Core Viewpoint - The company, Macro Holdings (09930.HK), anticipates a significant decline in revenue and shareholder profit for the first half of 2025 compared to the same period in 2024, with expected revenue dropping by approximately 10% and shareholder profit decreasing by 80%-90% [1][2]. Group 1: Revenue and Profit Forecast - The company expects total revenue for the first half of 2025 to decrease to approximately RMB 4,385,179 thousand from RMB 4,872,421 thousand in the first half of 2024, indicating a decline of about 10% [1]. - Shareholder profit for the first half of 2025 is projected to fall to between RMB 26,823 thousand and RMB 53,646 thousand, down from RMB 268,228 thousand in the first half of 2024, representing a decrease of 80%-90% [1]. Group 2: Reasons for Decline - The decline in revenue and profit is primarily attributed to the adverse market conditions in the equipment rental industry in mainland China, where rental prices have continuously decreased, impacting operational leasing income and gross profit despite stable utilization rates of aerial work platforms [2]. - The company has adopted a proactive contraction strategy for its materials business in mainland China, leading to a reduction in engineering technical service income and a delayed impact on gross profit margins due to the clearance of labor and site costs [2]. - The ongoing decline in steel prices has also contributed to a decrease in trade income and gross profit from the sale of material assets [2]. - Although the overseas business segment has experienced rapid revenue growth and achieved profitability, its smaller scale compared to domestic operations means it cannot fully offset the downturn in the domestic market [2].

Core Viewpoint - Hongxin Jianda has signed a share acquisition agreement with TH Tong Heng Machinery, marking its first cross-border acquisition and aiming to enhance its market presence in Malaysia through strategic synergies [1][2]. Group 1: Acquisition Details - Hongxin Jianda will acquire 80% of TH Tong Heng Machinery initially, with the remaining 20% to be priced based on future performance [1]. - TH Tong Heng Machinery is the largest comprehensive equipment rental company in Malaysia, established in 1994, and ranks 71st in the 2024 global aerial work platform rental list [1]. - The acquisition is expected to create significant synergies in product complementarity, channel integration, and technology fusion [2]. Group 2: Company Background - Hongxin Jianda, a flagship platform under Far East Horizon, was listed in Hong Kong in May 2023 and ranks 14th in the 2024 global equipment rental company list [2]. - The company has established a global service network covering 59 overseas locations across 7 countries [2]. Group 3: Market Impact - The acquisition is anticipated to deepen Hongxin Jianda's market penetration in Malaysia, leveraging a stable customer base of over 1,000 clients with low concentration and strong loyalty [2]. - The first quarter operational summary indicates a rising rental rate for key equipment, with the rental rate for aerial work platforms reaching approximately 78% [3]. - Overseas business revenue for the first quarter of 2025 has significantly increased compared to the same period last year, now accounting for over 15% of total revenue [3].

Investment Rating - The investment rating for the company is "Buy" with a target price not specified in the report [3][4]. Core Viewpoints - The company has signed a share acquisition agreement with TH Tong Heng Machinery, the largest comprehensive equipment leasing company in Malaysia, to acquire 80% of its shares, which is expected to enhance market share and competitiveness in Malaysia [1][2]. - The acquisition price is approximately RMB 300 million, corresponding to about 1.76 billion MYR, which is considered reasonable at about 6 times EBITDA, with the target company's revenue compound annual growth rate projected at 31% from 2021 to 2024 [2]. - The company is optimizing its asset structure and controlling capital expenditures, which is expected to improve asset return rates and enhance overseas operational performance [3]. Summary by Sections Acquisition Details - The acquisition of TH Tong Heng Machinery is a strategic move to deepen the company's presence in the Malaysian market, leveraging a stable customer base of over 1,000 clients [1]. - The remaining 20% of shares will be priced based on future long-term operating performance [1]. Financial Performance - The target company reported total assets of 163 million MYR and net assets of 91.9 million MYR as of the end of 2024, indicating strong financial health [2]. - The company's EBITDA margin and net profit margin for 2024 are projected to be 70% and 28.3%, respectively [2]. Operational Efficiency - The company's rental rates for key equipment categories have been increasing, with a reported rental rate of approximately 78% for aerial work platforms by the end of Q1 2025 [3]. - The overseas business revenue has significantly increased, accounting for over 15% of total revenue, indicating successful global expansion efforts [3]. Future Projections - The company expects net profits for the years 2025 to 2027 to be 1.02 billion, 1.15 billion, and 1.3 billion RMB, respectively, with corresponding price-to-earnings ratios of 3.6, 3.2, and 2.8 times [3].

