Company Overview - Yantai Eddie Precision Machinery Co., Ltd. is located in Yantai Economic and Technological Development Zone, Shandong Province, established on August 6, 2003, and listed on January 20, 2017 [2] - The company's main business involves research, development, production, and sales of hydraulic technology and products, with revenue composition as follows: hydraulic components 63.12%, breakers 26.65%, other products 8.24%, and others 1.99% [2] Financial Performance - For the first half of 2025, the company achieved operating revenue of 1.569 billion yuan, a year-on-year increase of 13.15%, and a net profit attributable to shareholders of 207 million yuan, a year-on-year increase of 5.34% [2] - Since its A-share listing, the company has distributed a total of 720 million yuan in dividends, with 292 million yuan distributed over the past three years [3] Stock Performance - As of September 16, the stock price increased by 2.05% to 18.40 yuan per share, with a trading volume of 40.455 million yuan and a turnover rate of 0.27%, resulting in a total market capitalization of 15.292 billion yuan [1] - Year-to-date, the stock price has risen by 9.26%, with a 0.66% increase over the last five trading days, a 2.65% decrease over the last 20 days, and a 6.24% increase over the last 60 days [2] Shareholder Information - As of June 30, the number of shareholders was 20,700, a decrease of 18.36% from the previous period, with an average of 40,176 circulating shares per person, an increase of 22.48% [2] Capital Flow - In terms of capital flow, there was a net outflow of 2.647 million yuan from main funds, with large orders buying 1.4046 million yuan (3.47% of total) and selling 4.0516 million yuan (10.02% of total) [1]

Macro Strategy - The core viewpoint highlights the unprecedented removal of Federal Reserve Governor Cook by Trump, raising concerns about the independence of the Federal Reserve and the potential for more "Trump-aligned" appointees, which could lead to increased expectations for interest rate cuts next year [1] - Following the removal announcement, long-term U.S. Treasury yields and gold prices rose, while the U.S. dollar index fell, indicating market reactions to the uncertainty surrounding the Federal Reserve's future [1] Fixed Income - The report indicates a cautious approach in the convertible bond market, suggesting a reduction in exposure to high-priced targets while increasing allocations to ETFs to balance risks [2][3] - The 10-year government bond yield increased from 1.745% to 1.785%, reflecting market adjustments [2] Industry Insights - Longi Green Energy's Q2 performance showed a reduction in losses, with production capacity gradually increasing, maintaining a "buy" rating [4] - Zhuhai Guanyu's mobile phone shipments saw significant growth, aligning with expectations, and the company is rated as a "buy" [4] - Hunan YN's profit forecast for 2025-2027 was adjusted downwards due to lithium carbonate price pressures, but the company maintains a "buy" rating based on its market position [7] - The report on Aima Technology indicates a slight downward adjustment in profit forecasts for 2025-2026, but the company is still rated as a "buy" due to its strong market position and ongoing product development [9] - The report on Yutong Bus highlights performance driven by exports, with expectations for a strong second half of 2025 [10] - The analysis of Minsheng Health indicates stable growth in traditional products and clear growth in probiotics, suggesting a positive outlook for future growth [13] - The report on Ganfeng Lithium indicates a downward adjustment in profit forecasts for 2025-2027, but the company is still rated as a "buy" due to its global resource layout [20] - The report on Jianghuai Automobile indicates a strategic partnership with Huawei and ongoing collaborations with other tech firms, maintaining a "buy" rating despite competitive pressures [22] - The report on Yingjia Wine suggests a focus on mid-range products, with expectations for improved performance following inventory clearance [23]

Group 1 - The stock price of AVIC Heavy Machinery closed at 17.28 yuan on August 26, down by 0.17 yuan, a decrease of 0.97% [1] - The trading volume on that day was 251,300 hands, with a transaction amount of 434 million yuan [1] - AVIC Heavy Machinery is a core enterprise under the China Aviation Industry Corporation, specializing in forging and casting, with main products including aerospace forgings and hydraulic components [1] Group 2 - The company operates in multiple sectors, including aerospace, shipping, and power [1] - The latest announcement indicates that the company has completed the public transfer of 29.9879% equity in its subsidiary, Excellence Forging Technology, through the Beijing Property Exchange, receiving 170.2973 million yuan from the equity transfer [1] - On August 26, the net outflow of main funds was 48.6577 million yuan, with a cumulative net outflow of 172.0738 million yuan over the past five days [1]

