XCMG(000425) -·2025-01-17 02:53Investment Rating - The report assigns a Buy rating to XCMG with a 12-month target price of RMB 8.40, representing a potential upside of 12.8% from the current price of RMB 7.45 [4][5][8] Core Views - XCMG is expected to achieve high single-digit revenue growth in 2025, with domestic revenue growing at a single-digit rate and overseas revenue maintaining double-digit growth [1] - The company anticipates improved profitability in 2025 due to better revenue mix and cost control, leading to a year-on-year increase in net profit margin [1] - XCMG plans to continue reducing off-balance sheet receivables in 2025, indicating a focus on financial health [1] - Overseas inventory levels are reported to be healthy, with an average of around 1 month of inventory [1] Domestic Market Outlook - Domestic excavator sales are expected to grow at a double-digit rate in 2025, driven by infrastructure projects and improved operating hours [2] - Small excavator sales are projected to maintain strong growth, while medium excavator sales are expected to improve [2] - However, demand for concrete machinery, cranes, and aerial work platforms is expected to remain weak in 2025 [2] Overseas Market Outlook - Overseas revenue is forecasted to grow at a double-digit rate in 2025, following a similar performance in 2024 [3] - The fastest growth is expected in Europe, America, and Australia, primarily due to a low base effect [3] - Asia, particularly Indonesia, is also expected to contribute to strong growth, while Latin America may see a slowdown but still achieve double-digit growth [3] - Mining machinery and aerial work platforms are likely to experience robust growth, with mining machinery benefiting from increased market share due to competitive pricing [3] Financial Metrics - The company's valuation is based on a 12.0x 2025E PE ratio, with a target price of RMB 8.40 [4] - XCMG's market capitalization is RMB 88.0 billion (USD 12.0 billion), with a P/B ratio of 1.5x and net debt/EBITDA of 0.5x as of 12/24E [5] - The company's EBIT margin is expected to improve from 7.6% in 2021 to 12.9% by 2028E, reflecting stronger profitability [7] Company Background - XCMG is a leading brand in China's construction machinery industry, specializing in products such as cranes, earthmoving machinery, and road construction equipment [9] - The company holds the top market share in domestic sales of truck cranes and truck-mounted cranes and is one of the largest exporters of construction machinery in China [9]