LIUGONG(SZ:000528) KAIYUAN SECURITIES·2024-08-27 03:23Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Views - The company is positioned as a leading loader manufacturer in China, with continuous improvement in profitability and a strong outlook for future growth driven by domestic demand recovery and high overseas export growth [1][12]. - The company has a comprehensive product layout, focusing on electric and international expansion, which is expected to enhance its competitive edge [1][4][5]. Summary by Sections 1. Domestic Loader Leader Moving Towards Globalization - The company covers a wide range of products including earth-moving machinery, engineering machinery components, and prestressed machinery, with a projected 11% growth in the loader industry in 2023 [1][12]. - The company achieved net profits of 1.34 billion, 1.79 billion, and 2.25 billion yuan for the years 2024, 2025, and 2026 respectively, with corresponding EPS of 0.68, 0.90, and 1.14 yuan [1][7]. - The current stock price corresponds to a PE ratio of 14.0, 10.5, and 8.3 for the years 2024, 2025, and 2026, indicating that the company's valuation is below the average level of comparable companies in the industry [1][7]. 2. Engineering Machinery Sector: Domestic Demand Recovery and High Overseas Growth - The company has seen a significant increase in overseas revenue, with 11.46 billion yuan in 2023, representing a year-on-year growth of 41% [5][21]. - The company’s sales revenue for earth-moving machinery, engineering machinery components, prestressed machinery, and financing leasing in 2023 were 15.91 billion, 8.82 billion, 2.24 billion, and 0.55 billion yuan respectively, with earth-moving machinery accounting for over half of the total revenue [19][20]. 3. Mixed Reform and Incentives Enhance Internal Dynamics - The company completed a mixed reform in 2022 and launched an employee stock option incentive plan in 2023, significantly boosting employee motivation [6][27]. - The company issued 3 billion yuan in convertible bonds to optimize production capacity, further enhancing its overall manufacturing capabilities [6][27]. 4. Research and Development Investment - The company has consistently increased its R&D investment, with expenditures rising from 418 million yuan in 2018 to 907 million yuan in 2023, reflecting a CAGR of 16.8% [24][25]. - The company has made significant advancements in electric and intelligent technologies, establishing research institutes focused on AI applications and electric technology [25][26]. 5. Market Outlook - The engineering machinery sector is expected to see continued improvement in demand, particularly in infrastructure and real estate, with construction investment maintaining growth [29][35]. - The company is well-positioned to benefit from the ongoing recovery in domestic demand and the expansion of its international market presence [1][5][21].