Investment Rating - The report maintains a strong buy recommendation for leading companies in the engineering machinery sector, including SANY Heavy Industry, XCMG, Zoomlion, LiuGong, and Shantui [10]. Core Insights - The engineering machinery sector is experiencing a significant recovery driven by both domestic and international demand, with a notable increase in performance elasticity [8]. - The sector's revenue for the first half of 2025 reached 187.92 billion yuan, reflecting a year-on-year growth of 8.02%, while net profit increased by 22.94% to 18.661 billion yuan [19][22]. - The report highlights a shift from an "export-only" growth model to a "dual-core" model, with both domestic and international sales contributing to revenue growth [19]. Summary by Sections 1. Operating Conditions: Accelerated Revenue Growth and Strong Profit Elasticity - The engineering machinery sector has shown significant excess returns, with the sector's stock price increasing by 27.56% from the beginning of 2025 to September 9, compared to a 16.16% increase in the CSI 300 index [8][14]. - Domestic excavator sales from January to August 2025 increased by 21.55% year-on-year, driven by structural infrastructure projects [2]. - The average expense ratio for the sector decreased by 0.3 percentage points, primarily due to increased foreign exchange gains [8]. 2. Engineering Machinery: Steady Recovery and Upward Trend - Domestic excavator sales are expected to continue growing, with major projects like the Yaxia Hydropower Station accelerating demand [2][3]. - The overseas market saw excavator exports increase by 12.79% year-on-year, reversing a two-year decline, with total engineering machinery exports reaching 33.486 billion USD, up 10.8% [3][8]. - The report emphasizes the strong performance of leading manufacturers in both domestic and international markets, with SANY Heavy Industry and LiuGong showing particularly strong revenue growth [19][24]. 3. Investment Recommendations - The report suggests focusing on leading manufacturers of complete machines, component manufacturers, and high-altitude work platform/forklift manufacturers due to the expected recovery in demand [9][10]. - Specific companies recommended for investment include SANY Heavy Industry, XCMG, Zoomlion, LiuGong, and Shantui for complete machines, and Hengli Hydraulic and Aidi Precision for components [9][10].

Market Performance - The engineering machinery sector rose by 0.9% on September 11, with Hengli Hydraulic leading the gains [1] - The Shanghai Composite Index closed at 3875.31, up 1.65%, while the Shenzhen Component Index closed at 12979.89, up 3.36% [1] Individual Stock Performance - Hengli Hydraulic (601100) closed at 89.75, up 2.34% with a trading volume of 70,500 shares and a transaction value of 624 million [1] - Huadong Heavy Machine (002685) closed at 8.36, up 2.33% with a trading volume of 572,200 shares and a transaction value of 473 million [1] - Changling Hydraulic (605389) closed at 44.93, up 2.28% with a trading volume of 16,500 shares and a transaction value of 7.32 million [1] - Other notable performers include Shaoyang Hydraulic (301079) up 2.12% and Jinzhi Technology (301279) up 1.88% [1] Capital Flow Analysis - The engineering machinery sector experienced a net outflow of 341 million from institutional investors, while retail investors saw a net inflow of 313 million [2] - The sector's overall capital flow indicates a mixed sentiment, with institutional selling and retail buying [2] Detailed Capital Flow for Selected Stocks - Huadong Heavy Machine saw a net inflow of 26.1 million from institutional investors but a net outflow of 16.9 million from retail investors [3] - Hengli Hydraulic had a net inflow of 6.1 million from institutional investors, with retail investors showing a net outflow of 7.3 million [3] - Zhejiang Dingli (603338) had a net inflow of 3.1 million from institutional investors, while retail investors contributed a net inflow of 789.86 thousand [3]

