Xugong Machinery (000425): The performance of the first quarter of 2019 has approximately doubled and the boom of construction machinery continues
Event: The company released the 2018 annual performance report, reporting and realizing operating income of 444.
1 ppm, an increase of 52 over the same period last year.
45%; net profit attributable to mother to be 20.
400 million, an increase of 100 over the same period last year.
Achieved an improvement in average return on net assets8.
27%, an increase of 3 per year.
57 points; In 2018, the company’s product segments achieved high-speed growth. The company benefited from domestic infrastructure construction and investment, seized opportunities, and increased internal sales revenue; the company’s international development pace accelerated, and the company’s export scale and growth rate remained the industryLead the highest.
The company released the first quarter report for 2019: in the first quarter, it is expected to achieve net profit attributable to mothers of approximately 9.
5 ten percent, an annual increase of 82.
Benefiting from downstream infrastructure overweight and environmental protection-driven replacement demand, sales of construction machinery increased at the beginning of 2019.
1) The sales of construction machinery in early 2019 continued the high growth of 2018.
From January to February 2019, the sales volume of XCMG cranes increased by 30%, and orders in March are expected to increase by 40-50%. Sales volume continues to exceed expectations. We expect growth to be around 20%.
2) The growth rate of downstream infrastructure investment rebounded, and the leader of construction machinery continued to benefit in 2019: Steady growth of “countercyclic adjustment” is still the focus of short-term work.
From a fundamental perspective, we expect the construction machinery industry to continue its recovery.
3) Environmental protection policy drives demand for replacement: The sales of new truck cranes will be switched to National VI in July this year, and the national market for National Stock II has no annual review.
China started to sell Country III in 2008, which was the main model of the previous round of peaks, and currently has huge demand for updates.
The company steadily ranked first in the field of cranes, and the aerial work platform grew rapidly.
1) The global crane leader has further increased its market share.
XCMG’s truck crane share in 2018 was 45.
8%, the domestic market concentration has increased, and the top three (XCMG, Sany and Zhonglian) have a market share of 91.
XCMG cranes have high quality and high reliability, and have the highest residual value rate in the secondary market.
2) The business of aerial work platforms has grown rapidly.
The company’s aerial work platforms account for about 50% of the firefighting machinery, and the revenue of 2018H1 firefighting machinery has increased by 70%.
At present, it is mainly restricted by production capacity constraints. In 2018, 500 million yuan will be raised to expand the new plant by the scheduled increase project. It is expected to double the production capacity in the second half of this year.
3) Most of the company’s construction machinery hydraulic parts can be self-sufficient.
The company has excellent industrial chain safety and research and development of construction machinery parts.
At present, the hydraulic cylinders, pump valves and other parts of the company’s various products are self-sufficient except for large tonnage which needs to be imported.
Initial efforts were made in the reform of state-owned enterprises: internal asset reorganization has added vitality to mid- and long-term development.
Xingong Group Construction Machinery Co., Ltd., the company’s controlling shareholder, was divided into the first batch of pilot enterprises for mixed ownership reform in Jiangsu Province.
We believe that the joining of XCMG Group in the reform will benefit XCMG’s internal corporate reorganization and asset reorganization, optimize its internal capital structure, and add vitality and creativity 杭州桑拿 to XCMG’s long-term development.
Investment suggestion: Benefiting from the continuous recovery of the construction machinery industry and the enhancement of industry concentration, the domestic construction machinery industry leaders are expected to continue to benefit.
We expect the company’s net profit for 2019-2020 to be 29.
6, 36.9 trillion, EPS is 0.
47 yuan, PE is 14x, 11x.
Maintain “Buy” rating.
Risk reminders: lower-than-expected investment in infrastructure, macroeconomic risks, ongoing risks of deteriorating industry rebound, risks of changes in the company’s internal competitive relationships, and growth in sales of major products exceeding expected risks.