XCMG(000425) 中泰证券·2024-08-20 02:01Investment Rating - Buy rating (首次) with a target price of 6.55 RMB [2] Core Views - The company is positioned to benefit from both domestic and international demand in the construction machinery sector, with traditional and emerging businesses driving growth [2] - The domestic construction machinery cycle has bottomed out, and the company's traditional products are expected to benefit from the upcoming replacement cycle [4] - Emerging businesses such as mining machinery and aerial work platforms are contributing to the second growth curve, with strategic emerging industries growing nearly 30% in 2023 [4] - State-owned enterprise (SOE) reforms are gradually releasing results, with profitability expected to improve [4] Company Overview - XCMG is a global leader in construction machinery, ranking third globally and first among Chinese companies, with a 5.3% market share [7] - The company has a comprehensive product portfolio, including earthmoving machinery, lifting machinery, piling machinery, concrete machinery, and road machinery, as well as strategic emerging industries like mining machinery and aerial work platforms [10] - XCMG has a strong presence in the global market, with operations in over 190 countries and regions, and overseas revenue accounting for 40% of total revenue in 2023 [50] Financial Performance - Revenue for 2024-2026 is projected to be 1027/1154/1296 billion RMB, with year-on-year growth of 10.6%/12.3%/12.4% [5] - Net profit for 2024-2026 is expected to be 68.2/88.2/109.4 billion RMB, with year-on-year growth of 28.0%/29.3%/24.1% [5] - The company's gross margin and net margin have improved, with a gross margin of 22.38% and a net margin of 5.64% in 2023 [24] Industry Analysis - The domestic construction machinery market has bottomed out, with excavator sales turning positive in March 2024, signaling the start of a new replacement cycle [31] - The global construction machinery market is projected to reach 1570.6 billion USD in 2023, with China accounting for 21.8% of global exports [35] - The mining machinery market is expected to grow, with global sales reaching 468.4 billion RMB in 2023 and projected to grow to 714.9 billion RMB by 2030, with a CAGR of 5.7% [38] Emerging Businesses - Mining machinery and aerial work platforms are key growth drivers, with mining machinery sales expected to grow at a CAGR of 40%/30%/30% from 2024-2026 [5] - Aerial work platforms are seeing strong growth, with the company's Mexico factory expected to boost overseas sales [44] SOE Reforms and Profitability - The company has implemented mixed-ownership reforms, including employee stock ownership and professional manager systems, which are expected to improve profitability [52] - The company has set net profit targets of 58 and 65 billion RMB for 2024 and 2025, respectively, to incentivize management and employees [28] Global Expansion - XCMG has a strong global presence, with 40 overseas offices, 150 spare parts centers, and over 300 overseas dealers, covering more than 190 countries and regions [50] - Overseas revenue accounted for 40% of total revenue in 2023, with export gross margins 3 percentage points higher than domestic margins [50]