Multiple growth drivers ahead

Multiple growth drivers ahead Target PriceHK$19.50(Previous TPHK$20.60)Up/Downside66.2%Current PriceHK$11.73 SANYI’safter-tax profit (including MI) came in at RMB1.78bn, which iswithinthepre-announced profit range of RMB1.60-1.85bn. Adjusted for the one-offimpairment loss, the adjusted attributable net profit was flat YoY at RMB1.85bn.Inthe post-results call, managementmentionedthat large mining trucks,microgridsand lithium powerare the key growth areas over the coming years. Wefine-tuneour 2026 earnings forecast by-6%, but largely due to lower roadheader sales (domesticallycoal related). We continue to like SANYI’sgrowththroughcontinuous business diversification. Maintain BUY with new TP ofHK$19.5(previously HK$20.6),based on unchanged 20x 2026E P/E(equivalent to the peak level since 2017, to reflect the rising earnings visibilitydriven by the commodity upcycle). China Capital GoodsWayne FUNG, CFA(852) 3900 0826waynefung@cmbi.com.hk Mining trucks:SANYI believes that large mining trucks and articulatedtrucks are high value products with good potential for global penetration.SANYI mentioned that its large mining trucks offer 15% lower maintenancecostthanpeers, and therefore much lower TCO for customers. SANYIcurrently has RMB3bn backlog foroverseaslarge mining trucks,with morefocus on high-end customers. Non-coal applications (such as copper, goldand manganese) accountfor close to 50%of the backlog. Micro grid:SANYI’s micro grid solution targets mainly mining sites.SANYIfocuses onthreemajor business models: (1) Self-owned (mainly in Africa):Investment returnisgeneratedthrough the collection of tariffs, withpaybackperiodof~5 years. (2) EPC (mainly in Asia Pacific and Latin America):SANYIprovidescustomers with solutions. Gross margin is~25%. (3)BOT(in Europe): The investment returnincludesEPC margin and gains fromproject disposal.Currently, SANYI has four micro grid projects in operation,and 20 EPC projects on hand. Lithium power:At present,SANYI lithium battery products are mainly soldto SANY Group. SANYI is planning to expand its capacity to 22GWh/33GWhin 2027/28. Given that SANYI Group’s lithium battery demand is expectedto reach 30GWh/45GWh in 2027/28according to management,orders forSANYI’s products are therefore almost secured. In terms of downstreamapplications, SANYIplans togradually expand from commercial vehicles(mainlyconcretemixers and tractors)to wheel loaders. Related reports: SANYI (BUY)–Profit in 2025 a negativesurprise;Looking for improvement in2026–22 Mar 2026 (link) SANYI(BUY)-Mining truck gainingtraction; Higher earnings forecast and TP–20 Feb 2026 (link) Capital Goods–Key themes in 2026;Focus on Mining equipment + Power fordata centres + Replacement cycle–1Dec 2025 (link) Source:Bloomberg,company data,CMBIGMestimates Source:Bloomberg,company data,CMBIGMestimates Risks:(1) further weakness of coal mining activities in China; (2) the implementation ofreduction of coal output quota in Indonesia; (3) slowdown of emerging business; (4) costinflation due to elevated commodity prices. Disclosures& Disclaimers Analyst CertificationThe research analyst who is primaryresponsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about thesubject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst norhis/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report;(2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interestsin the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential lossof over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to performin-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months CMB InternationalGlobal MarketsLimited Address: 45/F,Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporati