Key takeaways from Hong Kong NDR

Key takeaways from Hong Kong NDR Target PriceHK$18.90(Previous TPHK$19.50)Up/Downside68.8%Current PriceHK$11.20 We hosted NDR for SANYI in Hong Kong last week.Investors’ questions aremostlyaroundlarge mining trucks growth outlook and the potential handling ofsolarbusiness.Key highlights:(1)Impressive backlog of mining trucks(overseas) which increased to RMB4.5bn in mid-Apr from RMB3.6bn in Mar; (2)Large-size logistics equipment will see visible margin expansion due to solidbacklog with higher ASP; (3) Management has yet to decide the future of solarbusiness(disposal or asset impairment)which is running atanannual loss of~RMB300mn (including depreciation of RMB200mn which is non-cash).Wefine-tuneour 2026E/27E/28E earnings forecast by-3%/+1%/+3%, to reflecthigher profitforecaston mining trucks and telescopic forklifts, butlowerforecastonroad headers, CCMUsand solar. While we expect the 1Q26 results (to beannounced on 20 May) will likelybeunder pressuredue to weak new businesssegments, we are positive on SANYI’s structural growth outlook given the risingcontribution of large mining trucks.ReiterateBUYwith new TP of HK$18.9(previously HK$19.5),based on unchanged 20x 2026E P/E (equivalent to thepeak level since 2017, to reflect the rising earnings visibility driven by thecommodity upcycle). China Capital GoodsWayne FUNG, CFA(852) 3900 0826waynefung@cmbi.com.hk Stock Data Large mining trucks backlog and margin.Large mining trucks backlog(overseas) further increased to RMB4.5bnby mid-Apr.With delivery cycleof3-6 months, most of the orders willlikelybe recognized in 2026E.Moreimportantly, SANYI has started winning “billion-scale (RMB)” tenders relatedto large metal mines recently.Large mining trucks carry 35-40% grossmarginoverseas, which is much higher than that of wide-body trucks (China:20%; overseas: 30%). Attractive TCO for customers.SANYI’s large mining trucks areequippedwith 2 sets of Weichai’s engines (2338 HK/000338 CH, BUY), and thereforeable to achieveasubstantiallylower cost compared withusingCummins’(CMI US, NR)engines. SANYI’s large mining trucks ASP is only 5% lowerthan a major US competitor’s.However, SANYI’smodelscan help clientsachieve15-20% lower diesel consumption,and20-30% lower maintenancecost. This makes SANYI’s trucks highly attractive fromtheperspectiveofTCO.SANYI targets to achieve 10% global market share in 2028E (vs 4-5%in 2025). Highvisibility of aftermarket revenue going forward.Given thataftermarketrevenueaccounts for ~3/4 of the total revenue overtheusefullifeof mining trucks,SANYIbelievestheaftermarket income will be highlyvisible following the strongtrucksales in 2026E. Related reports: SANYI(BUY)–Multiple growth driversahead–2 Apr 2026 (link) SANYI (BUY)–Profit in 2025 a negativesurprise;Looking for improvement in2026–22 Mar 2026 (link) (…Moredetailson page 2) 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) Large size port machinery (STS cranes & yard cranes):The latest backlog reachedRMB5.3bn, includingRMB4bnfromoverseasclients. The backlog carries 22-22% grossmargin, which is much higher than the 18% gross margin recognized in 2025. SANYIrevealed thatanimproving competitive landscape has helped boost the higher margin. Telescopic forklifts:SANYI’s telescopic forklift revenue dropped10% YoY to RMB1.07bnin 2025, whichwas largely due to the increased tariffsimposed on India by the US in early2025 (SANYI’s telescopic forklifts were mainly produced in itsIndian production base). Thatsaid, SANYI expects substantial growth (potentially >100% YoY) in 2026E, as productionhas been shifting to Indonesia.Meanwhile, SANYI’s Turkey production base is underconstructionandis expected to commence production in2028E, which will offer furthergrowth potential. Capex:SANYI expects the annual capex to be ~RMB1bn over the coming years, basedon the current business plan. Source:Bloomberg, company data,CMBIGM estimates Source:Bloomberg, company data,CMBIGM estimates Risks:(1) further weakness of coal mining activities in China; (2)higher-than-expectedoperating loss ofemerging business; (3) cost inflation due toelevated commodity prices. Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith 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 the subject 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 analystconfirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commissi