Investment Rating - The report maintains a "Buy" rating for the machinery industry [1] Core Views - Domestic excavator sales continued to grow in September 2025, with a total of 19,858 units sold, representing a year-on-year increase of 25.4%. Domestic sales reached 9,249 units, up 21.5% year-on-year [3][4] - The report highlights a significant recovery in non-excavator machinery categories, with loader sales increasing by 30.5% year-on-year in September 2025 [3][4] - The government is expected to support infrastructure investment through the issuance of long-term special bonds and local government bonds, which will drive demand for construction machinery [5] - The report notes that the electric loader sales surged by 176.0% year-on-year in September 2025, indicating a strong trend towards electrification in the machinery sector [7][8] - The commencement of the Yarlung Tsangpo River hydropower project is anticipated to further boost demand for construction machinery, with potential equipment needs estimated between 120 billion to 180 billion RMB [9][10] Summary by Sections Sales Performance - In September 2025, excavator sales reached 19,858 units, with domestic sales at 9,249 units, both showing significant year-on-year growth [3][14] - Non-excavator machinery categories also showed strong performance, with loaders up 30.5% and truck cranes up 40.7% in domestic sales [3][14] Market Trends - The report emphasizes the ongoing recovery in domestic demand for construction machinery, driven by equipment replacement cycles and government infrastructure initiatives [4][5] - The electric machinery segment is gaining traction, with electric loader sales increasing significantly, reflecting a shift towards greener technologies [7][8] Export Opportunities - Excavator exports in September 2025 totaled 10,609 units, marking a 29.0% increase year-on-year, with total export value reaching 5.27 billion USD [6][14] - The report identifies opportunities in Southeast Asia, Africa, and the Middle East for machinery exports, despite challenges such as U.S.-China tariff uncertainties [6] Investment Recommendations - The report recommends several leading machinery manufacturers, including SANY Heavy Industry, XCMG, and Zoomlion, as well as component suppliers like Hengli Hydraulic, indicating a positive outlook for these companies [10][11]

Group 1: Machinery Industry - In September 2025, the total sales of excavators in China increased by 25.4% year-on-year, with domestic sales and exports growing by 21.5% and 29.0% respectively. For the first nine months, total excavator sales rose by 18.1% year-on-year, with domestic sales and exports increasing by 21.5% and 14.6% respectively [2] - In September 2025, the total sales of loaders in China increased by 30.5% year-on-year, with domestic sales and exports growing by 25.6% and 35.3% respectively. For the first nine months, total loader sales rose by 14.6% year-on-year, with domestic sales and exports increasing by 20.7% and 8.3% respectively [2] - The growth in sales for earth-moving machinery is attributed to increased sales efforts by manufacturers, accelerated exports of second-hand equipment, and a low base from the previous year. Future growth in domestic sales is expected to continue due to ongoing demand for equipment updates and contributions from new projects [2] - The overseas market is anticipated to maintain growth driven by demand from emerging markets in Africa and mineral-rich countries like Indonesia and Australia, alongside domestic manufacturers accelerating their international expansion [2] Group 2: Lithium Battery Equipment - In September 2025, the production of power batteries in China increased by 35.4% year-on-year, with a total installed capacity of 76.0 GWh, reflecting a 39.5% year-on-year growth. For the first nine months, the cumulative installed capacity reached 493.9 GWh, up 42.5% year-on-year, while total production grew by 51.4% to 1121.9 GWh [3] - The growth in power battery production is driven by the rapid increase in new energy vehicle sales, which reached approximately 1.604 million units in September 2025, a year-on-year increase of 24.6% [3] - Future growth in the new energy vehicle market is expected to continue, supported by policy incentives and technological advancements, which will also drive demand for lithium battery equipment [3] Group 3: Investment Recommendations - The manufacturing PMI in China rose by 0.4 percentage points to 49.8% in September 2025, indicating improvements in production, new orders, and new export orders, suggesting a recovery in both supply and demand in the manufacturing sector [4] - The report maintains a "buy" rating for the machinery industry, particularly recommending the engineering machinery sector, which is expected to see sustained growth in performance due to the resonance of domestic and international demand [5] - The lithium battery equipment sector is also highlighted for its potential growth driven by rapid end-user demand and technological advancements leading to equipment upgrades [5]