Core Viewpoint - Hengli Hydraulic's stock has shown significant growth this year, with a year-to-date increase of 71.85% and a market capitalization of approximately 119.98 billion yuan [1] Financial Performance - For the first half of 2025, Hengli Hydraulic reported 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, reflecting a year-on-year increase of 10.97% [2] Shareholder Information - As of June 30, 2025, the number of shareholders increased to 43,800, up by 4.26% from the previous period [2] - The average circulating shares per shareholder decreased by 4.09% to 30,647 shares [2] Dividend Distribution - Since its A-share listing, Hengli Hydraulic has distributed a total of 5.775 billion yuan in dividends, 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, holding 103 million shares, a decrease of 185,000 shares from the previous period [3] - Huatai-PB CSI 300 ETF and E Fund CSI 300 ETF increased their holdings, with the former holding 9.5305 million shares (up by 769,300 shares) and the latter holding 6.8093 million shares (up by 680,600 shares) [3]

Investment Rating - The industry is rated as "Positive" [2][32] - The specific companies recommended for "Increase" rating are Zoomlion (000157), Hengli Hydraulic (601100), Estun (002747), and Haomai Technology (002595) [2][32] Core Insights - In August, excavator sales reached 16,500 units, representing a year-on-year growth of 12.8% [10] - Loader sales in August totaled 9,440 units, with a year-on-year increase of 13.3% [10] - The average working hours for major construction machinery products in August was 78.4 hours, showing a year-on-year decrease of 9.45% [11] - The industry is experiencing a strong recovery, with both domestic and international market sales maintaining double-digit growth [32] - The demand for construction machinery is expected to continue growing due to favorable policies and reduced tariff disturbances globally [32] Industry News - In August, excavator sales included 7,685 units sold domestically (up 14.8%) and 8,838 units exported (up 11.1%) [10] - For the first eight months of 2025, a total of 154,181 excavators were sold, marking a 17.2% increase year-on-year [10] - The average operating rate for major construction machinery products in August was 55.1%, down 6.83 percentage points year-on-year [12] Company Announcements - Ruina Intelligent announced the signing of a contract for a project by its wholly-owned subsidiary [20] - Taifu Pump Industry is planning a significant asset restructuring to acquire at least 51% of Nanyang Huacheng Technology [21] Market Review - From September 3 to September 9, 2025, the CSI 300 index fell by 1.21%, while the Shenwan Machinery Equipment industry decreased by only 0.01%, outperforming the CSI 300 by 1.20 percentage points [22] - As of September 9, 2025, the price-to-earnings ratio (TTM) for the Shenwan Machinery Equipment industry was 30.62, with a valuation premium of 133.32% compared to the CSI 300 [23]

Core Viewpoint - The engineering machinery industry continues its recovery in the first half of 2025, driven by domestic demand from long-term government bond issuance, deepening equipment renewal policies, and accelerated energy transition. Core products such as excavators, concrete machinery, and cranes have seen comprehensive growth in domestic sales, while overseas markets remain robust, particularly in mineral development and energy infrastructure [1]. Company Performance Summary XCMG Machinery - Achieved operating revenue of 54.808 billion yuan, a year-on-year increase of 8.04%, and a net profit of 4.358 billion yuan, up 16.63%. The company shows a favorable development trend with growth in revenue, net profit, and cash flow, driven by internationalization, new energy, and aftermarket services [2][3]. - The earthmoving segment saw a revenue increase of 22.37%, making it the largest revenue segment, accounting for 31.05% of total revenue. Domestic sales share increased, with export revenue growing by 20% and aftermarket revenue up by 29% [3]. SANY Heavy Industry - Reported revenue of 44.534 billion yuan, a 14.96% increase, and a net profit of 5.216 billion yuan, up 46%. The excavator segment generated 17.497 billion yuan in sales, a 15% increase, maintaining the top position in the domestic market [5]. - Concrete machinery sales decreased by 6.49% to 7.441 billion yuan, while crane machinery sales increased by 17.89% to 7.804 billion yuan, with significant market share gains in various crane categories [6][7]. Zoomlion Heavy Industry - Recorded revenue of 24.855 billion yuan, a 1.3% increase, and a net profit of 2.765 billion yuan, up 20.84%. The crane segment accounted for 33.69% of total revenue, with earthmoving machinery exports growing over 33% [8]. LiuGong Machinery - Achieved revenue of 18.181 billion yuan, a 13.21% increase, and a net profit of 1.230 billion yuan, up 25.05%. The earthmoving machinery segment contributed 64.09% of total revenue, with both domestic and overseas markets showing strong growth [9]. Shantui - Reported revenue of 7.004 billion yuan, an 8.78% increase, with overseas revenue growing by 7.66% compared to the previous year [10]. Zhejiang Dingli - Achieved operating revenue of 4.336 billion yuan, a 12.35% increase, and a net profit of 1.052 billion yuan, up 27.63%. The company has shown resilience in a complex external environment [10]. Anhui Heli - Reported revenue of 9.390 billion yuan, a 6.18% increase, but net profit decreased by 4.60% to 0.796 billion yuan. Overseas revenue reached 4.016 billion yuan, up 15.20%, accounting for 43% of total revenue [11]. Market Dynamics - The engineering machinery industry is gradually improving, with domestic markets recovering and exports maintaining stable growth. Companies are actively seizing opportunities to enhance quality and efficiency while expanding their market presence [9][10].

