20260428-招银国际-恒立液压-601100.SH-1Q26_EBIT_+34_YoY_above_expectation_net_profit_dragged_by_FX_loss_5页_1mb

Jiangsu Hengli (601100 CH) Summary

Core Content Overview

Jiangsu Hengli, a Chinese capital goods company, reported its first-quarter 2026 results, showing strong performance despite some challenges. The company's EBIT rose by 34% year-over-year (YoY) to RMB775 million, driven by a significant 33% YoY increase in revenue. However, net profit only increased by 6% YoY to RMB653 million, primarily due to a foreign exchange (FX) loss. Operating cash inflow surged 9 times YoY to RMB518 million, indicating robust operational performance.

The document also provides a detailed financial outlook for Hengli from FY24A to FY28E, highlighting continued growth in revenue and adjusted net profit, with the latter expected to increase significantly in 2026E. The company's target price is set at RMB109.00, with a 12.4% upside from the current price of RMB96.94. The recommendation remains "BUY" with an unchanged target price, based on a 42x 2026E P/E ratio, which is 1 standard deviation above the historical average.

Key Financial Highlights (1Q26)

• Total Revenue: RMB3,210 million (+32.5% YoY)
• Cost of Sales: RMB1,972 million (+34.3% YoY)
• Gross Profit: RMB1,238 million (+29.7% YoY)
• EBIT: RMB775 million (+34% YoY)
• Net Finance Income/(Cost): RMB-162 million (vs. RMB199 million in 1Q25)
• Net Profit: RMB653 million (+5.6% YoY)
• Operating Cash Inflow: RMB518 million (+9x YoY from a low base)

Key Ratios (1Q26)

• Gross Margin: 38.6% (-0.8% YoY)
• S&D Expense Ratio: 2.2% (-0.2% YoY)
• Administrative Expense Ratio: 5.2% (-0.5% YoY)
• R&D Expense Ratio: 5.7% (-0.4% YoY)
• Effective Tax Rate: 11.4% (-2.6% YoY)

Financial Outlook (FY24A to FY28E)

Business Segments

• Hydraulic Cylinder: Expected to grow steadily with revenue increasing from RMB4,497 million in 2020 to RMB5,734 million in 2026E.
• Hydraulic Pump and Valve: Revenue is projected to rise significantly, from RMB2,338 million in 2020 to RMB5,404 million in 2026E.
• Hydraulic System: Revenue is expected to grow from RMB157 million in 2020 to RMB443 million in 2026E.
• Component: Revenue is projected to increase from RMB845 million in 2020 to RMB1,025 million in 2026E.
• Other Business: Expected to show growth, from RMB17 million in 2020 to RMB95 million in 2026E.

Key Risks

• Slowdown of demand for hydraulic components
• Slower-than-expected development of new business

Shareholding Structure

• Wang's Family: Holds 64.3% of shares

Stock Performance

• 1-Month Return: +1.2% (Absolute) vs. -4.4% (Relative)
• 3-Month Return: -14.2% (Absolute) vs. -15.3% (Relative)
• 6-Month Return: +3.2% (Absolute) vs. +2.0% (Relative)

Valuation Metrics

• P/E Band: Expected to decrease from 52.0 in FY24A to 28.4 in FY28E
• P/B Band: Expected to decrease from 9.0 in FY24A to 5.2 in FY28E
• Dividend Yield: Expected to increase from 0.7% in FY24A to 1.5% in FY28E

Analyst Recommendation

• Rating: BUY
• Target Price: RMB109.00
• Upside/Downside: 12.4%

Summary of Financial Growth (2020–2028)

Profitability Metrics

Liquidity and Gearing

• Net Debt to Equity: (-0.6) in 2023A to (-0.5) in 2026E
• Current Ratio: 4.2 in 2023A to 5.7 in 2028E
• Receivable Turnover Days: 116.8 in 2023A to 110.0 in 2028E
• Inventory Turnover Days: 120.9 in 2023A to 110.0 in 2028E
• Payable Turnover Days: 91.6 in 2023A to 83.0 in 2028E

Conclusion

Jiangsu Hengli demonstrated strong operational performance in 1Q26, with EBIT rising 34% YoY. While net profit growth was modest due to FX losses, the company's cash flow and long-term revenue and profit projections remain positive. The "BUY" recommendation is maintained, with the target price unchanged at RMB109.00, reflecting confidence in the company's growth prospects and industry trends. Key risks include potential slowdowns in demand for hydraulic components and new business development.