LIUGONG(000528) 国投证券·2024-11-06 10:10Investment Rating - The report maintains a Buy-A rating for the company with a 12-month target price of 14.7 CNY [4] Core Views - The company, a state-owned enterprise in the engineering machinery sector, has shown strong performance post-state-owned enterprise (SOE) reforms, with significant improvements in profitability and operational efficiency [1] - The company's gross margin increased to 23.5% in the first three quarters of 2024, up by 2.8 percentage points year-over-year, while the net margin rose to 5.9%, up by 2 percentage points [1] - The company is focusing on a "three-pronged strategy" (comprehensive solutions, comprehensive intelligence, and comprehensive internationalization) to drive long-term growth and profitability [1] State-Owned Enterprise Reforms - The company has completed a series of SOE reforms, including equity incentives, mixed-ownership reforms, and a full listing, which have significantly improved its operational efficiency and profitability [2] - The company issued a 3 billion CNY convertible bond in 2023 to upgrade its production lines and expand capacity, further enhancing its manufacturing capabilities [2] - The dividend payout ratio has increased steadily, reaching 45% in 2023, reflecting the company's commitment to shareholder returns [2] Electric Transformation - The company is a leader in the electrification of construction machinery, particularly in the loader segment, with a 10.18% electrification rate in the first nine months of 2024, up by 7.2 percentage points year-over-year [3] - The company's electric loader sales grew by 159% in the first half of 2024, maintaining a leading market share in the industry [3] - The company has been a pioneer in electric technology since 2014 and is the first in the industry to achieve full-series electric technology application [3] Diversification Strategy - The company is diversifying its product portfolio, expanding into agricultural machinery, forklifts, and aerial work platforms, with its sugarcane harvester becoming the top domestic brand [7] - The company's international revenue grew by 41.18% in 2023, reaching 11.46 billion CNY, driven by its global expansion strategy [8] - The company's revenue from mining machinery increased by 71% in the first half of 2024, highlighting its success in diversifying into high-end mining equipment [7] Financial Performance - The company's revenue for 2024 is projected to be 30.41 billion CNY, with a year-over-year growth of 10.5%, and net profit is expected to reach 1.54 billion CNY, a 77.3% increase [9] - The company's PE ratio is expected to drop to 8.9X by 2026, reflecting strong growth potential [9] - The company's overseas revenue accounted for 48.02% of total revenue in the first half of 2024, with a gross margin of 29.09%, significantly higher than domestic operations [74] Industry Trends - The construction machinery industry is undergoing a significant shift towards electrification, driven by policy support, rising diesel prices, and declining lithium battery costs [83][84] - The company is well-positioned to benefit from this trend, with its early investment in electric technology and strong market position in loaders and excavators [3][7] - The company's international strategy, particularly in mature markets like Europe and North America, has been a key driver of growth, with overseas revenue reaching 11.46 billion CNY in 2023 [8]