柳工20250625

Summary of the Conference Call for Liugong Company Overview - Liugong has completed its leadership transition while maintaining stability in core management and strategic direction. The new leadership structure follows the CSRC's "Five Separations" principle to ensure operational independence [2][3][4]. Strategic Goals - The company continues to pursue its 2027 revenue target of 50 billion and the "Three Full Strategies," while also formulating the 2030 14th Five-Year Plan [2][3]. International Market Performance - Liugong's performance in international markets shows resilience, with a decline in the Northern Special Zone and North America being less severe than the industry average. The European market, however, has seen over 20% growth, contributing to overall overseas sales and revenue growth of over 10% [2][5][13]. Domestic Market Insights - The domestic market is benefiting from the issuance of special bonds and a wave of equipment upgrades in the construction machinery sector. Liugong anticipates continued government support for fixed asset investment, aiming to outperform the industry by over 10 percentage points. From January to May, domestic revenue growth approached 20% [2][5][7]. Excavator Market Dynamics - The demand structure for excavators is diverging, with medium-sized excavators declining due to real estate impacts, while small and large excavators benefit from water conservancy, agriculture, and mining activities. Liugong's sales of small and large excavators have achieved double-digit profit growth [2][8]. Loader Market and Electric Equipment - The loader market, particularly electric loaders, is experiencing rapid growth, exceeding 40%. However, the current gross margin for electric equipment is low. Liugong plans to increase prices and introduce a new generation of electric loaders and hydraulic systems to enhance profitability. The goal is to double overseas electric equipment sales to 1,200 units, with expected gross margins exceeding 50% [2][9][10]. Aftermarket Business Strategy - Liugong is accelerating its aftermarket business development, drawing lessons from Caterpillar, where aftermarket profitability surpasses that of new equipment sales. The company is enhancing after-sales services and utilizing smart management systems to reduce customer costs and improve efficiency, thereby increasing sales opportunities [2][11]. Overseas Sales Structure - Liugong's overseas sales structure is balanced, with no single region exceeding 20% of total sales. The Northern Special Zone accounts for approximately 15-16%, while regions like Africa and Europe show significant growth, each around 11% [2][12]. Management's View on Demand Trends - Despite a decline in demand in Europe and North America, Liugong's European revenue grew over 20% in the first five months of 2025. The company has made significant adjustments to its European subsidiary, improving profitability from a previous loss to an expected net profit exceeding 200 million this year [2][13]. Impact of Used Equipment Exports - The export of used equipment does not negatively impact new equipment sales, as the customer bases differ. New machines are sold to first-tier customers, while used machines cater to second and third-tier customers. The export of used equipment has accelerated, with 110,000 units exported over the past three years [2][15][16]. Conclusion on Market Demand - The Chinese engineering machinery market is expected to maintain stable and moderate growth, with government policies supporting fixed asset investment. Liugong aims to outperform the industry by over 10 percentage points, with domestic revenue growth of nearly 20% and international growth close to 15% in early 2025 [2][6][7].