New Stock Outlook | Shantui Construction Machinery: Growth on the Front and Hidden Worries on the Back, the Halo and Worries Behind the "King of Bulldozers"

Shantui Construction Machinery (000680.SZ), a company that pioneers in land development and construction, is preparing for its second "breaking ground" moment in the secondary market. On April 30, Shantui Construction Machinery submitted its prospectus to the Hong Kong Stock Exchange for the second time, with CICC as the exclusive sponsor, planning to achieve a dual listing in A+H markets. This is another important capital operation promoted by Shandong Heavy Industry Group after the failed submission in August 2025, and is a significant step forward for the company. As the third largest global and largest in China's bulldozer manufacturer, this "bulldozer leader" has experienced six consecutive years of revenue growth and recorded historic high profits. Why has this company chosen to pursue financing in the Hong Kong stock market and what is its investment value? Business Performance: Growth on the Surface with Hidden Concerns Shantui Construction Machinery, formerly known as Yantai Machinery Factory established in 1952, is a state-owned listed company under Shandong Heavy Industry Group. Its products mainly cover more than ten categories of main machinery and accessories including bulldozers, road machinery, concrete machinery, loaders, and excavators. After years of development, the company has accumulated a strong leading position in its industry: according to Frost & Sullivan data, in 2025, the company's bulldozer sales ranked third globally and first in China, with a global market share of 10.2% and a China market share of 63.0%, maintaining a market share of over 60% since 2010. In the field of intelligence and new energy, Shantui Construction Machinery has taken the lead in the industry in June 2025, it released the world's first AI intelligent bulldozer, and in September, delivered the world's first AI pure electric unmanned bulldozer. It achieved a 40% increase in earthwork efficiency and a 20% reduction in fuel consumption in practical tests in Saudi Arabia. Looking at the performance from a fundamental perspective, although Shantui Construction Machinery has become a dominant player in the bulldozer market, its performance also shows clear "A-side growth and B-side concerns". According to the prospectus, from 2023 to 2025, Shantui Construction Machinery's operating performance has shown a rising trend against the industry average. Revenue increased from 11.364 billion yuan to 14.62 billion yuan, with a compound growth rate of 13.4%; while net profit rose from 796 million yuan to 1.211 billion yuan, with a high compound growth rate of 23.3%. The growth rate of profit continued to exceed that of revenue, highlighting the company's profit resilience. However, beneath the surface of growth lie hidden concerns. The revenue growth rate reached 25.12% in 2024, but dropped sharply to 2.82% in 2025; the growth rate of net profit attributable to shareholders slid from 40.72% in 2024 to 9.86%. When the growth rate transitions from "double digits" to "single digits," the market undoubtedly worries about whether it has reached its growth ceiling. The strong growth of overseas markets also poses a "double-edged sword" pressure on Shantui Construction Machinery's overseas expansion. In 2025, overseas business income reached 8.741 billion yuan, a year-on-year increase of 17.94%, accounting for a surge to 59.79% of total revenue, while domestic market revenue declined by 11.29%. The gross profit margin of overseas business reached 28.1%, far higher than the domestic margin of 9.6%for every equipment exported overseas, it earns almost triple the income of the domestic market. This is the underlying logic behind Shantui Construction Machinery's costly global expansion. However, overseas expansion does not come without its costs. By the end of 2025, Shantui Construction Machinery's trade receivables and notes receivable (net of impairment) amounted to 6.294 billion yuan, an increase of 23.97% year-on-year, with a significant rise in days sales outstanding to 141.9 days, indicating a growing pressure on cash flow. With longer overseas credit terms and increased financial pressures, each revenue from exports seems to come with a long waiting period. As of December 31, 2025, Shantui Construction Machinery's operating cash flow continued to be positive, demonstrating solid and stable blood-making abilities. The company recorded a net cash flow from operating activities of 781 million yuan during the period, and held cash and cash equivalents of 1.077 billion yuan at year-end. However, objectively speaking, while the company's cash generation abilities are robust, the high days sales outstanding and the need for optimization of inventory structure are still hidden growth concerns. While bulldozers can flatten sand and gravel, they may not necessarily be able to smooth out the reefs in the slow growth and long payment cycle. It can be seen that although Shantui Construction Machinery holds a dominant position in the global bulldozer market, the current investment narrative is a combination of solid fundamental strengths and growth concerns brought by high accounts receivable and inventory pressure. Industry Conditions: Overseas Expansion + Electrification Expansion, Resonance of Reversal Opportunities After undergoing an adjustment