November 25, 2025 08:34 AM GMT Sany Heavy Industry Co., Ltd. | Asia Pacific Focusing on Overseas Markets in 2026 We hosted a call with Sany, and management expects accelerated overseas sales growth in 2026, especially in Europe, North America and Africa. In China, non excavator sales will likely outgrow excavator in 2026, with more demand from mega infra projects in 2027-28. Key Takeaways We expect Sany to maintain its leadership in the domestic upcycle and achieve sustained overseas market share gains in t ...

Core Viewpoint - Caterpillar has shown significant stock performance, with an 83% increase over the last three years and 176% over the last five years, but investors should consider the cyclical nature of the company and its current market conditions before making investment decisions [1]. Group 1: Company Overview - Caterpillar operates in cyclical markets, primarily in construction, resource industries, and energy and transportation [2]. - Recent years have seen strong performance in these end markets, supported by solid commercial construction, bipartisan infrastructure spending, and favorable commodity prices [3]. Group 2: Financial Performance and Projections - Management estimates that free cash flow (FCF) for 2024 will range from $5 billion to $10 billion, indicating a peak in the current cycle [4]. - The projected FCF for 2025 is between $7.5 billion and $10 billion, suggesting a potential market cap of $175 billion based on a typical price-to-FCF multiple of 20 [5][6]. - If the current cycle has peaked, a more cautious estimate would place FCF at $7.6 billion, leading to a market cap of $150 billion [7]. Group 3: Services Growth - In 2024, Caterpillar generated $64.8 billion in sales, with $24 billion from services, marking a 4% increase from 2023 [8]. - The company aims to double its services revenue from $14 billion in 2016 to $28 billion by 2026, requiring an annual growth rate of 8% [9]. Group 4: Pricing Environment - Price realization, which reflects the ability to achieve listed selling prices, has turned negative in the fourth quarter of 2024, indicating a weakening pricing environment [10][11]. - This trend suggests that pricing pressures are impacting sales volume, which could affect overall profitability [11]. Group 5: Investment Outlook - Currently, Caterpillar does not appear to be an outstanding value stock, but future economic conditions could change this outlook [12]. - Given the trends in price realization, service revenue growth, and sales volumes, it is likely that Caterpillar has passed the peak of the current cycle, making it a candidate for the watch list [13].

Core Viewpoint - Caterpillar's shares have declined by 3.2% due to the implementation of new tariffs on imports from Mexico, Canada, and China, which could negatively impact the company's competitiveness and profit margins [1][2]. Group 1: Impact of Tariffs - The company has significant international exposure, with more employees outside the US (61,400) than within (51,500), making it vulnerable to trade tensions [2]. - Increased tariffs may lead to higher costs for components manufactured in its global plants, particularly in China and Mexico, which will negatively affect profit margins [3]. - The potential for retaliatory tariffs could render Caterpillar's products uncompetitive in various markets [3]. Group 2: Supply Chain Concerns - Historical context from the COVID-19 supply chain crisis indicates that trade disruptions can significantly increase procurement costs and complicate logistics [4]. - If tariffs lead to retaliatory actions that adversely affect global economic growth, Caterpillar's sales in construction machinery and commodity-related sectors could suffer [5]. Group 3: Future Outlook - There is a possibility that tariffs may be eased if political objectives are met, suggesting that immediate panic may not be warranted [6].