New Stock Preview | "Dual Leading" XCMG: Annual revenue exceeds 10 billion, still unable to hide cyclical risks

The Hong Kong stock market may welcome "dual leading" targets. On November 6, according to the official website of the Hong Kong Stock Exchange, XCMG Heavy Machinery Co., Ltd. (hereinafter referred to as "XCMG Heavy Machinery") submitted its listing application to the Hong Kong Stock Exchange, planning to list on the Hong Kong main board, with CICC and CISI FIN as its joint sponsors. The company had previously submitted a listing application to the Shanghai Stock Exchange in December 2022, and later voluntarily withdrew its A-share application in January 2024. XCMG Heavy Machinery was established in 2012 and is a leading global mining equipment and aerial work equipment company, focusing on the research, design, manufacturing, sales, and service of machinery equipment in the fields of mining, aerial work, and material handling. It is worth mentioning that in the two major fields of mining equipment and aerial work, XCMG Heavy Machinery can be described as having "dual leading" attributes. Based on the revenue in 2024, XCMG Heavy Machinery ranks third among domestic enterprises in the global mining transportation equipment and excavator market, and ranks first among domestic enterprises in the global new energy mining transportation equipment market. In addition, based on the revenue in 2024, XCMG Heavy Machinery ranks fifth in the global aerial work equipment market among domestic enterprises, and ranks third in the Asia-Pacific region's aerial work equipment market. As a "dual leading" player in the industry, will XCMG Heavy Machinery's IPO in Hong Kong trigger a listing frenzy in the Hong Kong stock market? What is the company's investment value? With annual revenue exceeding one hundred billion, the aerial work business has some fluctuations. In terms of business layout and product structure, XCMG Heavy Machinery is a "hardcore" manufacturing company that has undergone fierce market competition in the real economy, unlike many "story-type" technology companies. According to GMTEight, XCMG Heavy Machinery's main business includes three major product lines: mining equipment, aerial work equipment, and material handling machinery. Since its establishment, XCMG Heavy Machinery has achieved significant results in its globalization and diversified product layout by focusing on the themes of "China manufacturing going global" and "green energy". Specifically, in terms of globalization, as of November 1, 2025, XCMG Heavy Machinery's sales footprint has reached over 100 countries and regions globally, holding important positions in major markets such as Asia, Europe, Africa, and the Americas. At the same time, the company's overseas revenue ratio has increased from 26.8% in 2022 to 44% in the first half of 2025, further increasing its market share in overseas markets. In terms of diversified product layout, XCMG Heavy Machinery has formed a core product line centered around aerial work machinery, wide-body dump trucks, drilling rigs, and special machinery, covering multiple scenarios in mining, construction, industrial and other fields. In recent years, to adapt to the trends of electrification and intelligence, the company has become an active promoter of electrification in engineering machinery, pioneering the introduction of new energy and unmanned driving mining equipment. As of June 30, 2025, the company had sold approximately 1,600 units of new energy mining transportation equipment, ranking first among domestic enterprises in the global new energy mining transportation equipment field. Thanks to the above strategic layout, XCMG Heavy Machinery's revenue scale continues to expand, and its profitability has significantly improved. According to the prospectus data, from 2022 to 2024, XCMG Heavy Machinery achieved revenues of 10.529 billion yuan, 9.897 billion yuan, and 12.028 billion yuan, respectively. In 2023, the company's revenue slightly decreased, but it quickly rebounded in 2024. As of the first half of 2025, the company's revenue reached 5.531 billion yuan, a year-on-year increase of 18.3%, maintaining overall growth. In addition, from 2022 to the first half of 2025, XCMG Heavy Machinery achieved net profits of 954 million yuan, 974 million yuan, 1 billion yuan, and 635 million yuan, respectively, with year-on-year growth. This may be related to the company's continuous optimization of profitability, with the gross profit margin increasing from 17.7% in 2022 to 22.4% in the first half of 2025, mainly due to the growth in sales of high-margin products (such as new energy mining equipment) and the fall in raw material prices. It is worth noting that although the two core financial