Capital Goods:Momentum of earth-moving machinery sales continued in May

Momentum of earth-moving machinerysalescontinued in May What’s new?China Construction Machinery Association (CCMA) releasedover the weekend the data for earth-moving machinery sales inMay2026.Sales(exports + domestic sales)of excavators and loaders grew 36% YoY and27% YoY respectively.Excavatorswere strongin both domestic sales (+39%YoY) and exports (+34% YoY).It’s also worth noting thatelectric loader salessurged79% YoY inMay, with electric ratio rising toa record high of37%, whichwe believewas driven by high oil price. ChinaCapital Goods Sector Wayne FUNG, CFA(852) 3900 0826waynefung@cmbi.com.hk Related reports:Jiangsu Hengli (601100 CH)-Takeaways from Implications:The strong data suggest that the industry upcycle is well on-track.We maintain our positive stance ontheconstruction machinery outlook, drivenby upside of global mining capex on the back of elevated commodity prices, aswell as Chinese machinery players’ penetration in emerging markets. plant visit: More positive than we thought–5Jun 2026 (link) SANY International (631 HK)-Weak 1Q26results but should be expected by the market;Focus on mining truck growth–21 May 2026(link) Stock ideas:Weseethemismatch between the strong industry data and thepullback of major names in the sectorasabuying opportunity.Our valuationcallsincludeZoomlion (1157 HK / 000157 CH, BUY),SANY Heavy (6031 HK/600031 CH, BUY)andSANYInternational(631 HK, BUY).Meanwhile,wecontinue to likeJiangsu Hengli (601100 CH, BUY), an outperformer recently,for its strong sales of hydraulic components and huge potential upside onhumanoid robots components(Takeaways from plant visit: More positive thanwe thought). Capital Goods–Takeaways from DongfangElectric plant visit–18 May 2026 (link) Capital Goods-Strong sales of earth-movingmachinery in Apr; price hikes planned forexcavators–11 May 2026 (link) Weichai Power (2338 HK / 000338 CH)-AIDCpower driven re-rating to continue; Earningsforecast and TP raised–4 May 2026 (link) Zoomlion (1157 HK/000157 CH)-Expect animprovement from 1Q26–30 Apr 2026 (link) Jiangsu Hengli (601100 CH)-1Q26 EBIT+34% YoY above expectation; net profitdragged by FX loss–28 Apr 2026 (link) SANYInternational(631 HK)-Key takeawaysfrom Hong Kong NDR–27 Apr 2026 (link) Source:CCMA, CMBIGM Source: CCMA, CMBIGM Source:Komatsu, CMBIGM Source: Komatsu, CMBIGM Source:CCMA, CMBIGMestimates Source: CCMA, CMBIGM estimates Source:CCMA, CMBIGM Source: CCMA, CMBIGM Source: CCMA, CMBIGM estimates Source:CCMA, CMBIGM Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwithrespect 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 analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and FuturesCommission) (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 thedate 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 coveredin this report. CMBIGM RatingsBUY : Stockwith potential return of over 15% over next 12 months: Stock with potential return of +15% to-10% over next 12 months: Stock with potential loss of over 10% over next 12 months: Stock is not rated byCMBIGM HOLDSELLNOT RATED OUTPERFORMMARKET-PERFORMUNDERPERFORMCMB InternationalGlobal MarketsLimited :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to 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 months 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 Disclosures There are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGMdoes 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 material