Jinwu Financial News | CCB International said that in 2023, the overseas sales of China's top seven construction/heavy equipment manufacturers increased by an average of 41% year over year. Each of these seven companies increased sales by at least 1 billion yuan outside of China. Aerial work platforms, mining equipment, cranes, and electrical equipment are growing faster than high-value, large-order earthmoving machinery categories.
As for the Chinese market, the average sales of the seven companies fell by 5% in 2023. However, profit margins have expanded for all companies. Currently, the outlook for industry demand depends on a possible recovery in spending, which may benefit from the issuance of long-term government bonds to stabilize investment and the acceleration of the pace of equipment upgrading. Despite a decline in demand in the Chinese market, companies have successfully increased profit margins by improving operational efficiency and cost control, and are looking forward to the positive impact of future government stimulus policies and the recovery in market demand.
The bank has a constructive view of Zoomlion Heavy Industries (01157, outperforming the market), Sany International (00631, outperforming the market), and Sany Heavy Industries (600031 CH, outperforming the market), believing that they can achieve catch-up growth in overseas markets. The bank believes that Zoomlion Heavy Industries is on track to achieve strong overseas growth and broader profit margins, which will support it to achieve a compound annual growth rate of 22% in earnings per share between the 2024 and 2026 fiscal years. Judging from its 10x price-earnings ratio and 6% dividend yield, the bank sees its valuation as very attractive. After stock price adjustments, Sany International has become a very attractive investment choice due to the healthy development of its core business and a low valuation of only 8 times the price-earnings ratio.