Summary of Key Points Core Viewpoint - The stock of Hengli Hydraulic experienced a 2.64% increase on September 8, closing at 90.32 yuan, with significant block trading activity totaling 582.2 million shares and a transaction value of 489 million yuan [1]. Trading Activity - A total of 15 block trades were executed, with the first trade priced at 84.00 yuan for 300,000 shares, amounting to 25.2 million yuan, reflecting a discount of 7.00% [1][2]. - The subsequent trades consistently maintained a price of 84.00 yuan, with varying volumes and transaction values, including a notable trade of 2 million shares for 168 million yuan [2][3]. - Over the last three months, the stock has recorded 16 block trades with a cumulative transaction value of 495 million yuan [4]. Market Performance - In the last five trading days, the stock has seen a decline of 1.07%, with a net outflow of 176 million yuan in principal funds [4].

Summary of Key Points Core Viewpoint - Hengli Hydraulic experienced significant trading activity on September 8, with a total of 15 transactions on the block trading platform, amounting to 5.82 million shares and a total transaction value of 489 million yuan, indicating strong institutional interest despite a discount relative to the closing price [2][3]. Trading Activity - The average transaction price was 84.00 yuan, which represents a discount of 7.00% compared to the closing price of 90.32 yuan on the same day [2][3]. - Institutional specialized seats participated in 6 of the transactions, with a total transaction value of 317 million yuan and a net purchase of 317 million yuan [2][3]. - Over the past three months, Hengli Hydraulic has recorded 16 block trades, totaling 495 million yuan [2]. Market Performance - On September 8, the closing price of Hengli Hydraulic was 90.32 yuan, reflecting an increase of 2.64% with a trading volume of 1.78 billion yuan and a turnover rate of 1.47% [2]. - The stock has seen a net outflow of 73.75 million yuan in main funds throughout the day, and a cumulative decline of 1.07% over the past five days, with a total net outflow of 134 million yuan [2]. Margin Financing - The latest margin financing balance for Hengli Hydraulic is 437 million yuan, which has decreased by 45.07 million yuan over the past five days, representing a decline of 9.34% [3]. Analyst Ratings - In the past five days, five institutions have provided ratings for Hengli Hydraulic, with the highest target price set at 104.50 yuan by Guotai Junan Securities on September 5 [3].

Summary of Key Points Core Viewpoint - On September 8, Hengli Hydraulic executed a block trade of 5.822 million shares, amounting to a transaction value of 489 million yuan, which accounted for 21.54% of the total trading volume for the day, with a transaction price of 84 yuan, representing a 7% discount compared to the market closing price of 90.32 yuan [1]. Group 1: Transaction Details - The block trade involved a total of 5.822 million shares of Hengli Hydraulic [1]. - The total transaction value was 489 million yuan [1]. - The transaction price was set at 84 yuan per share, which is 7% lower than the market closing price of 90.32 yuan [1]. Group 2: Institutional Participation - The block trade was primarily executed by institutional investors, with various financial institutions involved in the transactions [2]. - Specific institutions included China International Capital Corporation and UBS Securities, among others [2]. - The trade was categorized as an institutional special session, indicating a focused interest from institutional investors [2].

