FIRST TRACTOR(601038) 西南证券·2024-10-15 06:30Investment Rating - The report maintains a "Buy" rating for Yituo Co., Ltd. (601038) with a target price of 20.91 CNY over the next six months, based on a current price of 17.42 CNY [1][7]. Core Views - The agricultural machinery industry is expected to benefit from favorable policies, with a record high subsidy of 24.6 billion CNY for agricultural machinery purchases in 2024, which is anticipated to stimulate demand [1][5]. - Yituo Co., Ltd. holds the leading market share in the medium and large tractor segment, with a market share of 24% in 2022, and is well-positioned to benefit from the growth in this segment [1][5]. - The company's export of tractors is projected to become a significant growth driver, with a compound annual growth rate (CAGR) of 37% from 2021 to 2023 [1][5]. Summary by Sections Company Overview - Yituo Co., Ltd. is a long-established state-owned enterprise in the tractor market, originally founded in 1955, and has undergone significant transformations, including a public listing in 2012 [14][18]. Tractor Industry - The global agricultural machinery market exceeds 1 trillion CNY, with China's agricultural machinery market size over 500 billion CNY, where tractors account for approximately 30% [1][31]. - The demand side is supported by new agricultural machinery purchase subsidies and equipment renewal policies, while the supply side sees an improving competitive landscape with a market concentration nearing 50% in the medium and large tractor segment [1][25]. Export Growth - China's agricultural machinery and parts exports reached 13.28 billion USD in 2023, with tractors transitioning from small to medium and large models, indicating a growing trend in exports [1][5]. - Major export markets for Chinese tractors include Europe and Asia, which account for 30-40% of total exports [1][5]. Financial Performance and Forecast - The company is expected to achieve net profits of 1.18 billion CNY, 1.38 billion CNY, and 1.56 billion CNY for 2024, 2025, and 2026 respectively, with a three-year compound growth rate of 16% [2][7]. - The projected price-to-earnings (PE) ratios for the next three years are 17, 14, and 13 times, respectively [7]. Market Position - Yituo Co., Ltd. is recognized as the leading player in the medium and large tractor market, with a focus on high-end product development and international market expansion [1][5].