Core Viewpoint - Shantui Construction Machinery Co., Ltd. is applying for a listing on the Hong Kong Stock Exchange, aiming to enhance its global strategy and competitiveness, with a significant portion of its revenue coming from overseas markets [1][4][10]. Company Overview - Shantui has a 73-year history, originally established in 1952, and has evolved into a leading bulldozer manufacturer [4][6]. - The company has undergone several mergers and acquisitions, including the acquisition of Shandong DeGong and the sale of part of its stake in Komatsu Shantui [5][6]. - Shantui is backed by Shandong Heavy Industry Group, which holds approximately 40.07% of the company's shares [7]. Financial Performance - Shantui's revenue for the years 2022 to 2025 shows a compound annual growth rate (CAGR) of 11.8%, with 2024 revenue expected to grow by 25.1% year-on-year [9][10]. - The net profit for the same period has a remarkable CAGR of 111.94%, indicating strong profitability growth [9][11]. Market Position - Shantui is the third-largest bulldozer manufacturer globally and the largest in China, maintaining over 60% market share in the domestic market since 2010 [7][9]. - The company has established a significant presence in overseas markets, with international sales contributing over 52.1% of total revenue by 2024 [10]. Product and Service Expansion - Shantui has diversified its product offerings to include a full range of construction machinery, such as excavators, loaders, and concrete equipment [6][12]. - The company has established 10 overseas subsidiaries and a sales network covering over 160 countries, participating in major infrastructure projects both domestically and internationally [12]. Market Trends - The global construction machinery market is projected to grow from $213.5 billion in 2024 to $296.1 billion by 2030, with a CAGR of 5.6% [9]. - Factors driving this growth include infrastructure recovery, ongoing mining investments, and the acceleration of electrification and automation in the industry [9].

Core Insights - Shantui Co., Ltd. is a leading player in the global bulldozer industry and a prominent enterprise in the engineering machinery sector, focusing on the R&D, manufacturing, sales, and service of a full range of construction machinery and components [3][4] - The company has maintained its position as the largest bulldozer manufacturer in China for 21 consecutive years since 2004, holding over 60% market share in the Chinese bulldozer market from 2010 to 2024 [3] - Shantui has pioneered several industry breakthroughs, including the development of China's largest horsepower bulldozer and the world's first AI bulldozer [3] Company Performance - As of June 30, 2025, Shantui has established 10 overseas subsidiaries, with a sales and service network covering over 160 countries and regions, achieving 52.1% of its revenue from overseas in 2024, which increased to 55.7% in the first half of 2025 [4] - The company's revenue for the fiscal years 2022, 2023, 2024, and the first half of 2025 was approximately CNY 11.37 billion, CNY 11.36 billion, CNY 14.22 billion, and CNY 7.00 billion respectively, with net profits of CNY 248 million, CNY 796 million, CNY 1.11 billion, and CNY 577 million during the same periods [4][6] Financial Metrics - In 2022, Shantui's revenue was CNY 11.37 billion, with a gross profit margin of 11.2%, which improved to 19.4% in 2024 [6] - The company reported a net profit margin of 2.2% in 2022, which increased to 7.8% in 2024, indicating a significant improvement in profitability [6] - The cost of sales as a percentage of revenue decreased from 88.8% in 2022 to 80.6% in 2024, reflecting better cost management [6]

Investment Rating - The report maintains a "Positive" investment rating for the machinery industry [10]. Core Insights - In June, domestic excavator sales in China increased by 6.2% year-on-year, marking a return to growth after a slight decline in May. The total domestic sales for the first half of 2025 reached 65,637 units, up 22.9% year-on-year. The upward trend in the domestic market is expected to continue due to factors such as equipment replacement cycles, labor substitution, and electrification [2][6][15]. - Export volumes for excavators in June surged by 19.3% year-on-year, with a notable acceleration compared to May. The total export volume for the first half of 2025 was 54,883 units, reflecting a 10.2% increase year-on-year. The growth in exports is supported by the increasing global competitiveness of domestic brands and favorable conditions in emerging markets [2][22][24]. Summary by Sections Domestic Sales - In June, excavator domestic sales reached 8,136 units, a 6.2% increase year-on-year, reversing the slight decline seen in May. The average working hours for major construction machinery in June were 77.2 hours, down 9.11% year-on-year, and the average operating rate was 56.9%, a decrease of 7.55 percentage points year-on-year. The recovery in domestic sales reflects a low base after significant declines and an increasing trend in equipment replacement [2][15][17][19]. Export Performance - The export volume of excavators in June was 10,668 units, representing a 19.3% year-on-year increase and a significant acceleration from May. The first half of 2025 saw a total export of 54,883 units, up 10.2% year-on-year. The growth in exports is driven by strong demand in emerging markets, with notable increases in regions such as Africa and Indonesia [2][22][24][30]. Market Outlook - The report anticipates a clear upward trend in the domestic machinery industry, supported by the need for equipment updates, the push for infrastructure projects, and the increasing penetration of electrification. The export market is also expected to see sustained growth, with domestic brands enhancing their global competitiveness and emerging markets showing robust demand [2][30].

