China's Top Three Engineering Machinery Giants Saw A Resurgence in Net Profit Growth Rates in 2023.

In 2023, the performance growth rates of the three leading engineering machinery companies in China turned positive year-on-year. As of now, all three major engineering machinery leaders in the country have released their annual reports. Among them, the most profitable engineering machinery enterprise last year was still XCMG (000425.SZ), with a net profit of 5.326 billion yuan for the whole year, an increase of 23.51% year-on-year, further widening the gap with Sany Heavy Industry. Sany Heavy Industry (600031.SH) achieved a net profit of 4.527 billion yuan last year, a year-on-year increase of 5.53%. In 2022, after completing its overall listing, XCMG's net profit was only 34 million yuan more than Sany Heavy Industry. Among the three companies, Zoomlion (000157.SZ) performed the best in terms of revenue and net profit growth rate, with its net profit increasing by more than 50% last year. In 2022, affected by factors such as industry cyclicality, Zoomlion and Sany Heavy Industry saw a year-on-year decline in net profit of over 60%, while XCMG's decrease was close to 50%. In 2023, influenced by factors such as the continued downturn in the real estate market, the domestic engineering machinery industry is still in a downward adjustment period. In their annual report, Sany Heavy Industry pointed out that in 2023, China's macroeconomy experienced fluctuations but overall showed a trend of recovery and improvement. The domestic engineering machinery market is still at the bottom, but there is a noticeable acceleration in the recovery trend, with the decline narrowing significantly. The overseas market is undergoing a structural adjustment and showing a trend of high-quality development, with a significant increase in the proportion of large-scale, high-end, green, and intelligent products. Last year, the common feature among the three companies mentioned above was that their overseas revenue all increased year-on-year, indicating a greater emphasis on the expansion of overseas business. Among them, Sany Heavy Industry had the highest proportion of overseas revenue. Last year, Sany Heavy Industry achieved overseas sales revenue of 43.258 billion yuan, an increase of 18.28% year-on-year; the proportion of international income to total operating income increased by 14.78 percentage points year-on-year to 60.48%. As of the end of 2023, Sany Heavy Industry's overseas product sales covered more than 180 countries and regions, with Europe and the United States becoming its fastest-growing overseas regions. Benefiting from the increase in overseas sales scale and the improvement of product structure, the company's international business gross profit margin reached 30.78% last year, which was 8 percentage points higher than that of the domestic market, an increase of 4.42 percentage points year-on-year. Except for pile machinery, the gross profit margins of other products of Sany Heavy Industry all increased year-on-year. However, the gross profit margin of pile machinery business remained the highest, reaching 34.08%. Excavators are still the main source of revenue for Sany Heavy Industry, accounting for nearly 40%. Sany Heavy Industry's excavators have been the sales champion in the domestic market for 13 consecutive years. In addition, they are also the number one in categories such as concrete machinery, electric mixing trucks, and road machinery. XCMG also regards internationalization as its main strategic thrust, with its overseas revenue proportion increasing to around 40% last year. XCMG believes that the current engineering machinery industry has a high degree of maturity, with fierce competition in local regions. In recent years, industry concentration has continued to increase, with leading companies further expanding their market share, enhancing their competitive strength, and risk resistance, showing a trend of the strong becoming stronger. The industry shows the characteristics of "five transformations," namely high-end, intelligent, green, service-oriented, and internationalization. Last year, XCMG's automobile cranes, truck cranes, and road rollers ranked first in 16 main categories in the domestic industry; lifting machinery and mobile cranes continued to rank first globally. Earthmoving machinery and lifting machinery are the two main sources of revenue for XCMG, with revenues reaching 22.56 billion yuan and 21.187 billion yuan, respectively. The gross profit margins of these two parts are also above 20%, with the former slightly higher at 25.69%. Although the proportion and overall scale of overseas revenue of Zoomlion last year were lower than those of XCMG and Sany Heavy Industry, its overseas revenue growth rate was the fastest among the three companies, with a year-on-year increase of over 79.2%. The company stated that its engineering lifting machinery has become the brand with the highest market share in Turkey and Central Asia; its tower crane products maintain the first position in the Turkish market; the market share in Saudi Arabia, Malaysia, Vietnam, Kenya, and other markets has increased. Currently, the company's concrete machinery boom pumps and mixing station market share rank first in the industry. In the fields of construction lifting machinery, 25-ton and above truck cranes, and 500-ton and above crawler cranes, it ranks first in the industry. Last year, the gross profit margins of Zoomlion's engineering machinery products all increased, with the gross profit margin of its main products, lifting machinery, reaching 31.04%, an increase of 8.13 percentage points year-on-year. In its annual report, Zoomlion mentioned that the current industry cycle volatility is easing. The first quarter is traditionally a slow season for infrastructure construction. Zoomlion's revenue and net profit growth rates still performed the best among the three leading companies. During the same period, the net profit of XCMG and Sany Heavy Industry was around 1.6 billion yuan, with the former slightly higher by 20 million yuan, and the latter's profit did not increase despite the growth in revenue. As of the close of trading on May 6, the Wendel Engineering Machinery Index rose by 4.12% to 6639.71. XCMG Machinery rose by 6.4% to 7.48 yuan, with a total market value of 88.385 billion yuan; Sany Heavy Industry rose by 3.62% to 16.9 yuan, with a total market value of 143.409 billion yuan; Zoomlion rose by 2.47% to 8.72 yuan, with a total market value of 75.672 billion yuan.