period, the engineering machinery industry officially reached the turning point of bottoming out and rebounding in 2025, with both internal and external demand resonating and the industry's business prospects continuously on the rise. Domestically, infrastructure investment remains strong, with trillions of dollars worth of infrastructure projects kicking off in the early stages of the 15th five-year plan, coupled with the start of an equipment updating cycle, continuous release of replacement demand, providing stable domestic demand support to the industry. Internationally, as the global economy gradually recovers and the U.S. Federal Reserve starts an interest rate reduction cycle, overseas infrastructure investment is picking up, coupled with the cost-effectiveness of domestic engineering machinery becoming apparent, resulting in a continuous increase in global export volume. The industry is bidding farewell to the previous vicious competition based on price internalization, and the profitability restoration of leading enterprises is significantly increasing. According to Frost & Sullivan data, driven by the global infrastructure construction recovery, mining investment growth, equipment renewal cycles, and the acceleration of electrification and intelligence, the total global engineering machinery market size reached $220 billion in 2025 and is expected to reach $298.5 billion by 2030, with a compound annual growth rate of 6.1% from 2025 to 2030. In terms of regional distribution, the overseas market of the engineering machinery industry is vast. The overseas market size of the engineering machinery industry in 2025 was $194 billion, accounting for 87.4% of global market share, and is expected to reach $241.2 billion by 2030, accounting for 80.8% of the global market share, with a compound annual growth rate of 4.5% from 2025 to 2030. At the same time, the Chinese engineering machinery market has shown strong growth resilience. Benefiting from multiple policy and demand tailwinds, the Chinese engineering machinery market size is expected to grow from $28 billion in 2025 to $57.3 billion in 2030, accounting for 19.2% of the global market share, with a compound annual growth rate of 15.4% from 2025 to 2030. Among them, the global engineering machinery industry exhibits a typical oligopoly structure, with the top five bulldozer manufacturers accounting for 70.4% of the global bulldozer market share in 2025. Shantui Construction Machinery ranks as the third largest bulldozer manufacturer in the world with a 6.2% global market share, competing against international giants like Caterpillar and Komatsu, and possessing significant cost-effectiveness. In the domestic market, the industry's consolidation trend continues to strengthen, with small and medium-sized manufacturers accelerating their exit, resources concentrated on leading enterprises, and the market share of Shantui, Xugong, Sany Heavy Industry, and other leading companies continuing to rise. Meanwhile, amid the wave of going global, Chinese engineering machinery technology, cost, and channel advantages have taken the lead in overseas markets, reaching record highs in Chinese engineering machinery exports in 2025, with overseas income becoming a core growth driver for leading enterprises. Leveraging its sales network in over 160 countries and regions, Shantui Construction Machinery has fully benefited from the advantages of Chinese exportation, steadily increasing its global market share. For Shantui Construction Machinery, these industry trends of reversal resonance undoubtedly present significant growth opportunities. However, it should be noted that the company's domestic business is highly tied to infrastructure and real estate industries, and its performance is closely related to macroeconomic cycles and the intensity of infrastructure investments. If future infrastructure investments fall below expectations and the real estate industry continues to stagnate, domestic demand for engineering machinery may come under pressure again, impacting the company's revenue and profits. The cyclical nature of the industry determines that the company's performance inherently exhibits fluctuating characteristics. Looking at the revenue structure, the 11.29% year-on-year decline in domestic market revenue has become the company's most significant imbalancewhile bulldozers are profiting overseas, the machines in domestic factories are waiting for "lights on." Therefore, for the company, the real test may not be in a price war, but in using profits from exports to remedy the sluggish domestic demand. In response to these growth concerns, Shantui Construction Machinery has evidently presented its own answerthe company plans to use the proceeds from this fundraising mainly for research and development (strengthening layout in intelligent and new energy technology), expanding global sales networks, repaying loans, and supplementing operating capital. In summary, it is evident that Shantui Construction Machinery, with its leading position in the global bulldozer market and the double dividends of overseas expansion and electrification, is gearing up for long-term growth through the A+H listing. However, concerns such as weak domestic demand, slowing growth, high accounts receivable, and inventory pressure still exist. Whether it can break through its growth bottleneck and realize long-term value remains to be seen and validated by the market.