Core Viewpoint - The domestic excavator sales in China are under short-term pressure due to low downstream operating conditions and the high growth in sales earlier in the year, which has somewhat exhausted future purchasing demand. However, the continuous growth in equipment replacement is expected to support future sales [4]. Group 1: Domestic Excavator Sales - In the first five months of 2025, China's excavator sales (including exports) reached 101,716 units, a year-on-year increase of 17.4%, with domestic sales of 57,501 units, up 25.7%. In May 2025, excavator sales were 18,202 units, a 2.1% increase year-on-year, while domestic sales were 8,392 units, down 1.5% [3]. - The average working hours for major construction machinery products in May 2025 were 84.5 hours, a year-on-year decrease of 3.9%, and the average operating rate was 59.5%, down 5.0 percentage points year-on-year [3]. Group 2: Government Policy Support - The 2025 government work report proposed issuing 1.3 trillion yuan in long-term special bonds, an increase of 300 billion yuan from the previous year, and plans to accelerate key project implementations, which is expected to boost infrastructure investment and downstream equipment demand [5]. - The report emphasizes the continuation of urban infrastructure investment and the promotion of new urbanization, particularly in underground engineering, municipal construction, and water conservancy projects, which will sustain demand for construction machinery [6]. Group 3: Export Trends - In the first five months of 2025, excavator exports reached 44,215 units, a year-on-year increase of 8.2%. In May 2025, exports were 9,810 units, up 5.4% year-on-year. The export market is influenced by geopolitical factors and increasing demand in Southeast Asia, Africa, and the Middle East [7]. Group 4: Electrification Trends - In the first five months of 2025, electric loader sales reached 10,904 units, a significant year-on-year increase of 207.7%, with an electrification rate of 20.7%, up 14.5 percentage points. In May 2025, sales were 2,765 units, a 121.2% increase year-on-year, with an electrification rate of 26.2%, up 13.5 percentage points [8]. - The government work report highlights the acceleration of green transformation in economic and social development, indicating that electrification and green initiatives will be key development directions for the construction machinery industry [8].

Group 1 - The core viewpoint is that the 2025 Changsha International Construction Machinery Exhibition is expected to sign annual procurement agreements exceeding 13 billion yuan, with domestic manufacturers focusing on large-scale, electrification, and intelligence [1] - The export of excavators in April increased by 19.3% year-on-year, indicating marginal improvement in overseas demand, and the long-term outlook for the construction machinery sector's international expansion is positive [1] - The general automation sector is projected to experience increased volume but decreased prices in 2024 due to intensified competition, with the injection molding machine industry benefiting from rising capital expenditures in 3C and home appliances as well as accelerated exports [1] Group 2 - The Industrial Mother Machine ETF (code: 159667) tracks the China Securities Machine Tool Index (code: 931866), which reflects the overall performance of listed companies involved in machine tool manufacturing and key component production [1] - The constituent stocks of the index cover core enterprises in machine tool manufacturing and related industries, demonstrating significant industry concentration and technological representation [1] - Investors without stock accounts can consider the Guotai China Securities Machine Tool ETF Initiated Link A (017471) and Guotai China Securities Machine Tool ETF Initiated Link C (017472) [1]