Investment Rating - The report maintains an "Outperform" rating for the machinery sector, indicating expected performance above the market average [1]. Core Insights - The report highlights the trend of companies expanding overseas and identifies 2025 as the year of mass production for humanoid robots, presenting hardware investment opportunities [1][3]. - The easing of trade tensions between China and the US is expected to support the growth of domestic companies in overseas markets, particularly in the tool market where relocation to the US is challenging due to cost and efficiency advantages [3]. - Key companies to watch include Giant Technology, Changrun Co., Honghua Digital Science, and others, which are positioned to benefit from these trends [3][4]. Summary by Sections Recommended Stocks - The report lists preferred stocks with ratings: - Jack Co. (603337.SH) - Buy-A - Hengli Hydraulic (601100.SH) - Buy-A - Zhejiang Rongtai (603119.SH) - Accumulate-A - Qiaocheng Ultrasonic (688392.SH) - Buy-A - Honghua Digital Science (688789.SH) - Buy-A - Tianzhun Technology (688003.SH) - Buy-A - Jiechang Drive (603583.SH) - Accumulate-A [2][10]. Industry Key Data Tracking - Forklifts: In June 2025, 137,570 units were sold, a 23.1% increase year-on-year. For the first half of 2025, sales totaled 739,334 units, up 11.7% [13]. - Excavators: June 2025 sales reached 18,804 units, a 13.3% increase. Total sales for the first half were 120,520 units, up 16.8% [14]. - Automotive Cranes: June sales were 1,649 units, down 5.28%. Total sales for the first half were 10,752 units, down 8.4% [17]. - Tower Cranes: June sales were 437 units, down 44.8%. Total sales for the first half were 2,771 units, down 38% [21]. - Loaders: June sales were 12,014 units, up 11.3%. Total sales for the first half were 64,769 units, up 13.6% [22]. - Metal Cutting Machine Tools: June production was 70,500 units, up 12.7%. Total production for the first half was 403,000 units, up 13.5% [24]. - Industrial Robots: June production was 74,764 units, up 37.9%. Total production for the first half was 379,000 units, up 35.6% [28].

Core Viewpoint - The credit rating agency has maintained a stable credit rating outlook for Yantai Aidi Precision Machinery Co., Ltd, reflecting the company's strong market position and customer base in the hydraulic component sector, despite some concerns regarding inventory and accounts receivable growth [3][5][7]. Financial Performance - In 2024, the company achieved a revenue of 2.725 billion yuan, representing a year-on-year growth of 21.90%, and a net profit of 344 million yuan, up 23.50% [5][6]. - The company's hydraulic component business saw a revenue increase of 1.344 billion yuan, with a growth rate of 22.53% [5][6]. - The operating cash flow improved to 155 million yuan, indicating better cash management [4][22]. Inventory and Accounts Receivable - The company experienced a significant increase in inventory, with the stock of hydraulic hammers rising by 53.39% to 2,261 units, which raises concerns about working capital utilization [6][20]. - Accounts receivable growth outpaced revenue growth, necessitating attention to its impact on working capital [6][20]. Production Capacity and Utilization - The production capacity utilization rate for hydraulic hammers was only 54.75%, indicating underutilization and potential profitability risks if market demand does not meet expectations [6][20]. - The hydraulic components' production capacity utilization improved to 84.36%, reflecting a positive trend in production efficiency [19][21]. Market Position and Customer Base - The company maintains a strong customer base among leading machinery manufacturers, which provides a degree of revenue stability [5][22]. - The top five customers accounted for 47.99% of sales revenue, indicating a concentrated customer base within the cyclical construction machinery industry [22]. Investment and Expansion Plans - The company has postponed some investment projects, including the construction of high-pressure pumps and valves, which may affect future production capabilities [8][20]. - New projects in Thailand aim to enhance production capacity and market competitiveness, with a focus on hydraulic hammers and high-end hydraulic components [20][22]. Industry Outlook - The engineering machinery industry is showing signs of recovery, with excavator sales increasing by 3.13% in 2024, and a strong growth forecast for 2025 [14][15]. - Government policies aimed at stabilizing the real estate market and increasing infrastructure investment are expected to benefit the engineering machinery sector [15][16].

