20211101-招银国际-三一国际-00631.HK-3Q21_Net_profit_+8_,_in_line_with_estimates__Revenue_growth_acceleration_a_positive_sign_5页_973kb

CMB International Securities | Equity Research | Company Update Summary

Core Content Overview

This report provides an update on SANY International (631 HK), a subsidiary of China Merchants Bank, focusing on its financial performance, growth drivers, and future outlook. The analysis highlights the company's strong revenue growth, margin pressures, and strategic initiatives in key segments.

Main Financial Highlights

• 3Q21 Results:

  • Revenue surged 51% YoY to RMB2.56bn, outperforming 2Q21 growth of 14%.
  • Net profit increased 8% YoY to RMB284mn, in line with estimates.
  • Gross margin narrowed by 6.3ppt YoY (to 23.2%) due to rising steel costs, freight rates, product mix changes, and RMB appreciation.
  • 9M21 Revenue/Net Profit Growth: 37% / 23% YoY, representing 73% / 84% of full-year estimates.
  • Backlog: Reached RMB5.6bn as of 3Q21.

• Earnings Summary:

  • Revenue: Expected to grow from RMB5,656mn (FY19A) to RMB15,219mn (FY23E).
  • Net Profit: Projected to rise from RMB920mn (FY19A) to RMB1,957mn (FY23E).
  • EPS: Expected to increase from RMB0.30 (FY19A) to RMB0.63 (FY23E).
  • P/E Ratio: Falls from 27.1x (FY19A) to 11.9x (FY23E).
  • EV/EBITDA: Drops from 16.5x (FY19A) to 8.2x (FY23E).
  • Target Price: Maintained at HK$14.30 with an unchanged price target.
  • Current Price: HK$8.92, indicating a potential +60% upside.

Key Segments and Growth Drivers

Mining Equipment

• Segment Revenue: Grew 28% YoY in 9M21 to RMB4.25bn.
• Net Profit: Increased 35% YoY to RMB860mn.
• ASP Growth: Driven by higher sales of large-size and intelligent road headers, with ASP rising from RMB2.8mn to RMB3.2mn.
• Future Growth: Expected from intelligent transformation of coal mining equipment, including unmanned machines.

Logistics Equipment

• Segment Revenue: Rose 31% YoY to RMB2.56bn in 9M21.
• Growth in 2022E: Expected to accelerate with margin expansion, especially from large-size port machinery orders (e.g., PSA signed 5 units of large-size quayside gantry cranes).
• Intelligent Upgrades: Expected to improve gross margin to ~33%.
• Electric Products: Electric reach stacker and empty container handler are projected to account for 30% of sales in 2022E and 50% in 2023E.

Robotic Business and Smart Mining

• Robotic Segment: Revenue increased 170% YoY in 9M21 to RMB1.08bn.
• Smart Mining: Expected to grow, with potential for unmanned mining equipment to drive future demand.

Operational Developments

• Lighthouse Factories:

  • The small-size port machinery factory is now ramping up.
  • The other three factories (hydraulic support, wide-body truck, large-size port machinery) are expected to be completed by November and start operations in December or early 2022.

• Cost Control and Pricing Strategy:

  • The company is implementing continuous cost control measures.
  • Introduction of intelligent models and ASP hikes are expected to improve gross margin in 4Q21E or early next year.

Financial Ratios and Performance

Stock Performance

• Market Cap (HK$ mn): 28,127
• Avg 3Mths Turnover (HK$ mn): 48
• 52W High/Low (HK$): 10.80 / 4.11
• Total Issued Shares (mn): 3,100.7
• Shareholding Structure:
  • Sany Heavy Equipment: 67.7%
  • Free Float: 32.3%

Share Performance (Bloomberg)

Analyst Ratings

• CMBIS Rating: BUY
• Potential Return: Over 15% over next 12 months.

Risk Factors

• Weakness in mining activities
• Higher-than-expected expenses for new product introductions
• Unexpected power outages

Conclusion

SANY International is maintaining a positive outlook due to strong revenue growth, strategic product development, and margin improvement initiatives. The company's electric and intelligent product lines, along with capacity expansion and cost control measures, are expected to drive sustainable growth. The BUY rating remains unchanged, with a target price of HK$14.30. Investors should be aware of the key risks and consider consulting a professional financial advisor before making investment decisions.