LIUGONG(SZ:000528) Southwest Securities·2024-10-23 10:30Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for the next six months [1]. Core Views - The company reported strong performance in Q3 2024, with revenue reaching 68.0 billion yuan, a year-on-year increase of 11.8%, and a net profit of 3.4 billion yuan, up 58.7% year-on-year. The overall revenue for Q1-Q3 2024 was 228.6 billion yuan, reflecting an 8.3% increase year-on-year, and a net profit of 13.2 billion yuan, which is a 59.8% increase year-on-year [1][2]. - The company's strategic focus on quality improvement and efficiency enhancement has led to significant operational improvements, with a gross margin of 23.5% for Q1-Q3 2024, up 2.8 percentage points year-on-year. The net profit margin also improved to 5.9%, an increase of 2.0 percentage points year-on-year [1][2]. - The company is expected to benefit from the recovery of domestic demand in the construction machinery sector, with excavator sales showing positive growth and the penetration rate of electric loaders increasing rapidly [2]. Summary by Sections Financial Performance - For Q1-Q3 2024, the company achieved a gross margin of 23.5% and a net profit margin of 5.9%. In Q3 alone, the gross margin was 23.7% and the net profit margin was 5.0% [1]. - The company forecasts net profits of 13.8 billion yuan, 18.1 billion yuan, and 22.5 billion yuan for 2024, 2025, and 2026 respectively, with a compound annual growth rate of 37% [2][3]. Market Position and Growth Drivers - The company has a robust product portfolio, including loaders and excavators, and is expanding into electric machinery, which is expected to drive future growth. The domestic market for excavators has shown a year-on-year increase of 8.6% in sales [2]. - The global construction machinery market remains vast, providing significant opportunities for international expansion [2]. Valuation Metrics - The report provides projected PE ratios of 18, 14, and 11 for the years 2024, 2025, and 2026 respectively, indicating a favorable valuation compared to expected earnings growth [2][3].