20260521-招银国际-三一国际-00631.HK-Weak_1Q26_results_but_should_be_expected_by_the_market_Focus_on_mining_truck_growth_6页_1mb

SANY International (631 HK) Summary

Core Content

SANY International (631 HK) reported its first-quarter 2026 (1Q26) results, showing a 13% YoY increase in revenue to RMB6,651 million, but a 20% YoY drop in net profit to RMB509 million. The results were considered weak but somewhat expected by the market, primarily due to a 3.6% YoY decline in gross margin and decline in road header sales, which had a high gross margin, as well as expanding losses in the solar business.

Despite the weak results, mining truck revenue surged by 65% YoY, contributing 27% to total revenue (up from 19% in 1Q25). Additionally, large-size port equipment revenue increased by 74% YoY, indicating positive momentum in certain segments. The report maintains a BUY rating with an unchanged target price of HK$18.9, based on a 20x 2026E P/E ratio, equivalent to the peak level since 2017, reflecting the upcycle of metals.

Key Financial Highlights

• Revenue Growth (YoY): 13% in 1Q26, with an overall growth trend of 30.9% in FY26E.
• Net Profit Growth (YoY): -20% in 1Q26, with a 47.4% increase in FY26E.
• Gross Margin: Dropped to 20.7% in 1Q26 from 24.3% in 1Q25, mainly due to the decline in road header sales and solar business losses.
• P/E Ratio: 10.4x in FY26E, down from 25.4x in FY24A.
• P/B Ratio: 1.9x in FY26E, declining from 2.3x in FY24A.
• Dividend Yield: Increased to 5.3% in FY26E from 3.1% in FY24A.
• ROE: Improved to 19.4% in FY26E from 9.3% in FY24A.

Key Business Segments

• Road Header: Revenue declined by 14% YoY in 2023 and further by 29.4% in 2024, with a slight recovery in 2025.
• Combined Coal Mining Units (CCMU): Declined by 22% YoY in 2023 but dropped further in 2024 and 2025.
• Mining Trucks: Showed strong growth, with a 66.2% YoY increase in 2026E and expected to continue growing at a 20.9% YoY rate in 2028E.
• Lithium Battery: Revenue increased significantly, with a 457.1% YoY growth in 2025A and 50.0% YoY growth in 2026E.
• Solar Power: Showed a 31.8% YoY increase in 2025A, but the segment has been a source of loss in recent quarters.
• Hydrogen: Demonstrated growth, with a 161.7% YoY increase in 2025A and 55.0% YoY growth in 2026E.

Market and Investor Focus

• The post-results investor call is expected to focus on:
  • The latest backlog
  • Mining truck growth trend
  • Timing of domestic coal mining machinery recovery
• The report highlights structural growth in mining trucks, which is seen as a key driver for future earnings and revenue growth.

Key Risks

• Further weakness in coal mining activities in China
• Higher-than-expected operating losses in emerging businesses
• Cost inflation due to elevated commodity prices

Share Performance

• Market Cap: HK$32,582.8 million
• Avg 3 mths t/o: HK$136.4 million
• 52w High/Low: HK$15.97 / HK$5.46
• Total Issued Shares: 3,232.4 million
• Shareholding Structure:
  • Sany Heavy Equipment Investments Company: 64.9%
  • Free float: 33.9%

Price Performance

• 12-month Price Performance: As shown in the chart, the share price has experienced significant fluctuations, with a 44.0% increase in the 6-month period ending in Feb-26.

Valuation Bands

• P/E Band: The P/E ratio has been declining over time, with a 10.4x in FY26E and expected to fall further to 6.3x in FY28E.
• P/B Band: Also shows a declining trend, from 2.4x in 2023A to 1.4x in FY28E.

Analyst Ratings

• CMBIGM Rating: BUY
• Target Price: HK$18.9
• Current Price: HK$10.08
• Up/Downside: 87.5%

Conclusion

Despite the weak 1Q26 performance, the report remains positive on SANYI's structural growth, particularly in the mining truck segment, which is expected to continue growing at a strong rate. The BUY rating and target price reflect confidence in the company's ability to recover and grow in the coming years, driven by increased demand in mining and metals sectors. However, the company faces key risks including declining coal mining activities, emerging business losses, and cost inflation, which could affect its performance.