CICC International: lowers target price of SANY INT'L (00631) to 7 Hong Kong dollars, maintains "outperform" rating.

ICBC International released a research report stating that it has lowered SANY INT'L (00631) target price by 14.6%, from HK$8.2 to HK$7, while maintaining an "outperform the market" rating. The bank stated that after a difficult 2024, it is expected that SANY INT'L will recover and grow in the future. Last year, the company maintained good development momentum in overseas markets, with revenue increasing by 8% and profit margins also rising. It is believed that this trend will continue in 2025. Domestic business in 2024 declined by 1%, but with the accelerated development of logistics equipment and new businesses, as well as the stability of mining equipment, growth is expected to be achieved in 2025. Considering the strong balance sheet and cash flow, the company's valuation is attractive. In 2024, the company's revenue from mining equipment decreased by 13% year-on-year to RMB 10.9 billion, impacted by the high base in 2023 and the weak performance in the first half of 2024. In the first two months of 2025, coal mining fixed asset investments increased by 22.6% year-on-year. The bank believes that the worst period for the coal mining industry has passed. Assuming effective cost control, the bank believes that the company can achieve a higher profit margin in this field as early as the first quarter of 2025. By the end of 2024, after a 55% year-on-year growth, Sany may have a large backlog of port machinery orders exceeding RMB 6 billion, with RMB 3-4 billion planned for delivery in the 2025 fiscal year. The gross profit margin of Sany's backlog orders is higher than the level in 2024.