20220331-招银国际-三一国际-00631.HK-Post-results_and_NDR_takeaways__Expect_a_strong_year_in_2022E_6页_1014kb

SANY International (631 HK) Summary

Core Content

SANY International (631 HK) has released its financial results and outlook for 2022, with the management expressing confidence in the company's structural growth potential. The company has a strong backlog and is positioned to deliver robust revenue growth in both mining and logistics equipment segments. The report highlights the company's strategic focus on intelligent and electric products, which are expected to improve gross margins. Additionally, SANY International is exploring expansion into the new energy business through potential M&A.

Main Points

• Revenue Growth:

  • In 2021, the company achieved a revenue growth of 38.4%.
  • Management expects 50% revenue growth for mining equipment and 100% for logistics equipment in the overseas market in 2022E.
  • The company aims to double logistics equipment revenue in 2022E.

• Gross Margin:

  • The gross margin contraction in 2H21 was attributed to high steel prices, freight costs, and initial costs of new logistics equipment models.
  • SANY International expects to stabilize its gross margin in 2022E through the increased contribution of intelligent products, reduced steel prices, and cost-cutting measures.

• Product Trends:

  • Intelligent and electric products are gaining traction, with the ratio expected to increase from 15% in 2021 to a higher level in 2022E.
  • The company has seen strong demand for road headers, with sales volume in January reaching 91 units, compared to 50 units in the same period the previous year.

• Market Expansion:

  • The company is targeting 50% YoY growth in mining equipment sales in 2022E.
  • Orders from Europe and the US are already covering the company's capacity for the second half of 2022E.
  • There are some supply chain bottlenecks, but the company is confident in meeting its full shipment targets.

• Earnings and Valuation:

  • The company's net profit for 2021 was RMB 1,259 million, with an EPS of RMB 0.40.
  • The consensus EPS for 2022E is RMB 0.50, and the company is maintaining its BUY rating with an unchanged target price of HK$14.60.
  • The P/E ratio for 2022E is 12.7x, and the PEG is 1x, based on a 23% earnings CAGR in 2022E-24E.

Key Financials

Stock Data

• Market Cap (HK$ mn): 26,148
• Average 3 mths t/o (HK$ mn): 18.1
• 52w High/Low (HK$): 10.80 / 6.93
• Total Issued Shares (mn): 3,154

Shareholding Structure

• Sany Heavy Equipment: 67.7%
• Free float: 32.3%

Share Performance

Financial Summary

• EBITDA for 2022E is expected to reach RMB 2,368 million, with a margin of 15%.
• Net profit is projected to be RMB 1,655 million for 2022E and RMB 2,327 million for 2024E.
• Cash flow from operation is expected to grow from RMB 1,070 million in FY20A to RMB 2,043 million in FY24E.
• Cash at the end of the year is projected to increase from RMB 941 million in FY20A to RMB 3,703 million in FY24E.

Key Ratios

Risk Factors

• Weakness in mining activities.
• Higher-than-expected expenses for new products.
• Continuous increase in raw material costs and freight rates.

Analyst Rating

• BUY with an unchanged target price of HK$14.60.
• The analyst believes the company has a 23% earnings CAGR in 2022E-24E, justifying a 1x PEG and a 23x P/E for 2022E.

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months.
• HOLD: Potential return of +15% to -10% over next 12 months.
• SELL: Potential loss of over 10% over next 12 months.
• NOT RATED: Stock is not rated by CMBIGM.

Industry Outlook

• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over next 12 months.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark over next 12 months.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark over next 12 months.