CICC: Initiates Coverage on SANY International (00631) with an "Outperform" Rating, Target Price of HK$5.7

CICC has released a research report, covering SANY INT'L (00631) for the first time, giving it an "outperform" rating. It is predicted that the company's EPS for 2024 and 2025 will be 0.63 yuan and 0.70 yuan respectively, with a CAGR of 8.0%, and a target price of 5.7 Hong Kong dollars. The market believes that the company's downstream industry is mature, limiting its growth potential. However, CICC believes that the company has strong technological research and development advantages, enabling it to continuously explore new customer needs, create and promote new products, and develop its own growth curve. CICC's main points are as follows: Mining equipment: The domestic coal machine business has a solid foundation, and the overseas mining truck business is creating new growth opportunities. In 2023, the company's coal machine business ranked fourth domestically. CICC believes that in the future, the company's domestic coal machine business is expected to maintain its market share advantage and adapt to changes in industry demand. In terms of overseas markets, the company's overseas mining truck business has seen breakthroughs in recent years, and there is room for further market share growth. The company's high cost-effective mining truck products are expected to open up space in overseas markets and contribute to new growth momentum. Logistics equipment: Global market share of large port machinery is stable, and the electrification trend of small port machinery is driving business growth. The market size and competitive landscape of large port machinery are relatively stable each year, and the company is expected to benefit from the rising demand for industry updates and replacements. With a variety of products and complex types, CICC estimates that the global market size for small port machinery will be around 20-30 billion yuan in 2023. The company has a high market share in the domestic market, with significant room for growth in overseas markets. As the electrification trend of small port machinery becomes more evident in recent years, CICC believes that the company is poised to increase market share and drive business growth with its high-quality electrified products and comprehensive services. Oil and gas equipment and emerging business equipment: Forge ahead, lay out long-term growth momentum. In recent years, the company's oil and gas fracturing equipment has grown from a newcomer to a leading market share enterprise in the domestic market through continuous expansion. The company is predicted to continuously break into foreign markets while solidifying its domestic market share. Additionally, the company is continuously expanding into emerging businesses such as photovoltaics, lithium batteries, and hydrogen energy, which are expected to contribute to the company's long-term growth with industry development and business layout. Strong technological research and development, wide sales channels, and quality after-sales service create a virtuous cycle, continuously breaking through the ceiling. The company continuously explores customer pain points in various fields, relies on its strong technological research and development capabilities to develop new products, and quickly reaches customers and cultivates customer stickiness through its wide sales channels and quality after-sales service, forming a virtuous cycle. CICC believes that this will help the company continuously explore new growth points and break through the ceiling. Potential catalysts: Recovery of downstream demand exceeds expectations, overseas market expansion exceeds expectations. Risk: Overseas expansion falls short of expectations, fluctuations in commodity prices affect costs, intensified market competition, new business expansion falls short of expectations, downstream demand falls short of expectations, and risk of impairment of goodwill.