Summary of the Conference Call Company and Industry Involved - **Company**: 红星建发 (Hongxing Jianda) - **Industry**: Equipment Rental Market in Malaysia Key Points and Arguments - **Acquisition Strategy**: 红星建发 acquired 东庆公司 (Dongqing Company) to bypass local regulations on second-hand equipment imports, quickly gain local customer resources, and enhance service quality and efficiency, thereby reducing reliance on Chinese clients and price competition [2][3][5] - **Market Growth**: The Malaysian equipment rental market is experiencing stable growth, with the number of aerial work platforms reaching 12,000 units. 红星建发 and 东庆 together hold approximately 35% market share, benefiting from data center projects in the new special zone [2][7] - **东庆 Company Profile**: 东庆 is the largest equipment rental company in Malaysia, with around 1,400 units and a high local customer repurchase rate of 90%. It has a net asset of approximately 100 million MYR and an EBIT of 40 million MYR, with an ROE exceeding 10% [2][4] - **Strategic Goals Post-Merger**: The joint venture aims to complement customer bases, influence industry policy, reduce operational costs, and absorb smaller rental companies through a buy-and-build model to enhance operational capabilities [2][9] - **Future Market Projections**: 红星建发 anticipates that the equipment inventory in Malaysia will grow to 19,000-20,000 units in the next 3-5 years, focusing on new machine sales through an agency model while maintaining strict PMA certification rules to limit second-hand equipment influx [2][15] Additional Important Content - **Regulatory Challenges**: The company faced challenges due to regulatory changes that restricted the import of second-hand equipment without PMA certification, prompting the acquisition of 东庆 as a solution [3][5] - **Market Dynamics**: The Malaysian market is characterized by a focus on service quality and efficiency among local clients, contrasting with the price competition prevalent in the Chinese market [4][6] - **Cost Optimization**: Post-merger, cost optimization strategies include reducing site rental fees, lowering PMA certification costs, and utilizing 东庆's logistics capabilities to halve logistics costs [10] - **Long-term Outlook**: The outlook is optimistic, with plans to strengthen ties with local clients and absorb smaller rental companies, aiming for sustainable long-term growth [11] - **Valuation Comparisons**: The valuation of the Southeast Asian equipment rental market is generally higher than that of the Hong Kong capital market, with acquisition multiples ranging from 8 to 12 times EBITDA in the region [12][24] - **Future Expansion Plans**: The company plans to continue expanding its overseas presence, particularly in the Middle East and Southeast Asia, through strategic acquisitions and potential public listings [22][25] This summary encapsulates the key insights from the conference call, highlighting the strategic direction and market dynamics of 红星建发 in the Malaysian equipment rental industry.

Group 1 - The core transaction involves the acquisition of an 80% stake in TH Tong Heng Machinery Sdn. Bhd. for a cash consideration of 176 million MYR (approximately 299 million RMB) [1][2] - Following the completion of the transaction, TH Tong Heng Machinery will become a subsidiary of the company, and its financial performance will be consolidated into the group's financial statements [2][3] - The acquisition is part of the company's strategic initiative to enhance its market position and operational capabilities in Southeast Asia, aiming to expand its overseas asset base and integrate a mature sales distribution network in Malaysia [3][4] Group 2 - The target company, established in 1994, primarily engages in machinery and equipment leasing, as well as the sale of new and used machinery [2] - TGCore, another entity involved, was founded in 2019 and focuses on industrial machinery maintenance and wholesale, with significant business overlap with the target company [2] - The transaction is expected to create synergies for the company's existing operations in Malaysia, enhancing operational efficiency and diversifying the business portfolio [3]

