Weak 1Q26 results but should be expected by the market; Focus on mining truck growth

Weak 1Q26 results but should be expected bythe market; Focus on mining truck growth Target PriceHK$18.90Up/Downside87.5%Current PriceHK$10.08 SANYI’s net profit in 1Q26 dropped 20% YoYto RMB509mn, despite a 13%YoY increase in revenue.The results are weak but, to a certain extent, shouldhave been expected by the market,in our view.Based on our understanding,thegrossmargin contractionin 1Q26(-3.6ppt YoY to 20.7%)was largely dueto(1)salesdecline of road headersthat carriedahighgross margin, and (2)expanded loss onsolarbusiness. On the positive side, miningtruck revenuesurged 65% YoY in 1Q26, with revenue contribution increased to 27% (19% in1Q25). Besides, large-size portequipmentrevenue surged 74% YoY in 1Q26.We remain positive on SANYI’s structural growth outlook,given the risingproportionof mining trucks.MaintainBUYwith unchangedTP of HK$18.9,based on 20x 2026E P/E (equivalent to the peak level since 2017, to reflecttheupcycle ofmetals). China Capital GoodsWayne FUNG, CFA(852) 3900 0826waynefung@cmbi.com.hk Post-results investor call at 10:00 a.m. today (HKT).We expect the focuswill be on the latest backlog, mining truck growthtrendand the timing ofdomestic coal mining machinery recovery. Keyrisks:(1) further weakness of coal mining activities in China; (2) higher-than-expected operating loss of emerging business; (3) cost inflation due toelevated commodity prices. Source: FactSet Related reports: SANYI(631 HK)–Key takeaways fromHong Kong NDR–27 Apr 2026 (link) SANYI (631 HK)–Multiple growth driversahead–2 Apr 2026 (link) SANYI(631 HK)–Profit in 2025 anegativesurprise;Lookingforimprovement in 2026–22 Mar 2026 (link) SANYI (631 HK)-Mining truck gainingtraction; Higher earnings forecast and TP–20 Feb 2026 (link) Source:Bloomberg,company data,CMBIGMestimates Source:Bloomberg,company data,CMBIGMestimates Disclosures& Disclaimers Analyst CertificationThe research analystwho is primary responsible 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 personalviews 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 analyst confirms that neither theanalyst nor his/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 interests in 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 withpotential loss of 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 expectedto perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 monthsCMB 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 Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGM does not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on theperformance of underlying assets or other variable market factors.CMBIGMrecommends that investors should independently evaluate particular investmentsand strategies, and encourages investors to consult with a professional financial advisor in order to make their own investment decisions.This report or any information contained herein, have been prepared by theCMBIGM, solely for the purpose of supplying information to the clients ofCMBIGM or its affiliate(s) to whom it is distributed. This report is no