Core Viewpoint - Hengli Hydraulic's stock has shown significant performance with a year-to-date increase of 76.03%, reflecting strong market interest and financial growth [1][2]. Financial Performance - For the first half of 2025, Hengli Hydraulic achieved operating revenue of 5.171 billion yuan, representing a year-on-year growth of 7.00% [2]. - The net profit attributable to shareholders for the same period was 1.429 billion yuan, marking a year-on-year increase of 10.97% [2]. Stock Market Activity - As of October 24, Hengli Hydraulic's stock price was 91.66 yuan per share, with a market capitalization of 122.9 billion yuan [1]. - The stock experienced a net inflow of 2.1221 million yuan from main funds, with significant trading activity noted [1]. Shareholder Information - As of June 30, the number of shareholders increased to 43,800, a rise of 4.26% from the previous period [2]. - The average number of circulating shares per shareholder decreased by 4.09% to 30,647 shares [2]. Dividend Distribution - Hengli Hydraulic has distributed a total of 5.775 billion yuan in dividends since its A-share listing, with 2.708 billion yuan distributed over the last three years [3]. Institutional Holdings - As of June 30, the largest circulating shareholder was Hong Kong Central Clearing Limited, holding 103 million shares, a decrease of 185,000 shares from the previous period [3]. - Several ETFs, including Huatai-PB CSI 300 ETF and E Fund CSI 300 ETF, have increased their holdings in Hengli Hydraulic [3].

Summary of China Machinery 3Q25 Preview Industry Overview - The report focuses on the **China machinery industry**, specifically construction machinery and trucks, with an emphasis on sales volume and profitability trends for 3Q25 [1][7][16]. Key Points Sales Volume Trends - **Domestic Sales Growth**: - Domestic sales volume for heavy-duty trucks (HDTs) increased by **81% year-over-year (yoy)** at the wholesale level and **65% yoy** at the retail level, indicating strong channel inventory health [5]. - Excavator sales volume also saw a surprising increase of **18% yoy**, surpassing earlier expectations of **5-10%** growth [5][14]. - Small machines drove the growth in excavators, with a **26% yoy** increase, while medium-to-large machines faced a **2% yoy** decline [5][14]. - **Export Trends**: - Export sales for HDTs grew by **23% yoy**, with strong performance in regions like Africa, the Middle East, and Southeast Asia [9][14]. - Overall export growth remained strong across most machinery categories, except for mobile cranes and aerial work platforms (AWPs) [14]. Profitability Insights - Despite solid top-line growth, profitability is expected to be under pressure due to: - Unfavorable foreign exchange impacts, particularly affecting companies like Hengli and Dingli [7][17]. - A negative product mix impacting Sany Heavy [7][17]. - Increased competition affecting Weichai [7]. Earnings Forecasts - The report anticipates that **4 out of 6** coverage companies will report solid top-line growth, primarily in double digits, led by Hengli [7]. - EPS estimates for the coverage companies have been revised downwards by **-7% to +6%** based on year-to-date developments [1][8]. Stock Ratings and Recommendations - **Buy Ratings**: - Weichai and Dingli are maintained as Buy rated due to their potential from German fiscal expansion and exposure to developed markets [8]. - **Neutral Ratings**: - Most construction machinery stocks, including Sany, Hengli, and Lonking, are rated Neutral as their positive outlooks are already reflected in current valuations [8]. - **Sell Rating**: - Sinotruk is rated Sell due to concerns over overestimated profitability amid pressures from electric HDTs and unfavorable export conditions [8]. Additional Insights - The report highlights a notable shift in the powertrain mix for trucks, with LNG penetration recovering and electrification accelerating, while diesel HDTs reached a historical low share [5]. - The construction machinery sector is experiencing intensified competition, particularly in the rental channel, which may affect future sales dynamics [14]. Conclusion - The China machinery industry is showing robust sales growth, particularly in domestic markets, but faces challenges in profitability due to external factors and competitive pressures. The outlook for individual companies varies, with specific recommendations based on their market positions and expected performance in the upcoming quarter.

