Morningstar

Jiangsu Hengli Hydraulic Co Ltd Class A 601100

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Stock XSHG Rating as of
¥63.00 +5.73 (10.01%)
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As of Delayed Price Closed

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Hengli Hydraulic Earnings: Product Diversification Drives Decent Sales Growth

Cheng Wang

Narrow-moat Hengli Hydraulic’s second-quarter results reinforce our view that product diversification will drive growth in the long term. Despite flat sales of the excavator hydraulic cylinder this quarter, sales of the excavator-related pump, valve, and motor grew 66%, and nonexcavator-related sales increased by 26% year on year. Gross profit jumped 43% year on year on a 22% revenue rise and 6.3 percentage points gross margin expansion. As such, we increase our net income forecast by 10% to CNY 2.7 billion for 2024 and by 6%-7% for 2025-28. We raise our fair value estimate by 8% to CNY 59.60. Hengli is slightly undervalued.

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Price vs Fair Value

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601100 is trading within a range we consider fairly valued.
Price
¥63.00
Fair Value
¥99.60
Uncertainty
High
1-Star Price
¥81.82
5-Star Price
¥41.35
Economic Moat
Hpsyvq
Capital Allocation
Nxddpchs

Bulls Say, Bears Say

Bulls

China will boost infrastructure spending more than expected, driving demand for Hengli’s hydraulic components

Bears

China real estate investment will remain subdued for longer, weighing on sales of Hengli’s excavator hydraulic cylinders.

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Trading Information

Previous Close Price
¥57.27
Day Range
¥59.55–63.00
52-Week Range
¥41.55–64.47
Bid/Ask
¥62.99 / ¥63.00
Market Cap
¥84.47 Bil
Volume/Avg
15.4 Mil / 5.2 Mil

Key Statistics

Price/Earnings (Normalized)
34.57
Price/Sales
9.02
Dividend Yield (Trailing)
1.11%
Dividend Yield (Forward)
1.11%
Total Yield
1.11%

Company Profile

Hengli Hydraulic is a leading Chinese hydraulic component company. It designs, manufactures, and sells hydraulic cylinder, pump, valve, and motor products. Hengli’s products are widely used in heavy machinery. It is the largest supplier of excavator hydraulic cylinders in the world with about 30% global market share.
Sector
Industrials
Industry
Specialty Industrial Machinery
Stock Style Box
Large Growth
Total Number of Employees
6,514
Website
http://www.henglihydraulic.com

Competitors

Valuation

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Metric
601100
PH
CAT
Price/Earnings (Normalized)
 34.5724.7917.77
Price/Book Value
 5.776.7211.24
Price/Sales
 9.024.123.00
Price/Cash Flow
 25.8520.9015.10
Price/Earnings
601100
PH
CAT

Financial Strength

Metric
601100
PH
CAT
Quick Ratio
 2.970.490.69
Current Ratio
 3.520.931.28
Interest Coverage
 668.618.0725.74
Quick Ratio
601100
PH
CAT

Profitability

Metric
601100
PH
CAT
Return on Assets (Normalized)
 14.37%11.18%13.12%
Return on Equity (Normalized)
 18.39%29.66%60.21%
Return on Invested Capital (Normalized)
 16.30%16.18%19.89%
Return on Assets
601100
PH
CAT

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