Group 1 - The company, Macro Holdings, announced a conditional share subscription agreement with Horizon Construction Development Investment (Hong Kong) Limited for a total indicative cash consideration of 176 million Malaysian Ringgit [1] - The transaction involves the acquisition of 80% of the issued share capital of TH Tong Heng Machinery Sdn. Bhd., which will become a subsidiary of the company upon completion [1] - A shareholders' agreement was established to regulate the affairs of the target company and the rights and obligations of the shareholders, including options for both parties to acquire shares [1] Group 2 - The acquisition and the granting of subscription and put options are strategic measures to enhance the company's market position and operational capabilities in Southeast Asia [2] - The transaction is expected to expand the company's overseas asset base and integrate a mature sales distribution network in Malaysia, providing access to a broad customer base [2] - The deal is anticipated to create synergies with the existing Malaysian operations, improving operational efficiency and diversifying the company's business portfolio [2]

Company and Industry Summary Company Overview - The company is a leading player in the equipment operation service industry in China, with total assets reaching 36.4 billion RMB by the end of last year, including a management asset scale of 216,000 high-altitude equipment platforms and nearly 145,000 tons of new capture materials and approximately 70,000 tons of new mold materials [1][2] Strategic Vision - The long-term vision is to become a world-class comprehensive equipment operation service provider, aiming to establish a strong presence in Southeast Asia and North Africa over the next decade [2] Financial Performance - In 2024, the company reported a revenue growth of over 20%, reaching 11.58 billion RMB, while EBITDA increased slightly by 3%. However, net profit saw a slight decline due to asset layout and increased shipping costs for second-hand assets [12][18] Domestic Business Insights - The company maintained a market share of over 30% in the high-altitude equipment sector during a decade of rapid growth from 2013 to 2023. In response to a recent adjustment in the domestic rental market, the company is implementing strategies to enhance asset operational efficiency [3][4] - New business expansion stores have been established to better serve end customers in sectors such as mining and steel [4] Product and Service Expansion - The company is diversifying its product offerings, with new categories generating approximately 220 million RMB in revenue, reflecting an over 800% year-on-year growth [4] - The company is also optimizing its asset structure by transferring traditional equipment overseas and enhancing digital operations to improve efficiency [5][6] International Expansion - The company follows a "3+3+3" strategy for overseas business development, focusing on countries along the Belt and Road Initiative. The demand for equipment operation services in Southeast Asia, the Middle East, and North Africa is expected to grow [7][8] - By mid-2024, the company had established 53 outlets in seven countries, employing around 700 staff, with an asset scale exceeding 3 billion RMB [8][9] Revenue Structure - The overseas revenue accounted for only 3.4% of total revenue, but it is expected to grow rapidly in the future. The company aims to enhance its multi-product operation model in existing markets [13][11] Market Challenges - The average output rate declined by 6 percentage points year-on-year, with rental prices for construction machinery dropping by 20%. The company's rental prices also fell by about 10% [14][15] - The company is facing challenges in maintaining rental rates and operational efficiency due to market fluctuations and competition from local rental companies [31][32] Future Outlook - The company anticipates a stable rental price environment in 2025, with an expected increase in utilization rates to offset potential price declines [38] - The focus will be on optimizing asset combinations and enhancing operational capabilities to improve overall asset returns and shareholder value [43][44] Key Financial Metrics - Total assets reached 36.4 billion RMB, with liabilities at 25 billion RMB, reflecting a 22% increase. The company maintains a debt ratio below 70% [20][19] - The company has established partnerships with eight overseas institutions, securing 1.66 billion RMB in foreign financing [18] Conclusion - The company is strategically positioned for growth in both domestic and international markets, with a focus on enhancing operational efficiency, diversifying product offerings, and expanding its global footprint while navigating market challenges and optimizing financial performance [42][43]