Core Viewpoint - Shaoyang Hydraulic has decided to terminate its plan for a private placement of shares for the year 2024, which will not adversely affect its normal operations or sustainable development [1][3]. Group 1: Termination of Share Issuance - The company held its sixth board meeting on May 26, 2024, where it approved the termination of the private placement of shares [1]. - The decision to terminate the issuance does not require shareholder approval as it falls within the board's authority [1]. - The company reassured that its production and operational activities are proceeding normally and that the termination will not harm the interests of shareholders, especially minority shareholders [1]. Group 2: Details of the Proposed Share Issuance - The proposed private placement was intended for a specific investor, Cui Wuhong, who is the controlling shareholder and chairman of the company [1][3]. - The planned issuance was set at a price of 9.76 yuan per share, which is 80% of the average trading price over the previous 20 trading days [2]. - The maximum number of shares to be issued was 15,368,852, representing 13.93% of the total share capital before the issuance [2]. Group 3: Financial Performance - For the year 2024, the company reported revenue of 351.19 million yuan, a year-on-year increase of 27.33% [5]. - The net profit attributable to shareholders was 6.40 million yuan, a decrease of 2.76% compared to the previous year [5]. - The net profit after excluding non-recurring items was 1.74 million yuan, reflecting a significant increase of 51.98% [5]. - The company experienced a negative cash flow from operating activities of -2.57 million yuan, compared to a positive cash flow of 10.52 million yuan in the previous year [5]. Group 4: Shareholder Structure - As of April 30, 2024, Cui Wuhong directly held 32,497,967 shares, accounting for 29.45% of the total share capital, and indirectly controlled an additional 3,653,417 shares through a related party [3]. - After the proposed issuance, the total share capital would increase from 110,364,584 shares to 125,733,436 shares, with Cui Wuhong's total control rising to 40.98% [3].

Core Viewpoint - Jiangsu Hengli Hydraulic Co., Ltd. successfully completed a non-public offering of 35,460,992 shares at a price of 56.40 RMB per share, raising a total of approximately 1.99 billion RMB in net funds [1][2]. Group 1: Company Overview - Jiangsu Hengli Hydraulic Co., Ltd. was established on June 2, 2005, with a registered capital of 1,340,820,992 RMB [1]. - The company specializes in the research, production, and technical support of high-pressure cylinders, hydraulic components, hydraulic systems, high-pressure plunger pumps and motors, high-pressure hydraulic valves, and precision castings [1]. Group 2: Sponsorship and Supervision - China International Capital Corporation (CICC) served as the sponsor for Hengli Hydraulic's non-public offering and is responsible for ongoing supervision [1][2]. - The sponsorship period for the non-public offering will conclude on December 31, 2024, and CICC will continue to oversee the remaining use of raised funds [4]. Group 3: Due Diligence and Compliance - During the due diligence phase, CICC conducted thorough investigations and prepared necessary documentation in compliance with regulations set by the China Securities Regulatory Commission (CSRC) and the Shanghai Stock Exchange [2]. - Throughout the ongoing supervision phase, Hengli Hydraulic adhered to legal and regulatory requirements, ensuring timely and accurate information disclosure [3]. Group 4: Fund Management - The company has complied with regulations regarding the management of raised funds, maintaining dedicated accounts for storage and specific usage [3]. - As of December 31, 2024, there are still some unutilized funds from the raised capital, and CICC will continue to monitor their usage [4].

Core Viewpoint - The company's performance in 2024 and Q1 2025 met expectations, with significant revenue and profit growth, although gross margins were impacted by the introduction of low-margin new products [1][2]. Financial Performance - In 2024, the company reported revenue of 2.725 billion yuan, a year-on-year increase of 21.9%, and a net profit attributable to shareholders of 344 million yuan, up 23.5% year-on-year [1]. - For Q1 2025, revenue reached 770 million yuan, also reflecting a 21.9% year-on-year increase, while net profit was 102 million yuan, marking a 15.6% increase year-on-year [1]. - The company's net profit margin improved to 12.6% in 2024, although it decreased to 13.2% in Q1 2025 due to the rising proportion of new business [2]. Gross Margin and Expenses - The overall gross margin for 2024 and Q1 2025 decreased by 1.2 percentage points and 2.9 percentage points, respectively, to 29.5% and 26.3%, primarily due to the higher revenue share from low-margin new products [1]. - The gross margins for hydraulic breakers and hydraulic components were 34.96% and 30.36%, respectively, showing year-on-year increases of 1.2 percentage points and 0.71 percentage points [1]. - The company’s sales, management, and financial expense ratios changed by +0.3, -0.6, and -0.5 percentage points year-on-year, respectively, while R&D expense ratio remained stable [1]. Business Development - The domestic demand for construction machinery is expected to recover in 2025, with the company poised to benefit from this trend [3]. - In Q1 2025, excavator sales reached 61,000 units, a year-on-year increase of 22.8%, with domestic sales of 37,000 units, up 38.3% [3]. - The company is expanding its new business lines, including tools, industrial robot components, lithium battery PACK business, and transmission components, with other product revenue reaching 400 million yuan in 2024, a 103.04% increase year-on-year [3]. Production Capacity Expansion - The company is constructing a new factory in Thailand, expected to produce 16,000 hydraulic breakers, 36,000 diversified attachments, and 8,000 high-end hydraulic components annually [3]. - The company is also developing a high-end hydraulic component project under the brand Aisaki [3]. Profit Forecast and Valuation - The company maintains EPS forecasts of 0.49 yuan for 2025 and 0.57 yuan for 2026, with current stock prices corresponding to P/E ratios of 38.1 and 32.9 for 2025 and 2026, respectively [4]. - The target price has been raised by 17% to 24.40 yuan, reflecting a potential upside of 30% from the current stock price [4].

