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Q1 performance exceeded expectations, continue to be optimistic about the opportunity of the double tap

Westdollar.com April 15, 2019 00:00 Soochow Securities Chen Xianfan, Zhou Ershuang, Zhu Beibei View original PDF

Sany Heavy Industry (600031)

Event: The company released a performance forecast. It is estimated that Q1 will achieve a net profit of 3 billion to 3.3 billion, which is +100% to 120% year-on-year. It is estimated that the net profit of non-home will be 2.9 billion to 3.15 billion, +133.5% to 153.6%.

Investment points

Excavator high-end product share exceeded expectations + overseas growth logic can be expected

The market share of excavators has been greatly improved, and the structure of high-end products has been optimized. According to the data of the Construction Machinery Industry Association, the sales volume of Q1 company's excavator is +52%, which greatly exceeds the industry's 25% growth rate. The market share of Q1 excavator is 26% (+5pct), and the market share of medium and large digging products is 26 respectively. %, 27%, both increased by 5pct year-on-year. Among them, high-end products over 40t have begun to replace foreign capital, and the market share is 38% compared with +16pct. We judge that the market share of high-end products of the company will continue to increase, and the optimization of product structure will bring profit elasticity. At the same time, after the domestic competitiveness of Zhongda digging products is greatly improved, the logic of overseas growth can be fulfilled.

The peak of cranes and concrete machines is updated, and the profitability of scale effect is obviously improved.

In January-February, the growth rate of industrial truck cranes reached 60%, the company's sales volume was +88%, and the market share reached 26% (+4pct). We believe that crane sales in March will continue to exceed expectations. We expect the company's Q1 crane revenue to grow by more than 100%, and concrete machine revenue growth of over 80%. According to the sales volume of each product Q1, we expect the company's revenue growth rate to reach more than 70%. The profitability of the scale effect appears. At the same time, the company actively promotes digital upgrade, and the operation quality and operation efficiency continue to increase substantially.

Industry boom will continue, long-term optimistic about the company's global competitiveness

The easing policy and environmental verification have become stricter and accelerated the release of demand. The construction machinery industry will continue to prosper, and the crane and concrete machine relay excavators will grow at a high rate. We continue to be optimistic about Sany as the leading position of engineering machinery industry: high-end product structure optimization + scale effect + high export growth will continue to bring performance flexibility, global competitiveness gradually reflects the valuation premium, optimistic about the company double-click opportunities.

Earnings forecast and investment rating

We expect the company's net profit for 2019-2021 to be 9.3 billion, 11 billion, and 11.9 billion, respectively, corresponding to PE of 12, 10, and 9 times, giving a “buy” rating. We give the target a valuation of 15 times PE, corresponding to a market value of 139.5 billion and a target price of 16.7 yuan.

Risk Warning: The growth rate of downstream infrastructure real estate is lower than expected, and the fierce competition in the industry has led to a decline in profitability.

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Sany Heavy Industry Fundamental Data
  • Total share capital of 8.376 billion shares
  • Circulating shares 8.338 billion shares
  • Earnings per share 0.73 yuan
  • Undistributed profit per share 2.36 yuan
  • Net assets per share 3.72 yuan
  • Return on equity 21.45%
  • Net profit 611,628,800
  • Net profit growth rate 192.33%
Sany Heavy Industry Investment Rating
Overall rating within one month
Overall rating in March
Statistical period Buy Overweight neutral Reduction Sell total
Within one month14500019
Within three months25800033
Within six months431700060
Within a year8037000117
Sany Heavy Industry Profit Forecast
                                index 2017A 2018E 2019E 2020E
Earnings per share (yuan) 0.25 0.73 1.07 1.24
Net profit (100 million yuan) 20.94 61.14 89.79 103.52
name Quote change Number of research reports Institutional investment rating (nearly six months)
Buy Overweight neutral Reduction Sell
Tianxiang environment 10.00% 0 0 0 0 0 0
All diesel power 9.99% 0 0 0 0 0 0
Zhongtai Shares 8.67% 2 1 1 0 0 0
Jiangte Motor 7.11% 0 0 0 0 0 0
Paisley 6.09% 0 0 0 0 0 0
Wisdom 5.47% 0 0 0 0 0 0
Boss 4.33% 0 0 0 0 0 0
Chengyitong 4.31% 0 0 0 0 0 0
Zhefu Holdings 3.93% 0 0 0 0 0 0
Shenli shares 3.77% 0 0 0 0 0 0
Hanzhong Seiki 3.61% 2 1 1 0 0 0
Zhongji Xuchuang 3.43% 16 9 7 0 0 0
Founder motor 3.16% 1 0 0 1 0 0
Xiagong shares 3.11% 0 0 0 0 0 0
Jifeng Technology 3.04% 0 0 0 0 0 0
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