Group 1: Metal Industry Insights - The steel industry is experiencing a demand rebound, but the recovery is not as strong as in previous years, with short-term price fluctuations expected [2] - Copper prices have been under pressure due to previous U.S. tariff policies, but expectations surrounding U.S.-China trade talks and potential Federal Reserve interest rate cuts may alleviate downward pressure [2] - Aluminum prices are expected to fluctuate in the short term, supported by stable fundamentals and easing trade tensions between the U.S. and China [2] - Gold prices may face short-term correction risks due to upcoming U.S.-China negotiations and Federal Reserve meetings, but geopolitical tensions could provide support [2] - Lithium prices are expected to be supported by resilient demand, particularly in energy storage, as disruptions in mining operations in Jiangxi have eased [2] - Rare earth prices may face pressure if export controls are tightened, with attention on the impact of U.S.-China trade negotiations [2] Group 2: Strategic Recommendations - For the steel sector, policies promoting precise capacity control and quality improvement are expected to enhance the competitive landscape and profitability of steel companies [3] - The copper supply outlook is tightening due to incidents at major mines, suggesting a potential price floor; focus on companies with strong resource guarantees and environmental standards [3] - In the aluminum sector, the "anti-involution" policy is anticipated to improve the supply landscape, with a focus on demand recovery during peak seasons [4] - Gold prices are influenced by U.S. government stability and geopolitical issues, with long-term interest rate uncertainty potentially benefiting gold [4] - The rare earth sector is expected to see a revaluation of related companies due to heightened strategic importance and export control policies [5] - Cobalt supply constraints are anticipated due to limited export quotas from the Democratic Republic of Congo, while demand from electric vehicles and energy storage remains strong [5] Group 3: Machinery Equipment Industry Insights - The engineering machinery sector is witnessing a recovery, with significant growth in excavator sales and a favorable policy environment promoting effective demand expansion [6][7] - The import and export trade of engineering machinery in September reached $5.505 billion, marking a year-on-year increase of 29.1% [6] - The machinery equipment industry is currently valued at a P/E ratio of 31.63, with a premium of 133.41% over the CSI 300 index [6] - The sector's outlook is positive, driven by ongoing demand from infrastructure projects and a shift towards commercial competition in humanoid robotics [7]

Core Viewpoint - Hengli Hydraulic experienced significant trading activity on October 22, with a total of 1.081 million shares traded through block trades, amounting to approximately 93.25 million yuan, reflecting a discount of 6.78% compared to the closing price of the day [1] Trading Activity - On October 22, Hengli Hydraulic had 16 block trades with a total trading volume of 1.081 million shares and a total transaction value of 93.25 million yuan [1] - The average transaction price was 86.26 yuan, which is 6.78% lower than the closing price of 92.53 yuan [1] - Over the past three months, the stock has seen a total of 55 block trades, with a cumulative transaction value of 1.204 billion yuan [1] Stock Performance - The closing price of Hengli Hydraulic on October 22 was 92.53 yuan, down 0.24% from the previous day [1] - The stock had a turnover rate of 0.43% and a total trading volume of 534 million yuan for the day [1] - In the last five days, the stock has decreased by 5.98%, with a net inflow of main funds amounting to 50.57 thousand yuan [1] Financing Data - The latest financing balance for Hengli Hydraulic is 498 million yuan, which has increased by 33.82 million yuan over the past five days, representing a growth rate of 7.29% [1] Company Background - Jiangsu Hengli Hydraulic Co., Ltd. was established on June 2, 2005, with a registered capital of 1.34082 billion yuan [1]

