SHANTUI(000680) 中银证券·2024-11-15 08:59Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The acquisition of 100% equity in Shanzhong Construction Machinery Co., Ltd. for RMB 1.841 billion is expected to enhance the company's growth potential, particularly in the excavator segment, while maintaining a "Buy" rating [3] - The company is positioned as a leading manufacturer of bulldozers in China, with ongoing expansion into overseas markets and the integration of excavator operations expected to further drive growth [3] - The financial performance of Shanzhong Construction Machinery is anticipated to improve steadily, with a projected increase in revenue and net profit due to market demand recovery and strategic restructuring [3][9] Summary by Sections Company Overview - Shanzhong Construction Machinery, established in 1999, specializes in hydraulic excavator manufacturing with a production capacity of 20,000 units annually and a market share of approximately 4.03% in the domestic market as of September 2024 [3][6] - The company underwent a debt separation process in December 2023, significantly improving its asset quality by shedding historical liabilities [3][9] Financial Projections - Revenue projections for the company from 2024 to 2026 are estimated at RMB 137.12 billion, RMB 160.90 billion, and RMB 181.32 billion, respectively, with net profits expected to reach RMB 9.80 billion, RMB 12.88 billion, and RMB 14.68 billion [4] - The earnings per share (EPS) is projected to increase from RMB 0.65 in 2024 to RMB 0.98 in 2026, reflecting a positive outlook for profitability [4][18] Strategic Initiatives - The acquisition is structured as a cash transaction, which will not dilute existing shares and is expected to enhance the company's EPS from RMB 0.45 to RMB 0.48 for the first nine months of 2024 [3][18] - The company has set performance commitments for Shanzhong Construction Machinery, ensuring minimum net profits of RMB 0.86 billion, RMB 1.26 billion, and RMB 1.67 billion for the next three years [3][21] Market Dynamics - The domestic excavator market is expected to benefit from a large-scale equipment renewal policy, while international demand is projected to grow due to increased investments in infrastructure and mining sectors globally [9][12] - The company aims to improve its product mix by focusing on high-tech excavators and reducing reliance on smaller models, which are subject to intense competition [16]