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Soochow Securities: Sany Heavy Industry Buy Rating

April 15, 2019 09:18
Author: Chen Xianfan Zhouershuangzhu babe

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K diagram 600031_1

  event:Company releasePerformancePreview, expecting Q1 to achieve homeNet profit3 billion to 3.3 billion, +100% to 120% year-on-year; the net profit of deductibles is estimated to 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 projectMachinery IndustryAccording to the association data, Q1's excavator sales volume was +52%, which greatly exceeded the industry's 25% growth rate. The Q1 excavator market share was 26% (+5pct), and the market share of Zhongda digging products was 26% and 27% respectively. Both increased significantly 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 growth rate of more than 100%, concrete machine revenue growth rate of more than 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 will be tightened to speed up 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.

  profit predictionWith 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, 12, 10, and 9 times, respectively, 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: downstream infrastructurereal estateThe growth rate was lower than expected, and the fierce competition in the industry led to a decline in profitability.

(Article Source:Soochow Securities)

                (Editor: DF358)

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