policies[64]. - The company has adopted a standard code of conduct for securities trading by directors, confirming compliance for the fiscal year ending December 31, 2023[70]. - The board consists of 8 members, including 1 non-executive director and 3 independent non-executive directors, with a gender diversity ratio of approximately 13% female representation[82]. Environmental, Social, and Governance (ESG) Initiatives - The company is committed to continuous improvement in environmental performance and product development to reduce pollution and enhance energy efficiency[52]. - The company has established an ESG governance framework consisting of the Board of Directors, an ESG working group, and executive departments to oversee and implement sustainability initiatives[100]. - The company adheres to national environmental regulations and has implemented an ISO 14001 environmental management system to minimize operational environmental impact[108]. - The company emphasizes the importance of stakeholder feedback in shaping its ESG strategies and initiatives[105]. Risk Management - The company has established a risk management and internal control system to identify, assess, and manage significant risks to achieve its business objectives[84]. - The internal audit department is responsible for reviewing the adequacy and effectiveness of the risk management and internal control systems, reporting to the board and audit committee[85]. Employee and Supplier Relations - The company employed approximately 7,204 employees as of December 31, 2023[51]. - Employee satisfaction with the production environment reached 99%[119]. - The company has established a stable and high-quality supply chain system, emphasizing risk identification and assessment of suppliers[122]. Financial Reporting and Compliance - The independent auditor's report confirms that the consolidated financial statements accurately reflect the group's financial position as of December 31, 2023, in accordance with Hong Kong Financial Reporting Standards[137]. - The group has adopted new and revised Hong Kong Financial Reporting Standards, including HKFRS 17 on insurance contracts[163]. - The group measures its investment properties, derivative financial instruments, equity investments, and wealth management and fund investment products at fair value at the end of each reporting period[168].

Investment Rating - The report maintains a "Buy" rating for the company [5][7]. Core Insights - The company has shown a rebound in net profit, with a year-on-year increase of 61.2%, despite a decline in revenue by 5.6% [2][4]. - The company’s overseas sales have significantly increased, with a 20.1% growth in 2023, contributing to 29.2% of total sales [4]. - The engineering machinery industry is expected to recover, benefiting from government policies aimed at stimulating growth [4]. Financial Performance Summary - The company achieved a total revenue of 10,522.9 million RMB in 2023, down from 11,150.2 million RMB in 2022, with a projected revenue growth of 7.3% in 2024 [6]. - The net profit for 2023 was 645.4 million RMB, up from 400.5 million RMB in 2022, with an expected net profit of 883.0 million RMB in 2024 [6]. - Earnings per share (EPS) increased from 0.09 RMB in 2022 to 0.15 RMB in 2023, with forecasts of 0.21 RMB in 2024 [6]. Business Segment Performance - The revenue from wheel loaders decreased by 22.2% to 40.6 billion RMB, while excavator revenue increased by 13.4% to 12.6 billion RMB due to strong export performance [3]. - Forklift revenue rose by 8.5% to 36.6 billion RMB, while roller revenue fell by 24.2% to 0.49 billion RMB [3]. - Parts revenue increased by 6.9% to 10.4 billion RMB [3]. Market Outlook - The engineering machinery sector is currently at a low point but is expected to recover as government infrastructure investments materialize [4]. - The company is positioned to benefit from improved equipment utilization rates and a recovery in demand within the industry [4]. - The international competitiveness of the company’s products has improved, leading to increased market share in overseas markets [4].