Jiangsu Hengli Hydraulic CO.(601100) 浙商证券·2024-10-29 08:23Investment Rating - The report maintains a Buy rating for Hengli Hydraulics (601100) [3] Core Views - Hengli Hydraulics' Q3 2024 performance showed continued recovery, with revenue and net profit growing by 11.12% and 6.07% YoY, respectively [1] - The company's operating cash flow improved significantly, with a 23% YoY increase in Q3 2024 [1] - The excavator sector is bottoming out, with domestic sales growing by 21.5% YoY in September 2024, while exports increased by 2.5% [1] - Non-excavator businesses, including non-standard cylinders and pumps, maintained strong growth, with sales of heavy equipment cylinders increasing by 21.53% YoY [1] - Overseas revenue grew by 15.29% YoY in H1 2024, supported by the nearing completion of the Mexico factory [1] Financial Performance - Q3 2024 revenue reached 2.103 billion yuan, up 11.12% YoY, while net profit was 504 million yuan, up 6.07% YoY [1] - Gross margin in Q3 2024 was 41.03%, down 1.93 pct YoY and 2.08 pct QoQ [1] - Net margin in Q3 2024 was 23.99%, down 1.13 pct YoY and 3.81 pct QoQ [1] - Operating cash flow in Q3 2024 was 773 million yuan, up 23% YoY [1] Industry Outlook - The excavator industry is expected to recover, with domestic demand supported by favorable real estate policies and increased infrastructure investment [1] - The update cycle for excavators (8-10 years) suggests that replacement demand may bottom out in 2024 [1] - Overseas market share is expected to continue growing, driven by globalization efforts [1] Non-Excavator Business - Sales of non-standard cylinders for heavy equipment grew by 21.53% YoY in H1 2024, driven by demand from sectors like tunneling machines, cranes, and renewable energy [1] - Non-excavator pump sales increased by 24.30% YoY, with compact hydraulic products expanding market share both domestically and internationally [1] - Radial piston motors saw rapid growth in both domestic and international markets, particularly in industries like skid steer loaders and agricultural machinery [1] Overseas Expansion - Overseas revenue grew by 15.29% YoY in H1 2024, with the Mexico factory nearing completion to support expansion in the Americas [1] - The company has begun sample deliveries and small-scale production of ball screw products [1] Financial Forecasts - The report forecasts net profit of 2.56 billion yuan, 2.94 billion yuan, and 3.57 billion yuan for 2024, 2025, and 2026, respectively, with YoY growth rates of 2%, 15%, and 21% [1] - The PE ratios for 2024-2026 are estimated at 29x, 25x, and 21x, respectively [1] Peer Comparison - Hengli Hydraulics' 2024E PE ratio of 29.2x is higher than peers like Sany Heavy Industry (24.6x) and XCMG (13.9x) [6] - The company's current market capitalization is 74.8 billion yuan, lower than Sany Heavy Industry's 151 billion yuan but higher than Zoomlion's 60.1 billion yuan [6]