Investment Rating - The investment rating for the company is "Buy" with a target price based on the last closing price of 1.21 HKD [1][10]. Core Views - The report highlights that the company has accelerated its overseas expansion, which is expected to enhance operational efficiency [1][6]. - The company achieved a revenue of 11.58 billion HKD in 2024, representing a year-on-year growth of 20.5%, while the net profit attributable to shareholders was 0.90 billion HKD, down 6.9% year-on-year [4][7]. - The average Return on Equity (ROE) was 8.1%, a decrease of 2.9% compared to the previous year [4]. Financial Performance - Revenue breakdown for the reporting period includes operating leasing services at 4.62 billion HKD, engineering technical services at 3.75 billion HKD, and asset management and other services at 3.21 billion HKD, with respective year-on-year changes of -10.1%, +26.5%, and +113.0% [5]. - The overall gross margin decreased by 6.5 percentage points to 32.6%, primarily due to a decline in equipment utilization and rental prices [5]. - The company’s capital expenditure reached 7.10 billion HKD, a significant increase of 249.5% year-on-year, with net capital expenditure after sales of second-hand equipment at 4.83 billion HKD, up 847.3% [5]. Strategic Initiatives - The company is diversifying its product matrix and expanding into non-construction sectors, including mining machinery leasing and oil and chemical industries [6]. - The overseas asset management scale has exceeded 2.1 billion HKD, with overseas revenue increasing over 27 times to 0.39 billion HKD, achieving breakeven [6]. - The company is pursuing an "operationally driven" transformation and advancing its "3+3+3" globalization strategy, which is expected to improve operational quality and efficiency [6]. Earnings Forecast - Projected revenues for 2025-2027 are 12.27 billion HKD, 13.46 billion HKD, and 14.84 billion HKD, with net profits of 0.96 billion HKD, 1.07 billion HKD, and 1.20 billion HKD respectively [7]. - The estimated earnings per share (EPS) for the same period are 0.30 HKD, 0.33 HKD, and 0.38 HKD, with corresponding price-to-earnings (PE) ratios of 3.76, 3.37, and 2.99 [7].

Financial Performance - The company reported a significant increase in revenue, achieving a total of 84 million in 2024, representing a growth of 63% compared to the previous year[5]. - The company achieved a total revenue of approximately RMB 11.58 billion in 2024, representing a year-on-year growth of about 21%[20]. - The total revenue for 2024 reached approximately RMB 11.58 billion, an increase from RMB 9.61 billion in 2023, representing a growth of 20.4%[30]. - Net profit for 2024 was approximately RMB 900 million, compared to RMB 962 million in 2023, reflecting a decrease of 6.9%[30]. - The pre-tax profit for 2024 was RMB 1,200,159 thousand, a decrease of 2.1% compared to RMB 1,226,523 thousand in the previous year[59]. - EBITDA for 2024 was RMB 4,628,654 thousand, an increase of 3.3% from RMB 4,480,251 thousand in the previous year[59]. - The gross profit for 2024 was RMB 3,774,596 thousand, a slight increase of 0.4% from RMB 3,761,401 thousand in the previous year, with a gross margin of 32.6%, down from 39.1%[84]. - The gross profit from operating lease services decreased by 23.0% to RMB 1,762,758 thousand in 2024, with a gross margin of 38.1%, down from 44.6% in the previous year, mainly due to fluctuations in rental prices[85]. - The gross profit from asset management services was RMB 1,021,592 thousand in 2024, with a gross margin of 31.8%, compared to RMB 605,442 thousand and 40.2% in the previous year, indicating a shift in service dynamics[85]. Customer Base and Market Position - The company has established a diverse and high-quality customer base, leveraging synergies across various product lines and service categories[12]. - The company expanded its customer base from approximately 232,000 at the end of 2023 to about 325,000 by the end of 2024[25]. - The company aims to provide a comprehensive "product + service" solution for the construction and industrial sectors, enhancing its market competitiveness[12]. - The company ranked 14th in the global equipment leasing company list (IRN100) and 2nd in the global aerial work platform rental list (ACCESS50)[28]. International Expansion - The company has expanded its overseas presence, deploying multiple service points in various international regions[12]. - The company established 53 service points in seven overseas countries, with overseas asset management exceeding RMB 3.1 billion[20]. - The company is committed to its "Three + Three + Three" overseas development strategy, aiming to enhance its overseas service capabilities[21]. - The overseas contracting business achieved a revenue of RMB 11,819.9 million in 2024, reflecting a year-on-year growth of 4.2%[51]. Innovation and Development - The company is committed to continuous innovation in research and development, focusing on digital operations to improve service efficiency[12]. - The company aims to achieve nearly 100% online business process rate through its self-developed digital system, with a ratio of full-time equipment dispatchers to equipment units at 1:7,100[57]. - The company is actively exploring new industries and products, focusing on non-construction sectors such as mining and marine engineering[19]. Financial Position and Structure - The company has a strong financial position, supported by major banking partners including China Construction Bank and Bank of China[11]. - The company maintained a stable financial structure and strong risk resistance amid a complex business environment[18]. - The debt-to-asset ratio for 2024 was 68.6%, compared to 65.5% in 2023, indicating a slight increase in leverage[31]. - Total assets as of the end of 2024 amounted to approximately RMB 36.43 billion, a growth of 16.6% compared to the previous year[31]. - Total liabilities increased by RMB 4,516,723 thousand or 22.1% year-over-year, reaching RMB 24,975,831 thousand as of December 31, 2024[147]. Operational Efficiency - The company is focused on strategic growth through potential mergers and acquisitions to enhance its market position[12]. - The company aims to enhance its core competitiveness by focusing on efficiency, service, and asset operation capabilities in 2025[29]. - The company actively adjusted its asset structure by selling underperforming equipment and materials, enhancing overall operational efficiency[89]. Employee and Cost Management - Employee and subcontractor costs rose to RMB 2,349,804 thousand in 2024, a significant increase of 48.0%, driven by the expansion of engineering services and increased overseas market activities[96]. - Selling and administrative expenses (excluding impairment of assets) rose to RMB 1,866,205 thousand, reflecting a 21.1% increase from RMB 1,540,538 thousand last year[93]. - The total costs and expenses combined reached RMB 9,672,671 thousand, a 30.9% increase from RMB 7,389,718 thousand in the previous year[93]. Risk Management - The company implemented a systematic risk management assessment policy to evaluate customer creditworthiness and performance, enhancing the assessment of small and medium-sized customers[130]. - The company has established a mechanism for risk awareness and management of accounts receivable, including a blacklist system to effectively isolate high-risk customers[130]. Future Outlook - The company aims to enhance core competitiveness and expand its business footprint while continuously exploring new products and customer needs[191]. - The company is focused on establishing a mature operational model domestically to support overseas growth, aiming for a second growth curve[191].

