HANGCHA GROUP(603298)：3Q22 RESULTS BEAT WITH E-FORKLIFTS FUELING FASTER GROWTH

Hangcha Group posted its 3Q22 results. In 1-3Q22, the Company achieved revenue/attributable net profit (ANP)/ex-one-off ANP of Rmb11.36bn/ 0.75bn/0.73bn (+3.3%/+1.1%/+2.1% YoY). In 3Q22 alone, its revenue/ANP/ ex-one-off ANP was Rmb3.84bn/0.29bn/295mn (+5.6%/+24.1%/+30.0% YoY). While industry-wide sales maintained negative growth in 3Q22, Hangcha took the lead to deliver positive top-line growth, driven by a higher proportion of high-value lithium battery counterbalanced forklifts in its sales mix. Considering that the Company’s 3Q22 results and the industry’s recovery in Oct both beat expectations, we raise our 2022E/23E/24E ANP forecast to Rmb1.01bn/1.30bn/1.53bn (from the original forecast of Rmb0.92bn/1.15bn/1.43bn). Factoring in the valuation of comparable companies, including Anhui Heli (600761.SH), Dingli Machinery (603338.SH,) and Noblelift Intelligent Equipment (603611.SH), which are trading at 14x/19x/13x 2022E PE based on Wind consensus estimates, we assign 15x 2022E PE to lift the target price to Rmb18 and reiterate the “BUY” rating.
3Q22 results exceeded expectations.
In 1-3Q22, the Company achieved revenue/attributable net profit (ANP)/ex-one-off ANP of Rmb11.36bn/0.75bn/0.73bn (+3.3%/+1.1%/+2.1% YoY). In 3Q22 alone, its revenue/ANP/ ex-one-off ANP was Rmb3.84bn/ 0.29bn/295mn (+5.6%/+24.1%/+30.0% YoY). The Company’s 3Q22 ANP hit a new high thanks to the decline in steel prices.
The blended expense ratio was 8.6% in 1-3Q22, down by 2.6ppts YoY.
The blended expense ratio in 1-3Q22 was 8.6% (-2.6ppts YoY). In a breakdown, the selling/administrative/R&D/financial expense ratio was 2.8% (-2.3ppts YoY)/2.1% (-0.1ppts YoY)/4.1% (+0.1ppts YoY)/-0.4% (-0.3ppts YoY), respectively. The decrease in selling and administrative expense ratios are mainly due to the Company’s own distribution model and the scale effect brought by the expansion of its revenue.
Actively expanding its market share in North America: The Company actively expanded its market share in North America during 3Q22, gradually building up its three-tier service network of “headquarters + overseas subsidiaries + distributors” to ensure swift and professional services for North American customers. Meanwhile, domestic counterbalanced forklifts are experiencing rapid electrification. With the continuous maturity of lithium battery technology, this type of battery will gradually replace lead-acid batteries as the mainstream technology route of electric forklifts (e-forklifts). In the past, limited by technologies of internal combustion engines and gearboxes, Chinese players were disadvantaged compared with overseas giants like Toyota and KION in the field of high-margin counterbalanced forklifts. However, with the development of lithium battery forklifts and rising oil prices, China’s forklift manufacturers have gained significant competitive edges in the field of electric counterbalanced forklifts by using the mature domestic technology along the new energy vehicle (NEV) industry chain and may outperform overseas giants going forward. High-value electric counterbalanced forklifts would mark another new field of strength for Chinese manufacturers.
Potential risks:
Less-than-expected industry demand recovery and sales volume; a decline in gross profit margin (GPM) due to sharp price hikes of steel and lithium batteries; disruptions to the supply chain due to Covid flare-ups; intensified competition in the domestic industry weighing on profitability; overseas sales undermined by the Russia-Ukraine conflict and changes in international trade policies; the negative effect on the overseas business due to exchange rate fluctuations and rising freight rates, etc.
Investment strategy:
Hangcha is one of the largest forklift R&D and manufacturing group in China. It is likely to enter a new stage of growth riding the wave of electrification of counterbalanced forklifts. Considering that the Company’s 3Q22 results and the industry’s recovery in Oct both beat expectations, we raise our 2022E/23E/24E ANP forecast to Rmb1.01bn/1.30bn/1.53bn (from the original forecast of Rmb0.92bn/1.15bn/1.43bn). Factoring in the valuation of comparable companies, including Anhui Heli (600761.SH), Dingli Machinery (603338.SH,) and Noblelift Intelligent Equipment (603611.SH), which are trading at 14x/19x/13x 2022E PE based on Wind consensus estimates, we assign 15x 2022E PE to lift the target price to Rmb18 and reiterate the “BUY” rating.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。