SANY(600031) Soochow Securities·2024-11-03 17:00Investment Rating - The report maintains a "Buy" rating for SANY Heavy Industry [1] Core Views - The Q3 performance of SANY Heavy Industry met expectations, benefiting from the continuous recovery in domestic and international industry conditions. For the first three quarters of 2024, the company achieved revenue of 58.36 billion yuan, a year-on-year increase of 3.9%, and a net profit attributable to shareholders of 4.87 billion yuan, up 19.7% year-on-year [2] - The company’s Q3 revenue reached 19.30 billion yuan, representing a year-on-year growth of 18.9%, while the net profit attributable to shareholders was 1.30 billion yuan, up 96.5% year-on-year. The significant profit increase in Q3 is attributed to a low base from the previous year and an improvement in profit margins [2] - The report anticipates that the easing monetary and fiscal policies will support a gradual recovery in infrastructure and real estate, leading to marginal improvements in downstream demand for construction machinery, which SANY is expected to benefit from [2] Financial Performance Summary - For the first three quarters of 2024, the gross profit margin was 28.3%, a slight decrease of 0.2 percentage points year-on-year, while the net profit margin was 8.6%, an increase of 1.1 percentage points year-on-year. In Q3 alone, the gross profit margin was 28.3%, down 0.9 percentage points year-on-year, and the net profit margin was 7.0%, up 2.9 percentage points year-on-year [3] - The company maintained good expense control, with a Q3 expense ratio of 18.3%, down 6.6 percentage points year-on-year. The net cash flow from operating activities for the first three quarters was 12.38 billion yuan, a year-on-year increase of 151.7%, demonstrating excellent cash flow management [3] Strategic Developments - SANY is gradually realizing its electric and global strategies. In H1 2024, the company secured a large order for 200 electric units in Indonesia and successfully entered the high-end European market with its electric excavators. The company is positioned to lead the electric construction machinery sector through significant R&D investments [4] - The company is also advancing its global manufacturing strategy, with the second phase of its factory in Indonesia completed and ongoing construction in India and South Africa. SANY's global market share is currently 5.2%, indicating substantial growth potential compared to competitors [4] - The report maintains profit forecasts for 2024-2026 at 6.284 billion yuan, 8.494 billion yuan, and 11.321 billion yuan, respectively, corresponding to current P/E ratios of 20, 15, and 11 times [4]