Investment Rating - The industry investment rating is maintained at "Add" [1] Core Viewpoints - The direct export cost of engineering machinery to the US has significantly increased due to tariffs, reaching 79% (25% + 20% + 34%), but the overall risk is manageable as the exposure to the US market is low for major manufacturers [1] - Key recommendations focus on companies with North American factories and those with facilities in Mexico (which has tariff exemptions) or Brazil and Turkey (which can bear a 10% tariff) [2] - Companies like SANY Heavy Industry and Hengli Hydraulic have established production capabilities in North America, which can help mitigate tariff risks [2] - The report suggests that the overall risk is controllable despite the tariff impacts, and recommends companies such as SANY Heavy Industry, Zoomlion, LiuGong, Shantui, and Hengli Hydraulic for investment [5] Summary by Sections Tariff Impact - The engineering machinery sector faces a 79% tariff on exports to the US, but major companies have limited exposure, with SANY at approximately 3% and Hengli at about 5% [1] - If retaliatory measures are taken by sanctioned countries, it could benefit Chinese engineering machinery brands, especially in emerging markets [1] Overseas Factory Layout - Companies with North American factories include SANY and Hengli, with SANY's future production capacity expected to exceed 2,000 units, corresponding to about 1 billion yuan [2] - Hengli's North American factory has an annual output value of 300-400 million yuan for hydraulic components, with plans to produce planetary screws if tariffs persist [2] - In Mexico, Hengli and Zoomlion have factories, with Hengli's projected annual output value increasing from 2 billion to 3-4 billion yuan [2] - Zoomlion's factory in Mexico has achieved over 1 billion yuan in actual sales since full production began in Q3 2024 [2] - In Brazil and Turkey, Zoomlion and LiuGong have factories with a combined capacity exceeding 3 billion yuan [2]

Summary of Key Points from the Conference Call Industry Overview - The mechanical sector, particularly the robotics segment, has shown significant growth since the Spring Festival, despite recent market adjustments. The overall outlook remains optimistic due to improving fundamentals, reasonable valuations, and strong annual and quarterly reports from industry companies [2][42]. Key Companies and Their Performance Excavator Market - The domestic excavator market is expected to see a year-on-year sales increase of over 70% in February, with a combined growth of approximately 37% for January and February. This growth is driven by rural demand, high-standard farmland construction, and small infrastructure projects [3][2]. - SANY Heavy Industry is projected to achieve a domestic growth rate of 10%-20% and maintain similar export growth. The company is launching a new series of excavators in Europe and the U.S. and is enhancing its competitiveness in overseas mining through operations in Indonesia [5][2]. - XCMG Group leads in the mining equipment sector, having signed overseas orders exceeding 3 billion RMB in the second half of last year, which will contribute to revenue recognition this year [6][2]. - LiuGong has improved its domestic excavator market share from over 8% to over 14% post-restructuring, with steady profitability improvements. The company is focusing on cost reduction and efficiency enhancements [7][2]. - Hengli Hydraulic is benefiting from land rights issues and collaborations with Tesla, with expectations of becoming a key supplier for humanoid robots [13][2]. - China Power is excelling in the marine engine sector, with expectations of significant profit growth by 2025 due to acquisitions and a focus on new energy servo motors [17][2][18]. Injection Molding Machine Industry - The injection molding machine sector performed better than expected in February, with leading companies reporting over 50% year-on-year order growth in a single month and over 20% growth overall for January and February. The growth is supported by large-scale equipment upgrades and domestic demand [40][2]. Additional Insights - The agricultural machinery sector is expected to grow due to increased crop yields and land consolidation, with significant investments in high-end machinery driven by government policies [22][23]. - Zhejiang Dingli has benefited from reduced tariffs and is expected to see significant sales growth in the U.S. market, with a strong performance anticipated in 2025 [25][2]. - The shipbuilding sector remains a focus, with companies like China Power and Jiangsu Hantong expected to perform well due to ongoing demand for new vessels and the aging global shipping fleet [16][20]. Recommendations - Key companies to watch include SANY Heavy Industry, XCMG Group, LiuGong, Hengli Hydraulic, and China Power in the mechanical sector. In the lithium battery equipment sector, companies like Xian Dai Intelligent and Haopeng Technology are recommended. The export chain includes companies like Haomai Technology and Zhejiang Dingli, while the shipbuilding sector highlights China Power and Jiangsu Hantong [42][2].