Jiangsu Hengli Hydraulic CO.(601100)2024-10-29 08:39Investment Rating - The report maintains a "Recommended" rating for the company, with a target price of 53.00 CNY [3]. Core Views - The company's revenue growth is recovering, with a year-on-year increase of 9.32% for the first three quarters of 2024, reaching 6.936 billion CNY [1]. - The net profit attributable to the parent company for the same period is 1.791 billion CNY, reflecting a year-on-year growth of 2.16% [1]. - The company is expanding its business into industrial automation and electric engineering machinery, which has led to an increase in employee numbers and a rise in expense ratios [1]. - The international R&D center is expected to be completed by the end of the year, with significant investments in R&D leading to innovative product launches [1]. Summary by Sections Financial Performance - For Q3 2024, the company achieved revenue of 2.103 billion CNY, a year-on-year increase of 11.12% [1]. - The gross profit margin for Q3 is approximately 41.03%, down 1.93 percentage points year-on-year [1]. - The net profit margin for Q3 is 23.99%, a decrease of 1.13 percentage points year-on-year [1]. Market Dynamics - Domestic excavator sales reached 74,000 units in the first three quarters of 2024, up 8.6% year-on-year, indicating a recovery in demand [1]. - The company benefits from policies aimed at stimulating demand for new machinery, particularly in the context of large-scale equipment updates [1]. Business Expansion - The company is investing in new business areas, which has resulted in a noticeable increase in operating expenses, with total expense ratios reaching 19.01% in Q3 [1]. - The R&D investment accounted for 6.92% of revenue in the first half of 2024, reflecting the company's commitment to innovation [1]. Future Outlook - The company forecasts net profits of 2.6 billion CNY, 3.02 billion CNY, and 3.69 billion CNY for 2024, 2025, and 2026, respectively, with corresponding valuations of 27x, 24x, and 19x [1].