SANY(600031) Changjiang Securities·2024-11-11 03:16Investment Rating - The investment rating for SANY Heavy Industry is "Buy" and is maintained [7]. Core Views - The domestic excavator industry is experiencing a recovery, with SANY expected to benefit significantly due to its high market share. Q3 domestic revenue is anticipated to grow well, supported by a 20% year-on-year increase in domestic excavator sales volume [4][5]. - The company's overseas revenue is expected to accelerate, with a 3% year-on-year increase in excavator exports in Q3, showing significant improvement compared to a 10% decline in Q2. The global strategy is advancing, with a focus on local operations and services [5][6]. - Cash flow has improved significantly, with a net cash flow from operating activities of 12.375 billion yuan in the first three quarters of 2024, a substantial increase of 144% year-on-year. This improvement in cash flow is accompanied by a notable increase in net profit margins [5][6]. Summary by Sections Financial Performance - For the first three quarters of 2024, SANY achieved revenue of 58.361 billion yuan, a year-on-year increase of 3.92%. The net profit attributable to shareholders was 4.868 billion yuan, up 19.66% year-on-year, while the net profit excluding non-recurring items was 4.628 billion yuan, an increase of 9.42% [4]. - In Q3 alone, the company reported revenue of 19.3 billion yuan, a year-on-year increase of 18.87%, and a net profit of 1.295 billion yuan, which is a remarkable 96.49% increase year-on-year. The net profit excluding non-recurring items surged by 310.59% to 1.502 billion yuan [4]. Market Outlook - The domestic excavator market is expected to continue benefiting from policy stimuli and new application scenarios, with small excavators seeing sustained high growth driven by agricultural water conservancy projects. The medium excavator market is stabilizing due to real estate policy easing, while large excavators are recovering due to mining activities [4][5]. - The company is positioned to capture a larger share of the domestic market as the industry recovers, and its global expansion strategy is expected to enhance its competitiveness in high-end markets in regions such as the US, Germany, Brazil, India, and Indonesia [5][6]. Profitability and Efficiency - The company has made significant strides in cost reduction and efficiency improvement, with sales, management, R&D, and financial expense ratios decreasing year-on-year. This has led to a net profit margin increase of 2.88 percentage points [5][6]. - Projections for 2024 and 2025 indicate that the company will achieve net profits of 6.135 billion yuan and 8.003 billion yuan, respectively, with corresponding price-to-earnings ratios of 26 times and 20 times [6].