J.P. Morgan Jiangsu Hengli Hydraulic (601100) Global China Summit Takeaways: Accelerating New Drivers and Global Expansion
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Key Views
Non-excavator revenue now accounts for approximately 50% of total sales, spanning aerial work platforms, agricultural machinery, and industrial hydraulics. This diversification underscores the company's reduced dependence on cyclical excavator demand. Management targets overseas revenue rising from the current ~20% to over 30%, supported by new manufacturing facilities in Mexico and India.
The company has set a 2028 total revenue target of RMB 20 billion, with RMB 6 billion contributed from overseas markets. Gross margin reached approximately 35% in 2025, with a net margin near 20%, while R&D spend remained around 5% of revenue.
Outlook
J.P. Morgan notes that China's construction machinery cycle has passed its trough, with a moderate recovery expected in 2026. Key milestones to monitor include the commissioning timelines for the Mexico and India plants.
Recommended Securities
Jiangsu Hengli Hydraulic (601100): Overweight rating maintained. Target price of RMB 80, based on 25x 2027E P/E. Rationale includes accelerating diversification, a clear overseas expansion roadmap, and cyclical industry recovery. Risks include slower-than-expected overseas plant ramp-ups, demand volatility, and raw material cost increases.