LIUGONG(SZ:000528) HTSC·2025-08-27 11:43Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 16.00 [7][5]. Core Views - The company reported a revenue of RMB 181.81 billion for H1 2025, representing a year-over-year increase of 13.21%, and a net profit of RMB 12.30 billion, up 25.05% year-over-year [1][5]. - The company's performance is attributed to the successful implementation of state-owned enterprise reforms and a recovery in the industry, which is expected to continue driving revenue and profit margin growth [1][5]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of RMB 90.32 billion, a year-over-year increase of 11.22%, but a quarter-over-quarter decrease of 1.28%. The net profit for Q2 was RMB 5.73 billion, up 17.94% year-over-year but down 12.85% quarter-over-quarter [1][2]. - The gross margin for H1 2025 was 22.32%, a decrease of 1.08 percentage points year-over-year, while the net margin slightly increased to 6.34%, reflecting stable operations [2]. Business Segments - The excavator segment saw a sales revenue increase of 25.1% year-over-year, with domestic sales up 31.0%, leading to a market share increase of 1.6 percentage points. The overseas sales also grew by 22.1% [3]. - The loader segment also performed well, with both domestic and international sales revenue exceeding 20% year-over-year growth. The electric loader sales surged by 193.0%, capturing over 50% of the industry’s electric loader export market [3]. Market Outlook - The domestic excavator market is recovering, with sales of 65,637 units in H1 2025, a year-over-year increase of 22.89%. The demand for small excavators in agriculture and municipal projects is strong, supported by environmental policies [4]. - The overseas market is also showing recovery, with significant growth in emerging markets such as South Asia and the Middle East, where growth rates can reach over 80% [4]. Profit Forecast and Valuation - The company’s projected net profits for 2025, 2026, and 2027 are RMB 19.61 billion, RMB 23.91 billion, and RMB 29.07 billion, respectively, with corresponding EPS of RMB 0.97, RMB 1.18, and RMB 1.43 [5][11]. - The report assigns a PE ratio of 16.5 for 2025, reflecting the company's strong growth prospects and the positive impact of state-owned enterprise reforms [5].