New Stock Interpretation | Sany Heavy Industry "A+H" Listing: Leading in Construction Machinery, Revenue Fluctuates, Profits Rise

The Hong Kong stock market "A+H" camp will welcome another industry leader. On October 12th, A-share engineering machinery leader Sany Heavy Industry (600031.SH) passed the hearing of the Hong Kong Stock Exchange, getting closer to listing on the main board of Hong Kong. The company submitted its application to the Hong Kong Stock Exchange on May 22, 2025, and received a notice of approval for overseas issuance and listing from the China Securities Regulatory Commission on September 30, 2025. Established in 1994, Sany Heavy Industry is an innovative global leader in the engineering machinery industry, focusing on the research and development, manufacturing, sales, and services of a full range of engineering machinery products including excavating machinery, concrete machinery, lifting machinery, piling machinery, and road machinery. According to Frost & Sullivan data, based on cumulative revenue from core engineering machinery from 2020 to 2024, Sany Heavy Industry is the third largest globally and the largest in China in the engineering machinery industry. In July 2003, Sany Heavy Industry went public on the Shanghai Stock Exchange, becoming the first privately owned listed company in the Chinese engineering machinery industry. As of the close of trading on October 14th, the company's total market value reached 195.25 billion yuan, making it a true leader in the A-share machinery sector. Now, this engineering machinery leader that is actively embracing the "A+H" mode, what strategic moves is it planning? Covering the entire industry chain, revenue fluctuations, and profit growth As a leader in the engineering machinery sector, Sany Heavy Industry has already achieved full coverage of the industry chain and a global footprint. During the performance record period, Sany Heavy Industry has successfully sold its products to more than 150 countries and regions, including Germany, the United Kingdom, France, Indonesia, India, Saudi Arabia, the United States, and Brazil. In 2024, the company's overseas market revenue accounted for 62.3% of total revenue, with a compound annual growth rate of overseas revenue from 2022 to 2024 reaching 15.2%, with both the contribution and growth rate of overseas revenue consistently higher than the industry average in China. In terms of product portfolio, Sany Heavy Industry has developed a diversified product matrix. Its products cover major categories such as excavating machinery, concrete machinery, lifting machinery, piling machinery, road machinery, as well as rapidly developing products like dump trucks and fire trucks. Additionally, the company can provide tailor-made products and solutions for various scenarios such as earthwork projects, public buildings, roads and bridges, airport runways, building construction, mining operations, energy development, and port logistics. Furthermore, under the full coverage of the industry chain and global expansion, Sany Heavy Industry's revenue and profit scale also demonstrate its leadership qualities. According to the prospectus data, from 2022 to 2024, the company achieved operating income of 80.839 billion yuan, 74.019 billion yuan, and 78.383 billion yuan, respectively, showing a significant overall revenue scale. However, there was an 8.4% year-on-year revenue decline in 2023; while the net profit was 4.433 billion, 4.606 billion, and 6.093 billion respectively, showing year-on-year growth. The revenue decline in 2023 may be related to factors such as weak domestic market demand (continuously under pressure from real estate investment, industry cycles), and a slowdown in overseas market growth. However, by the first half of 2025, Sany Heavy Industry showed a double-digit growth in revenue and net profit the company achieved revenue of 29.426 billion yuan in the period, representing an 18.4% year-on-year growth. Of this, overseas revenue was 16.884 billion yuan, accounting for 57.4% of total revenue, while net profit was 3.476 billion yuan, showing a 54% increase year-on-year. Simultaneously, through independent and controllable supply chains and strong manufacturing capabilities to optimize cost structure, Sany Heavy Industry's profitability has been continuously improving - with gross profit margins of 22.6%, 26.4%, 26.7%, and 27.1% from 2022 to the first half of 2025, and net profit margins of 5.5%, 6.2%, 7.8%, and 11.8%, respectively. Overall, although there was a decline in revenue in 2023, when looking at the company's performance over the past few years, the timely turnaround of revenue and the continuous improvement in profitability are consistent with the development characteristics of a leader in the industry. Intensive industry competition, "the strong get stronger" but new strategies are needed It is understood that engineering machinery refers to high-strength operating machinery equipment widely used in construction projects, infrastructure construction, urban renewal, mining, logistics handling, port operations, and other industrial fields. These devices typically have characteristics such as high power output, durability, and high precision operations, exerting a crucial influence on global modernization. In recent years, with the acceleration of economic development and urbanization, the global engineering machinery market has been steadily growing. According to Frost & Sullivan data, the overall market size of the industry reached 213.5 billion US dollars in 2024, and is expected to further increase to 296.1 billion US dollars by 2030, with a compound annual growth rate of 5.6% from 2024 to 2030. Specifically, the core market of the global engineering machinery industry represented by excavators, loaders, lifting machinery, road machinery, concrete machinery, and piling machinery had a market size of 150.5 billion US dollars in 2024, and is projected to grow to 218.9 billion US dollars by 2030, with a compound annual growth rate of 6.4% from 2024 to 2030. However, it is important to note that while the market size of the engineering machinery industry has reached the billion-dollar level and is stable, the industry is inherently cyclical. Its development is closely linked to the macroeconomic trends in China and globally, particularly in terms of fixed asset investments (especially in infrastructure and real estate). Therefore, Sany Heavy Industry undoubtedly faces certain cyclical risks. This is an inherent risk of the engineering machinery industry. This also means that the company's performance is highly related to the strength of China's real estate and infrastructure investment. Once there is a downturn in the macroeconomy, a slowdown in fixed asset investment will directly lead to shrinking demand, causing significant fluctuations in the company's performance. In addition, Sany Heavy Industry also faces intense industry competition, as stated in its prospectus, "Companies face direct competition in all product lines and price segments globally." From a domestic perspective, the domestic market has a typical oligopoly structure, and companies face fierce competition from competitors such as XCMG and ZOOMLION. During industry downturns, price wars are common to compete for limited orders, severely eroding the company's profit margins. On the international front, compared to some international competitors, these companies may benefit from higher local brand recognition, longer operating histories, and more stable customer relationships. Therefore, even though Sany has achieved rapid growth and a significant market share in some emerging overseas markets, it has yet to reach the scale of industry leaders in those regions. Therefore, in response to the development risks mentioned above, Sany Heavy Industry has outlined its own subsequent "strategy" - the company will adhere to its globalization strategy to better meet the needs of global customers; continue to promote digital transformation to enhance overall competitiveness; and continue to implement a low-carbon strategy to build a sustainable future. In conclusion, it is evident that Sany Heavy Industry is a world-class enterprise with strong core competitiveness, and its investment value is highly correlated with the business cycle of the macroeconomy. In the long term, its achievements in internationalization and electrification will determine its ability to navigate through cycles and achieve sustainable and stable growth.