Investment Rating - The report maintains a "Buy" rating for the engineering machinery industry [1] Core Insights - The engineering machinery industry is experiencing steady revenue growth, with profit growth outpacing revenue growth in 2024 and Q1 2025 [3][4] - The industry is supported by favorable government policies and a recovering demand for infrastructure, ensuring medium-term demand stability [7] - The trend towards electrification in engineering machinery is accelerating, with significant growth in electric loader sales [9] Revenue and Profit Performance - In 2024, the overall revenue of listed companies in the engineering machinery industry reached CNY 355.12 billion, a year-on-year increase of 3.5% [3] - For Q1 2025, the revenue was CNY 96.13 billion, reflecting a year-on-year growth of 10.4% [3] - The net profit attributable to shareholders in 2024 was CNY 29.77 billion, up 16.9% year-on-year, while Q1 2025 saw a net profit of CNY 9.72 billion, a 30.2% increase [4] Profitability Metrics - The overall gross margin for the industry in 2024 was 25.5%, a slight increase of 0.3 percentage points year-on-year [5] - The net profit margin improved to 8.7% in 2024, up 1.1 percentage points from the previous year [5] Sales Trends - From January to April 2025, excavator sales (including exports) reached 83,514 units, a year-on-year increase of 21.4% [6] - The domestic sales of excavators during this period were 49,109 units, marking a 31.9% increase [6] Export Performance - In the same period, excavator exports totaled 34,405 units, reflecting a 9.0% year-on-year growth [8] - The report highlights opportunities for growth in Southeast Asia, Africa, and the Middle East markets [8] Electrification and Green Transition - Electric loader sales surged by 254.8% in Q1 2025, with an electrification rate of 19.3%, up 14.3 percentage points year-on-year [9] - The government is promoting a green transition, which is expected to accelerate the electrification process in the engineering machinery sector [9] Investment Recommendations - The report recommends key players such as SANY Heavy Industry, Zoomlion, XCMG, LiuGong, and Shantui, as well as component manufacturers like Hengli Hydraulic [10]

Core Viewpoint - Zhonglian Heavy Industry's domestic revenue and gross profit declined last year, raising concerns about whether overseas sales can drive a recovery in this year's performance [1][2] Group 1: Financial Performance - In 2024, Zhonglian Heavy Industry reported total revenue of 45.478 billion yuan, a year-on-year decrease of 3.39%, while net profit was 3.52 billion yuan, a slight increase of 0.41% [1] - Domestic sales revenue fell significantly, reaching 22.098 billion yuan, down 24.24% from 29.17 billion yuan in the previous year, with a gross margin decrease of 0.6 percentage points [2] - In Q4, the company achieved revenue of 11.092 billion yuan, a year-on-year decrease of 4.05%, but a quarter-on-quarter increase of 12.61%, with net profit dropping 41.42% year-on-year and 55.19% quarter-on-quarter to 381 million yuan [2] Group 2: Product Performance - Revenue from core products such as concrete machinery and cranes declined, with year-on-year decreases of 6.8% and 23.35% respectively; cranes accounted for the largest revenue segment at 14.786 billion yuan, down 45.05% [2] - Agricultural machinery emerged as a highlight, with revenue growth of 122.29%, increasing from 2.092 billion yuan to 4.65 billion yuan [3] Group 3: Market Dynamics - Overseas revenue reached 23.38 billion yuan, accounting for 51.41% of total revenue, surpassing domestic revenue for the first time; this was a significant increase from 17.905 billion yuan and 38.04% in the previous year [6] - The demand for excavators, a key indicator of macroeconomic trends, showed a notable increase, with export sales in January and February totaling 10.08 billion yuan, a year-on-year growth of 28.72% [6] Group 4: Institutional Actions - The Stock Connect program saw continuous reductions in holdings of Zhonglian Heavy Industry from Q2 to Q4 last year, with a total reduction of 12.3128 million shares in Q4 [3] - Public funds displayed mixed actions, with 32 funds holding 15.8 million shares by the end of Q4, an increase of approximately 2.4 million shares from Q3 [3] Group 5: Industry Outlook - The engineering machinery industry is characterized by strong cyclicality, with the last update cycle peaking in 2021; the current market is closely watching for signs of recovery [4] - Analysts believe that overseas business growth is more certain compared to domestic demand, with foreign gross profit margins for major manufacturers significantly higher than domestic ones [4][6]