Core Viewpoint - Hitachi Construction Machinery has signed a memorandum of cooperation with Rio Tinto's subsidiary Technological Resources Pty Limited to develop remote control technology for large hydraulic excavators over the next five years, aiming to enhance safety and productivity in mining operations [3][4]. Group 1: Cooperation Details - The cooperation focuses on developing driving assistance, remote control, and semi-automated driving technologies for large hydraulic excavators [3]. - Hitachi Construction Machinery will be responsible for the development of remote control technology, while Rio Tinto will provide operational data and feedback from mining sites in Western Australia [3][4]. - The semi-automated driving feature allows operators to set the starting and loading positions, enabling the system to automatically repeat subsequent operations [3]. Group 2: Future Plans - Hitachi Construction Machinery plans to establish a scalable platform by 2030, allowing multiple large hydraulic excavators with semi-automated driving capabilities to operate in mining sites [4]. - This collaboration builds on previous strategic projects between Hitachi and Rio Tinto, including durability verification of excavator arms and evaluation of operator assistance technologies [4]. - The partnership aims to accelerate the development of highly versatile autonomous driving technology through testing in diverse site conditions [4]. Group 3: Industry Context - The engineering machinery industry is showing signs of recovery, with expectations of improved performance and demand in the coming months [6][10]. - The transition to "National IV" emissions standards is set to begin on December 1, which may impact the market dynamics for construction machinery [6]. - The industry has experienced a significant increase in exports, with a rise of over 70% despite a continuous decline in domestic sales for 13 months [6].

Investment Rating - The investment rating for the company is "Buy" [3] Core Views - The company plans to acquire 51% of Xuzhou Xugong Heavy Vehicles for 820 million RMB, aiming to become a global leader in open-pit mining machinery [1] - The acquisition will enhance the company's competitive advantage in mining machinery by integrating a complete range of products, providing a one-stop service for global mining customers [1] - The company has been ranked among the top five global manufacturers of open-pit mining equipment for six consecutive years, achieving a revenue of 5.9 billion RMB in 2023 with a CAGR of 44% from 2019 to 2023 [2] - The company has secured significant international contracts, including a nearly 800 million RMB contract for core mining equipment for the Simfer project in Guinea [2] - The company expects revenue growth from 2024 to 2026, with projected revenues of 909 billion, 1,047 billion, and 1,279 billion RMB, respectively [3] Summary by Sections Acquisition Details - The company announced an acquisition of 51% of Xuzhou Xugong Heavy Vehicles for 820 million RMB, which will be consolidated into its financial statements [1][10] - The seller, Xugong Nanjing, is a wholly-owned subsidiary of Xugong Group, focusing on vehicle design, production, and sales [1] Performance Commitments - Xugong Nanjing has committed to a net profit of no less than 1.44 billion, 1.61 billion, and 1.81 billion RMB for the years 2025 to 2027, totaling at least 4.86 billion RMB [2][10] Market Position and Growth - The company ranked fourth among global open-pit mining equipment manufacturers in 2024, being the only Chinese company in the top five [2] - The mining machinery revenue accounted for 7.1% of total revenue in the first half of 2024, with a gross margin of 24% [2] Revenue and Profit Forecast - The company forecasts revenues of 909 billion, 1,047 billion, and 1,279 billion RMB for 2024, 2025, and 2026, respectively, with year-on-year growth rates of -2%, 15%, and 22% [3] - The projected net profit for the same years is 62 billion, 78 billion, and 97 billion RMB, with growth rates of 16%, 26%, and 25% [3]