Jiangsu Hengli Hydraulic CO.(SH:601100)2025-09-08 06:23Summary of Jiangsu Hengli Hydraulic Co. (601100.SS) Conference Call Company Overview - Company: Jiangsu Hengli Hydraulic Co. - Industry: Hydraulic equipment manufacturing Key Points and Arguments Sales Performance - 3Q25 Sales Growth: Accelerating hydraulics sales observed for both excavators and non-excavator verticals, driven by demand recovery and gradual delivery of 1H25 orders [2][3] - Excavator Sales: Year-over-year growth accelerated from +SD% in 1Q to approximately 20% in 2Q, and 40-50% in 3Q25 QTD. Full-year sales from the excavator vertical expected to see 20-30% year-over-year growth [6][2] - Non-Excavator Sales: Improvement noted in verticals like tunnel boring machines, with full-year sales expected to see 10-20% year-over-year growth [7][2] Market Outlook - 2H25 Sales Outlook: Management expects 2H25 sales to achieve over 20% year-over-year growth, surpassing Goldman Sachs' estimate of 16% [3][2] - Key Customer Relationships: Management is optimistic about expanding wallet share among key multinational customers, including both Western and Japanese brands, into 2H25E and 2026E [2][3] Capital Expenditure Plans - Capex Strategy: The company plans to maintain a certain level of capital expenditure for business expansion domestically and internationally, focusing on linear actuators domestically and expanding global capacity in regions like South America and Indonesia [2][3] New Business Developments - Ball Screw Sales: Management anticipates an acceleration in ball screw sales into 2H25, with a full-year sales target of RMB 200 million, despite expecting a net loss of RMB 60 million for the year [11][2] - Humanoid Robot Development: Initial progress expected by end-3Q25, with potential profitability improvements by year-end due to new machine tools enhancing manufacturing efficiency [11][2] Overseas Expansion - International Demand: Solid demand noted in Southeast Asia, India, the Middle East, and Europe, with expectations for notable sequential improvement in overseas sales in 2H25 [11][2] - Capacity Investments: Plans to invest RMB 300 million in an Indonesian factory and RMB 500 million in a Mexican factory, with expected production output value increases [12][11] Financial Projections - 12-Month Price Target: Target price set at RMB 79.00, reflecting long-term growth potential driven by import substitution in the hydraulic market and expansion into the linear actuator market [13][2] - Revenue Forecasts: Projected revenues of RMB 9,389.7 million for 2025, increasing to RMB 14,532.4 million by 2027 [15][2] Risks - Market Risks: Potential risks include stronger or weaker-than-expected global demand for mobile machinery, and faster or slower-than-expected new product development [14][2] Additional Important Information - Management's Confidence: Management expressed confidence in Hengli's cost advantages compared to Japanese competitors and the potential for wallet share expansion among key customers [11][2] - Investment Focus: Future investments will be skewed towards ball screws and motors, with expected investment values of RMB 300-500 million each [11][2] This summary encapsulates the key insights from the conference call, highlighting the company's performance, market outlook, strategic plans, and associated risks.