Sany Heavy Industry (600031): Performance Will Eliminate Prejudice & Improve Estimates
Sany Heavy Industry announced the first-quarter performance forecast. It is expected that the net profit attributable to mothers will be 3 billion to 3.3 billion, which will increase by 100% to 120% in the future. The change will exceed the general forecast of excavator sales by plus or minus 10%.
Raise this year’s performance forecast and target market value to 150 billion, meanwhile it is recommended to increase industry allocation.
One of the market’s prejudices: why the macro is so bad, but the construction machinery is so good?
Initially released March social financing data on Friday, the increase in social financing in March was 2.
86 trillion yuan, more than the same period of the previous year1.
28 trillion yuan, of which RMB loans increased by 1.
69 trillion, 577.7 billion more than the same period last year.
M2 surplus at the end of March was 188.
94 trillion, an annual increase of 8.
The social financial data surpassed the previous market expectations, which not only increased confidence, but also showed that the infrastructure construction is in the transition period, and 杭州夜网论坛 the project construction period is usually 2-3 years. The construction machinery industry will benefit the most.
In addition, some leading companies understand that the current corporate bond issuance rate is significantly higher than that of the same period last year, indicating that the reorganization has loose liquidity, which has led to ample corporate funds and reduced financial costs.
Macro and micro data confirm each other that the booming industry sales are not a flash in the pan, but are supported by the long-term investment needs of infrastructure projects, and the performance in 2019 will continue to grow rapidly.
Performance-biased market bias # 2: Industry surrounds vicious competition, similar to 2012.
From our grassroots research, we know that the sales started in the first quarter, and the leading companies have a down payment ratio of more than 30%, and the cash repayment is good, which is expected to reach a record high.
Construction machinery has always been a fully competitive industry. After the Spring Festival, the industry is engaged in preferential activities, delivery of accessories, discounts on financial leasing, and sales incentives for dealers. These are normal competition methods, which are completely different from 2012.
SANY’s performance exceeded expectations. The expansion was in line with changes in macroeconomic data, and the reduction was related to the industry’s accelerated update under environmental protection requirements. What’s more important is that the industry is concentrating on leading enterprises, competitiveness and scale effects release performance elasticity.
Performance-biased market bias # 3: The monthly sales growth rate of excavators has fallen, may it fall?
As an outstanding industry leader, Sany has repeatedly proven its competitiveness and forward-looking strategy. The current compound growth rate of 10 times PE is 10%, and Sany has maintained high growth since 2017.
At the same time this year, the three major excavations accelerated import substitution, revenue growth was faster than sales growth, and concrete machinery and crane sales also maintained rapid growth.
In addition, the update demand will be smooth and gradual, and the data will change market bias and improve estimates.
Increase 2019 net profit (+ 15%), raise target market value to 150 billion, highly recommended!
According to the leading company’s 15 times PE, the reasonable market value should be about 150 billion.
Risk factors: exchange rate fluctuation risk, investment risk.