Summary of Key Points Core Viewpoint - The recent bulk trading activity of Hengli Hydraulic indicates significant institutional interest, with a total transaction volume of 1.081 million shares and a transaction value of approximately 93.25 million yuan, reflecting a discount of 6.78% compared to the closing price on the same day [2][3]. Trading Activity - On October 22, Hengli Hydraulic experienced 16 bulk trades, totaling 1.081 million shares and a transaction value of 93.25 million yuan, with an average transaction price of 86.26 yuan [2][3]. - The stock's closing price on the same day was 92.53 yuan, showing a slight decline of 0.24% [2]. - Over the past three months, the stock has seen a total of 55 bulk trades, amounting to 1.204 billion yuan [2]. Institutional Participation - Among the bulk trades, institutional proprietary seats were involved in one transaction, with a net purchase amounting to 2.50 million yuan [2][4]. - The latest margin financing balance for Hengli Hydraulic is reported at 498 million yuan, with an increase of 33.82 million yuan over the past five days, representing a growth of 7.29% [3]. Market Performance - The stock has experienced a cumulative decline of 5.98% over the past five days, with a total net outflow of 104 million yuan during the same period [2][3].

Core Viewpoint - On October 22, Hengli Hydraulic executed a block trade of 1.081 million shares, amounting to 93.2469 million yuan, which accounted for 14.86% of the total trading volume for the day, with a transaction price of 86.26 yuan, representing a discount of 6.78% compared to the market closing price of 92.53 yuan [1]. Group 1 - The block trade involved a total of 1.081 million shares at a price of 86.26 yuan per share [1]. - The total transaction value for the block trade was 93.2469 million yuan [1]. - The transaction price was 6.78% lower than the market closing price of 92.53 yuan [1]. Group 2 - The trading date for the transactions was October 22, 2025 [2][3]. - Multiple trading departments participated in the transactions, with varying amounts and prices, all at 86.26 yuan per share [2][3]. - The total trading volume for the day was significant, with various departments executing trades ranging from 276.03 million yuan to 3191.62 million yuan [2][3].

Summary of Hengli Hydraulic (601100 CH) Conference Call Company Overview - **Company**: Hengli Hydraulic - **Ticker**: 601100 CH - **Sector**: Machinery - **Market Cap**: CNY 123,423 million (USD 17,288 million) [6][16] Key Industry Insights - **Excavator Sales Growth**: Domestic excavator sales volume increased by 22% year-on-year, totaling 89,877 units for the first nine months of 2025, driven by replacement demand, hydraulic projects, and labor shortages [2][12] - **Export Volumes**: Export volumes rose by 29% year-on-year in September, with a total of 84,162 units for the first nine months of 2025, indicating a strong recovery in the excavator hydraulic business [2][12] Financial Performance and Projections - **Earnings Estimates**: EPS forecasts for 2025, 2026, and 2027 were raised by 3.6%, 1.7%, and 2.1% respectively, reflecting a positive margin trajectory [3][20] - **Revenue Adjustments**: Revenue forecasts for excavator cylinders were trimmed by 2-5% due to a higher sales mix of mid/large-sized excavators with declining ASPs, while hydraulic P&V segment revenue forecasts were raised by 0.4-3% [3][21] - **Gross Margin Improvements**: Segment gross margin forecasts were increased by 1.3-4.3 percentage points for 2025-2027 due to better scale effects [3][21] Valuation and Target Price - **Target Price Adjustment**: The target price was raised to RMB 104.00 from RMB 98.80, reflecting a 13% upside from the current price of RMB 92.05 [4][6] - **PE Ratio**: The target PE was lowered to 40x from 45x, reflecting a 30% discount to the peer average, as Hengli's EPS CAGR of 15% is below the peers' consensus CAGR of 21% [4][26] Investment Thesis - **Buy Rating**: The company maintains a Buy rating, supported by expected stronger sales in excavator hydraulic components and potential order wins in humanoid robot components [4][26] - **Market Sentiment**: Hengli's share price has increased by 76% year-to-date, significantly outperforming the CSI300 Index, which rose by 15% [2][12] Risks and Challenges - **Margin Pressure**: The hydraulic components manufacturing industry may face margin pressure due to raw material price hikes [37] - **Competition**: Increased competition from global peers in high-end hydraulic products could impact growth and profitability [37] - **Production Capacity Uncertainty**: Risks associated with the ramp-up of production capacity at the new Mexico factory and the development of linear drive products may affect revenue targets [37] - **Market Share in Humanoid Robots**: Potential loss of market share in humanoid robots due to competition could pose risks [37] Conclusion Hengli Hydraulic is positioned for growth with strong industry performance and positive earnings revisions. However, it faces challenges from competition and production uncertainties that could impact its future performance. The investment outlook remains positive with a maintained Buy rating and an increased target price.