Group 1 - The core viewpoint of the news is that Hengli Hydraulic has seen a significant increase in its stock price, rising by 5.1% to 92.49 CNY per share, with a trading volume of 1.344 billion CNY and a market capitalization of 124.013 billion CNY as of September 8 [1] - Hengli Hydraulic, established on June 2, 2005, and listed on October 28, 2011, specializes in the research, production, and sales of high-pressure hydraulic cylinders. The revenue composition includes hydraulic cylinders (50.70%), hydraulic pumps and valves (38.16%), parts and castings (7.28%), hydraulic systems (3.16%), and others (0.69%) [1] Group 2 - From the perspective of fund holdings, one fund under Guotai Haitong Asset Management has a significant position in Hengli Hydraulic. The Guotai Junan High-end Equipment Mixed Fund A (017933) held 5,900 shares in the second quarter, accounting for 3.38% of the fund's net value, ranking as the ninth largest holding [2] - The Guotai Junan High-end Equipment Mixed Fund A (017933) was established on March 1, 2023, with a latest scale of 8.0771 million CNY. Year-to-date returns are 7.17%, ranking 6160 out of 8248 in its category, while the one-year return is 15.84%, ranking 6171 out of 8051. Since inception, the fund has experienced a loss of 10.76% [2]

Summary of Jiangsu Hengli Hydraulic Co. (601100.SS) Conference Call Company Overview - **Company**: Jiangsu Hengli Hydraulic Co. - **Industry**: Hydraulic equipment manufacturing Key Points and Arguments Sales Performance - **3Q25 Sales Growth**: Accelerating hydraulics sales observed for both excavators and non-excavator verticals, driven by demand recovery and gradual delivery of 1H25 orders [2][3] - **Excavator Sales**: Year-over-year growth accelerated from +SD% in 1Q to approximately 20% in 2Q, and 40-50% in 3Q25 QTD. Full-year sales from the excavator vertical expected to see 20-30% year-over-year growth [6][2] - **Non-Excavator Sales**: Improvement noted in verticals like tunnel boring machines, with full-year sales expected to see 10-20% year-over-year growth [7][2] Market Outlook - **2H25 Sales Outlook**: Management expects 2H25 sales to achieve over 20% year-over-year growth, surpassing Goldman Sachs' estimate of 16% [3][2] - **Key Customer Relationships**: Management is optimistic about expanding wallet share among key multinational customers, including both Western and Japanese brands, into 2H25E and 2026E [2][3] Capital Expenditure Plans - **Capex Strategy**: The company plans to maintain a certain level of capital expenditure for business expansion domestically and internationally, focusing on linear actuators domestically and expanding global capacity in regions like South America and Indonesia [2][3] New Business Developments - **Ball Screw Sales**: Management anticipates an acceleration in ball screw sales into 2H25, with a full-year sales target of RMB 200 million, despite expecting a net loss of RMB 60 million for the year [11][2] - **Humanoid Robot Development**: Initial progress expected by end-3Q25, with potential profitability improvements by year-end due to new machine tools enhancing manufacturing efficiency [11][2] Overseas Expansion - **International Demand**: Solid demand noted in Southeast Asia, India, the Middle East, and Europe, with expectations for notable sequential improvement in overseas sales in 2H25 [11][2] - **Capacity Investments**: Plans to invest RMB 300 million in an Indonesian factory and RMB 500 million in a Mexican factory, with expected production output value increases [12][11] Financial Projections - **12-Month Price Target**: Target price set at RMB 79.00, reflecting long-term growth potential driven by import substitution in the hydraulic market and expansion into the linear actuator market [13][2] - **Revenue Forecasts**: Projected revenues of RMB 9,389.7 million for 2025, increasing to RMB 14,532.4 million by 2027 [15][2] Risks - **Market Risks**: Potential risks include stronger or weaker-than-expected global demand for mobile machinery, and faster or slower-than-expected new product development [14][2] Additional Important Information - **Management's Confidence**: Management expressed confidence in Hengli's cost advantages compared to Japanese competitors and the potential for wallet share expansion among key customers [11][2] - **Investment Focus**: Future investments will be skewed towards ball screws and motors, with expected investment values of RMB 300-500 million each [11][2] This summary encapsulates the key insights from the conference call, highlighting the company's performance, market outlook, strategic plans, and associated risks.