The market is optimistic to be included in the MSCI index, and the potential of intelligent business of Sany International (0631. HK) appears

On May 17, Sany International was officially included in the MSCI China Index in the quarterly adjustment results of the May index published by the international index preparation company MSCI, which is expected to take effect after the closing on May 27.

The MSCI China Index, launched by Morgan Stanley Capital International, aims to track the performance of Chinese concept stocks. It is an index that will be used by global investment professionals and is also the most widely used investment target among global portfolio managers.

MSCI has a high requirement for the "identity" of the objects to be absorbed. The inclusion of Trinity International in the index is the recognition of the company's performance and future development potential in the capital market, and also another major breakthrough in the capital market. Its leading position in the industry will be further strengthened.

Referring to the research report issued by First Shanghai Securities on May 12, it gave Sany International a buy rating and guided the latest target price of HK $12.9. At present, the secondary market price of Sany International is around HK $8.6, and there is a potential increase of about 50% from the target price given in the research report, which is worthy of long-term attention.

In the first quarter, both revenue and net profit were improved, and the advantage areas continued to lead

After years of development and expansion, Sany International has successfully expanded its business from domestic coal machinery and equipment manufacturing enterprises to coal machinery, non-coal stubborn mining, mining vehicles, robots, smart mines, container equipment, bulk equipment, general equipment and other diversified business sectors. The company has a deep foundation in the field of integrated manufacturing of intelligent machinery. Through intensive cultivation of mines and logistics equipment, the company has continuously launched new application products. In recent years, Sany International has continuously strengthened its market control at home and abroad, and promoted its performance to record highs.

In 2020, the market share of almost all products of Sany International will be improved, and the front crane, stacker and roadheader will continue to maintain the first brand position in the industry. The annual revenue was 7.36 billion yuan, up 30.2% year on year, the net profit was 1.05 billion yuan, and the operating cash flow reached 1.07 billion yuan, up 33.6% year on year. Among them, the adverse growth of overseas business under the influence of the epidemic is of great significance, with sales revenue of 1.36 billion yuan in the year, up 28% year on year, accounting for nearly 20% of the annual performance; In the first quarter of 2021, the company's sales revenue increased by about 55.3% year on year, and its net profit increased by about 32.4% year on year, continuing to grow at a high speed.

(Sany International's overseas sales over the years; source: Glenway)

Sany International's product innovation capability has been intensively expanded in 2020, and 52 new products have been launched throughout the year, making a significant contribution to comprehensive revenue and gross profit. The sales volume of EBZ280D large slope roadheader launched by the company last year exceeded 40, and the gross profit advantage of single product was further improved; The 70-ton, 80-ton, 100-ton and 120-ton large-tonnage wide-body vehicles developed in parallel have taken the lead in the industry layout. At present, the new product prototype has been put into trial operation in the customer's mine, and will continue to lead the industry trend.

Behind the rapid breakthrough of new products is the company's deep understanding of market segments and accurate control of market demand. For machinery and equipment companies, only by going deep into the work scene and sensing customer needs in advance and polishing them repeatedly in the R&D and trial operation stages can Sany International timely launch targeted products to address market pain points, constantly enrich product categories, continuously improve brand influence in domestic and foreign markets, and steadily promote performance improvement.

This kind of control over products is the bottom factor of Sany International's performance growth. In the latest performance data of 2021 released by the company, the company achieved sales revenue of 2.41 billion yuan, up 55.3% year on year, and net profit of 340 million yuan, up 32.4% year on year. The positive impact of product strength advantages on the company's performance has been continuously released.

Grasp the upgrading trend of automation and intelligence, and the trillion-level market emerges as the breaking development ceiling

In addition to the stability of the business fundamentals, the demand for intelligent and automatic upgrading in the field of traditional mechanical equipment will provide new impetus for Sany International's performance growth in the next 3-5 years (310328).

One of the core driving forces of Sany International's automation and intelligence business is the upgrading trend of intelligent manufacturing in the mechanical equipment sector, and the national policy guidance to accelerate the intelligent coal industry. The upgrading means that the stock market itself has a volume of nearly trillion. Sany International is undoubtedly the most responsive group of enterprises. At present, the company's robot business and intelligent mine business have begun to take shape.

The company's robot business is growing rapidly. In 2020, Sany International's robot business as a whole has an order in hand of 670 million yuan and an intention order of 450 million yuan, which is mainly contributed by the internal demand and implementation scenario of Sany Group. Specifically, system integration has completed the design and development of more than 30 projects and delivered more than 10 projects. The mobile robot has achieved the development of 2 ton fork type, 1 ton, 3 ton and 5 ton knapsack type AGV series, and the sales volume has exceeded 480 sets; Two tons of storage and two tons of transportable products of electric forklift have been developed and sold in batches.

As a new business segment, the company's R&D and sales progress are quite remarkable, which is inseparable from the incubation environment and resource support provided by the group companies behind it, and is also the essence of Trinity International. With the further maturity and productivity improvement of the follow-up robot products, the company's ability to export relevant products to the outside world will be strengthened, and the contribution ability of the robot business will be better demonstrated.

The intelligent mining business of Sany International is also showing initial results. The company's complete set of production equipment provides a good basis for business development. In this context, the company has completed the delivery of multiple sets of electro-hydraulic control and fully mechanized mining automation products; Research and development of electric and fuel powered unmanned mining cars and related operation management systems, and signed cooperation agreements with many mines.

Compared with the whole industry's automation and intelligence business, which is still in its infancy, and the relevant products have just been put into the planning stage, Sany International has taken the lead in launching a variety of product types, taking the lead in seizing the market and making profits by virtue of the original product technology advantages and the strong resources of Sany Group. With the "Matthew effect" highlighted, the company's leading position in the industry's automation and intelligence upgrading will continue to consolidate, The new business is expected to become a new engine for Sany International's performance growth.

Summary

Sany International is an internationally competitive supplier of mining equipment and logistics machinery and equipment and services. With the continuous growth of fixed asset investment in coal mining and washing industry, the container throughput has steadily increased, providing a guarantee for the basic business of Sany International. At the same time, there is a broad demand for automation and intelligent business in the industry. It is expected that the business increment will show up in the next two years and will become an important driving force for the company's performance.

In fact, since 2021, Sany International has been widely concerned by the capital market, showing a sharp buying trend of funds from the south. The selection of MSCI index this time is no different to Trinity International. The company's popularity in the international capital market will be further improved, and it is expected to attract new liquidity from the construction of index funds.