Jiangsu Hengli (601100 CH) Summary
Core Content
Jiangsu Hengli (601100 CH) is a Chinese capital goods company that has been reviewed in a post-results call, with several key insights and financial forecasts provided. The report highlights the company's performance, future expectations, and valuation metrics.
Key Takeaways
- Mexico Operation Loss Reduction: The loss from the Mexico operation decreased from RMB60mn in 1Q26 to RMB20mn in 2Q26, with an expected full-year loss of approximately RMB100mn.
- Precision Industry Turnaround: The precision industry segment (excluding ball screws) is expected to turn profitable in 2027E, with revenue growth and a production value target of RMB2bn annually.
- Hydraulic Components Demand: Demand for hydraulic components for excavators is strong, with potential for increased order intakes in 4Q26E from a major US construction machinery customer.
- Ball Screw Capacity for Humanoid Robots: Ball screw production capacity is expected to reach 100k units in the near term and 1mn units within 3-5 years.
- Earnings Forecast Adjustment: The company's 2026E earnings forecast was trimmed by 3% due to FX losses and lower margin assumptions.
- Target Price: The target price was revised to RMB132.00 from RMB125.00, based on a 42x 2027E P/E multiple, which is 1SD above the historical average, reflecting growth potential in both hydraulic and precision industries.
- Market Position: Hengli remains a key pick in the analyst's universe.
Financial Highlights
Revenue Growth
| Year |
Revenue (RMB mn) |
YoY Growth (%) |
| FY24A |
9,390 |
4.5 |
| FY25A |
10,941 |
16.5 |
| FY26E |
13,600 |
24.3 |
| FY27E |
16,409 |
20.6 |
| FY28E |
19,169 |
16.8 |
Adjusted Net Profit
| Year |
Adjusted Net Profit (RMB mn) |
YoY Growth (%) |
| FY24A |
2,734.0 |
- |
| FY25A |
2,734.0 |
- |
| FY26E |
3,382.7 |
23.7 |
| FY27E |
4,208.8 |
24.4 |
| FY28E |
4,938.2 |
17.2 |
Earnings Per Share (EPS)
| Year |
EPS (Reported) (RMB) |
YoY Growth (%) |
| FY24A |
2.04 |
- |
| FY25A |
2.52 |
23.7 |
| FY26E |
3.14 |
24.4 |
| FY27E |
3.68 |
17.2 |
Valuation Metrics
| Year |
P/E (x) |
P/B (x) |
Dividend Yield (%) |
| FY24A |
56.2 |
8.9 |
0.7 |
| FY25A |
51.5 |
8.2 |
0.8 |
| FY26E |
41.7 |
7.2 |
1.0 |
| FY27E |
33.5 |
6.3 |
1.3 |
| FY28E |
28.6 |
5.6 |
1.5 |
Business Segments
Hydraulic Cylinder
- Revenue: Expected to grow from RMB6,569mn in 2026E to RMB8,520mn in 2028E.
- Growth Rate: 24.4% in 2026E, 17.9% in 2027E, and 10.0% in 2028E.
- Gross Margin: Expected to decrease slightly to 40.9% in 2026E, then increase to 41.0% in 2027E and 41.2% in 2028E.
Hydraulic Pump and Valve
- Revenue: Expected to remain stable, with no significant growth.
- Gross Margin: Expected to remain around 49.0% for the forecast period.
Hydraulic System
- Revenue: Expected to grow from RMB463mn in 2026E to RMB600mn in 2028E.
- Growth Rate: 20.0% in 2026E, 18.0% in 2027E, and 10.0% in 2028E.
- Gross Margin: Expected to increase slightly to 34.5% in 2026E and 35.0% in 2028E.
Component
- Revenue: Expected to grow from RMB1,070mn in 2026E to RMB2,738mn in 2028E.
- Growth Rate: 20.0% in 2026E, 60.0% in 2027E, and 60.0% in 2028E.
- Gross Margin: Expected to increase from 15.8% in 2026E to 23.0% in 2028E.
Risk Factors
- Demand Slowdown: Potential slowdown in demand for hydraulic components.
- New Business Development: Slower-than-expected growth in new business development.
Analyst Ratings
- BUY: Indicates a stock with potential return of over 15% over the next 12 months.
- HOLD: Indicates a stock with potential return of +15% to -10% over the next 12 months.
- SELL: Indicates a stock with potential loss of over 10% over the next 12 months.
- OUTPERFORM: Indicates an industry expected to outperform the relevant broad market benchmark.
- MARKET-PERFORM: Indicates an industry expected to perform in-line with the relevant broad market benchmark.
- UNDERPERFORM: Indicates an industry expected to underperform the relevant broad market benchmark.
Company Overview
- Market Cap: RMB140,933.6mn.
- Shareholding Structure: Wang's family holds 64.3% of the shares.
- Share Performance:
- 1-month: -1.6%
- 3-months: -10.2%
- 6-months: -7.8%
Analysts
Disclosures
- The report is not tailored for all investors and should not be considered as investment advice.
- Past performance does not guarantee future results.
- The information is subject to change without notice.
- CMBIGM may have conflicts of interest and does not assume responsibility for the report's objectivity.
Legal Information
- CMB International Global Markets Limited is a subsidiary of CMB International Capital Corporation Limited, which is a subsidiary of China Merchants Bank.
- The report is intended solely for distribution to major US institutional investors.
- In the UK, the report is provided only to certain categories of investors.
- In Singapore, the report is distributed by CMBI (Singapore) Pte. Limited, an exempt financial adviser.
