XCMG(000425) 国盛证券·2024-09-13 02:43Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [3]. Core Views - XCMG is a pioneer and leader in the Chinese construction machinery industry, with a comprehensive product range and strong R&D capabilities. The company has seen improvements in revenue and profitability following various reforms, including mixed ownership and stock incentives [1][11]. - The domestic market is expected to stabilize and potentially trend upwards from 2024 to 2025, as excavator sales have shown signs of recovery after a significant downturn [1][2]. - The overseas market presents substantial growth opportunities, with XCMG aiming to expand its global presence and capitalize on the electrification trend in Europe and the ongoing urbanization in developing countries [2][11]. Summary by Sections Company Overview - XCMG was established in 1943 and became the first group company in the domestic industry in 1989, listed on the Shenzhen Stock Exchange in 1996. The company focuses on engineering technology equipment and related applications, holding the top position in 16 main product categories in China [1][11]. - In 2023, XCMG reported total revenue of 92.848 billion yuan, a slight decrease of 1.03% year-on-year, while achieving a net profit of 5.326 billion yuan, an increase of 23.67% [1][11]. Domestic Market Outlook - The domestic excavator market is anticipated to form a bottom and possibly trend upwards in 2024-2025, with sales growth observed from March to July 2023, indicating a recovery phase [1][2]. - The report highlights that the previous year's sales figures were significantly low, providing a favorable base for growth [1][2]. Overseas Market Potential - The overseas excavator market has experienced a decline of 15%-25% since last year, but the rate of decline has been narrowing, suggesting a potential recovery in the latter half of the year [2]. - XCMG is well-positioned to benefit from the vast overseas market, particularly in Europe and developing countries, where demand for construction machinery remains strong [2][11]. Financial Projections - Revenue projections for XCMG from 2024 to 2026 are 100.4 billion yuan, 113.5 billion yuan, and 130.7 billion yuan, with year-on-year growth rates of 8.1%, 13.0%, and 15.1% respectively. Net profit is expected to reach 6.57 billion yuan, 8.34 billion yuan, and 10.92 billion yuan during the same period, with growth rates of 23.3%, 26.9%, and 31.0% respectively [2][5].