XCMG(SZ:000425) Minsheng Securities·2024-06-02 01:30Investment Rating - The report maintains a "Buy" rating for XCMG Machinery (000425.SZ) [2][3]. Core Insights - The domestic engineering machinery market is expected to bottom out in 2024, driven by infrastructure investments supported by a 1 trillion yuan bond issuance, which has been allocated to approximately 15,000 specific projects [2][3]. - XCMG Machinery has seen significant growth in its emerging businesses and overseas revenue, with a projected net profit of 6.5 billion yuan in 2024, reflecting a year-on-year growth of 22% [2][3]. - The company is positioned as a leading player in the global engineering machinery market, with its market share increasing from 3.7% in 2016 to 5.8% in 2022, ranking third globally among domestic brands [2][3]. Summary by Sections 1. Global Engineering Machinery Market - The global engineering machinery market reached 871.09 billion yuan in 2022, with excavators accounting for nearly 30% of the market value [2][3]. - XCMG's market share has increased significantly, with the combined share of domestic companies rising from 8.7% in 2016 to 13.9% in 2022 [2][3]. 2. Domestic Market Outlook for 2024 - Infrastructure investment is expected to maintain a growth rate of around 8% in 2024, supported by government policies and funding [2][3]. - The natural replacement of old machinery is at a low point, with an estimated 128,500 excavators expected to be scrapped in 2024 [2][3]. 3. Revenue Growth from New Products and International Expansion - XCMG's new high-altitude machinery business ranked third globally, generating revenue of 8.883 billion yuan in 2023, a year-on-year increase of 35.62% [2][3]. - The company's overseas sales reached 37.22 billion yuan in 2023, accounting for 40.09% of total revenue, with a year-on-year growth of 33.71% [2][3]. 4. Financial Forecast and Investment Recommendations - The projected net profits for XCMG from 2024 to 2026 are 6.497 billion yuan, 8.180 billion yuan, and 10.649 billion yuan, respectively, with corresponding valuations of 13x, 10x, and 8x [2][3]. - The report emphasizes the company's improving profitability and the successful progress of its emerging businesses as key factors for investment [2][3].