Core Viewpoint - Hengli Hydraulic's stock price increased by 2.14% on October 20, with a trading volume of 713 million yuan, indicating positive market sentiment towards the company [1] Financing Summary - On October 20, Hengli Hydraulic had a financing buy-in amount of 67.83 million yuan and a financing repayment of 55.89 million yuan, resulting in a net financing buy of 11.94 million yuan [1] - As of October 20, the total financing and securities lending balance for Hengli Hydraulic was 515 million yuan, with the financing balance at 505 million yuan, accounting for 0.41% of the circulating market value [1] - The financing balance is above the 50th percentile level over the past year, indicating a relatively high position [1] Securities Lending Summary - On October 20, Hengli Hydraulic repaid 3,900 shares in securities lending and sold 3,300 shares, with a selling amount of 300,900 yuan based on the closing price [1] - The remaining securities lending volume was 108,900 shares, with a balance of 9.93 million yuan, exceeding the 90th percentile level over the past year, indicating a high position [1] Company Overview - Hengli Hydraulic, established on June 2, 2005, and listed on October 28, 2011, is located in Wujin High-tech Zone, Changzhou, Jiangsu Province [1] - The company's main business involves the research, production, and sales of high-pressure hydraulic cylinders, with revenue composition as follows: hydraulic cylinders 50.70%, hydraulic pumps and valves 38.16%, parts and castings 7.28%, hydraulic systems 3.16%, and others 0.69% [1] Financial Performance - As of June 30, the number of shareholders for Hengli Hydraulic was 43,800, an increase of 4.26% from the previous period, while the average circulating shares per person decreased by 4.09% to 30,647 shares [2] - For the first half of 2025, Hengli Hydraulic achieved operating revenue of 5.171 billion yuan, a year-on-year increase of 7.00%, and a net profit attributable to shareholders of 1.429 billion yuan, a year-on-year increase of 10.97% [2] Dividend Information - Hengli Hydraulic has cumulatively distributed 5.775 billion yuan in dividends since its A-share listing, with 2.708 billion yuan distributed over the past three years [3] Institutional Holdings - As of June 30, 2025, Hong Kong Central Clearing Limited was the fourth-largest circulating shareholder of Hengli Hydraulic, holding 103 million shares, a decrease of 185,000 shares from the previous period [3] - Huatai-PB CSI 300 ETF ranked fifth among circulating shareholders with 9.5305 million shares, an increase of 769,300 shares [3] - E Fund CSI 300 ETF ranked sixth with 6.8093 million shares, an increase of 680,600 shares, while Huaxia CSI 300 ETF entered as the tenth-largest circulating shareholder with 4.9937 million shares [3]