Jiangsu Hengli Hydraulic CO.(SH:601100)2025-06-02 15:44Investment Rating - The report maintains a Buy rating on Hengli Hydraulic with a target price of Rmb85.0, indicating an expected share price return of 26.1% and a total return of 27.2% [6][15]. Core Insights - Hengli Hydraulic aims for over 10% year-on-year growth in both revenue and earnings in 2025, primarily driven by a 20% increase in excavator component revenue despite flat non-excavator business [1]. - The Mexico plant is set to ramp up in June 2025, expected to contribute Rmb200m-300m to revenue in 2025, which would represent approximately 50% of Hengli's US revenue [4]. - The impact of US tariffs on demand has been limited, as major US customers can source Hengli's products from non-US plants [1]. Summary by Sections Excavator Business - Revenue from excavator pumps and valves is projected to grow by 30% year-on-year in 2025, while cylinder revenue is expected to increase by 10% year-on-year, driven by market share gains in China [2]. - Monthly production has been at full utilization from March to May 2025, but a decline is anticipated in June due to seasonal factors [2]. Non-Excavator Business - Revenue in the non-excavator segment is expected to remain flat in 2025, primarily due to weaker demand for Aerial Work Platforms (AWP), which accounted for about 10% of total revenue in 2024 [3]. - Non-excavator cylinders are projected to decline by a single digit year-on-year, while pump and valve revenues may still see a year-on-year increase [3]. Mexico Plant - The Mexico plant's revenue contribution is expected to double to Rmb600m-700m in 2026 and potentially reach Rmb3.0bn in the future [4]. Ball Screw and Linear Guide Business - Combined revenue from ball screws, linear guides, and electric actuators is anticipated to reach Rmb250m in 2025, with expectations to double to Rmb500m-600m in 2026, achieving gross and net profit margins of 30% and 10% respectively [5].