Investment Rating - The report initiates coverage with an "Accumulate" rating for the company [5]. Core Views - The company is a leading player in the aerial work platform rental industry, with significant growth potential in overseas markets, which is expected to contribute to performance increments [3]. - The company is shifting its focus towards non-asset-driven businesses, which are growing rapidly and are projected to account for 60.1% of revenue by 2024, up 13.58 percentage points year-on-year [1][2]. - Despite a decline in net profit by 6.87% year-on-year, the company is expected to achieve stable revenue growth of 20.50% in 2024, reaching 11.581 billion yuan [1][2]. Financial Summary - Revenue for 2024 is projected at 11.581 billion yuan, a 20.50% increase from the previous year, while net profit is expected to be 896.32 million yuan, a decrease of 6.87% [4]. - The gross margin for 2024 is estimated at 32.59%, down 16.73% year-on-year, with the rental service segment showing a gross margin of 38.15% [2]. - Operating cash flow is expected to increase to 4.204 billion yuan in 2024, reflecting a positive cash flow trend [2]. Business Segments - The company’s revenue from operating leasing services is projected to decline by 10.08% to 4.621 billion yuan, while engineering technical services and asset management are expected to grow by 26.54% and 112.96%, respectively [1]. - The company has expanded its overseas operations, entering seven countries, and expects overseas revenue to reach 389 million yuan in 2024, a staggering growth of 2765.7% [3]. Earnings Forecast - The company forecasts revenues of 11.928 billion yuan, 13.718 billion yuan, and 15.775 billion yuan for 2025, 2026, and 2027, respectively, with corresponding net profits of 921 million yuan, 1.062 billion yuan, and 1.218 billion yuan [4][3]. - Earnings per share (EPS) are projected to be 0.29 yuan, 0.33 yuan, and 0.38 yuan for 2025, 2026, and 2027, respectively, with price-to-earnings (PE) ratios decreasing to 3.87, 3.35, and 2.92 [4][3].