indicators show a steady growth trend, XCMG Heavy Machinery's performance is also susceptible to industry cyclical risks. It is understood that the engineering machinery industry is a typical cyclical industry closely related to global infrastructure investment and mining prosperity. After several years of rapid growth, the global macroeconomic environment faces uncertainties, which may lead to demand fluctuations and affect the company's performance. For example, XCMG Heavy Machinery's revenue from aerial work equipment decreased from 2 billion yuan in 2022 to 860 million yuan in 2024, mainly due to weak domestic market demand and international tariff impacts. Based on the above, as a "dual leading" player in the sub-sector, XCMG Heavy Machinery's fundamentals are in line with the characteristics of a leading player. However, the company must face the long-term challenge of smoothing out cyclical impacts. Operating in two major high-growth tracks, competition is intensifying XCMG Heavy Machinery operates in two tracks, one being the "blue ocean market" in a rapid growth phase, and the other experiencing a technological revolution (electrification) in the "niche market," both with very broad market prospects. According to data from Frost & Sullivan, the global engineering machinery equipment market is expected to reach 1.5372 trillion yuan in 2024 and further increase to 2.1319 trillion yuan by 2030, with a compound annual growth rate of about 5.6% between 2024 and 2030. The industry in which XCMG Heavy Machinery operates, namely the technical-intensive sub-sector of mining equipment, aerial work equipment, and material handling machinery, is currently experiencing rapid growth. Specifically, in the aerial work equipment field, the global market size of aerial work equipment increased from 62.6 billion yuan in 2020 to 136.6 billion yuan in 2024, with a compound annual growth rate of 21.5%. Under the combined driving forces of stricter aerial work safety supervision, rising labor costs, continued deepening of market penetration for mature market leasing, and the expansion of construction and industrial maintenance demands in emerging economies, the market is expected to further expand to 204.4 billion yuan by 2030, with a compound annual growth rate of 6.9%. Furthermore, the transformation of equipment electrification and the increase in the proportion of high-value arm-type aerial work equipment products in outdoor application scenarios inject new impetus into the industry, driving both equipment prices and utilization rates higher. In the field of mining equipment, driven by the strong growth of commodity prices and increased mining capital expenditures, the market achieved significant expansion from 2020 to 2024. By 2024, the global mining equipment market size reached 736.7 billion yuan, with a compound annual growth rate of 5.9% between 2020 and 2024. Looking ahead, the market is expected to continue expanding, with the size expected to reach 1.0256 trillion yuan by 2030, with a compound annual growth rate of 5.7% between 2024 and 2030. Among them, the global market size of new energy mining equipment is expected to increase from 30.9 billion yuan in 2024 to 145.6 billion yuan in 2030, with a compound annual growth rate of 29.3% during the forecast period. XCMG Heavy Machinery has a certain leading advantage in new energy technology, which positions it favorably in the trend of "green transformation". However, it is important to note that as the concentration of China's engineering machinery industry continues to increase, competition within the industry is becoming increasingly intense. In recent years, leading companies such as XCMG and Sany Heavy Industry have accelerated their overseas market layout, with XCMG's overseas revenue ratio reaching 46.61% in 2025, far surpassing XCMG Heavy Machinery's 44%. In addition, in the field of aerial work equipment, XCMG Heavy Machinery's revenue decreased by 57% in 2024, ranking fifth globally and facing fierce competition from companies such as Zhejiang Dingli Machinery. Similarly, wide-body mining trucks also face fierce competition from multiple domestic manufacturers. In summary, XCMG Heavy Machinery's fundamentals are relatively solid, and its listing may attract the attention of many Hong Kong stock investors. Its core highlights lie in its leapfrogging revenue growth, forward-looking electrification layout, strong global operational capabilities, while its potential weaknesses and challenges lie in its ability to cope with the downward cycle of the industry and maintain healthy profitability amidst intense competition. Therefore, the core of its investment value lies in its ability to overcome industry cycles and achieve sustained and stable growth.