With the strong support of SANY Group (parent company), SANYI is rapidly growing its robot business and we see high visibility in 2021E. Besides, crusher products will be launched in 2H21E which will become another driver. All these, together with fast growing wide-body trucks, will help SANYI achieve diversification and enhance growth quality. We slightly revise up our earnings forecast in 2021E-22E by 4-5% and lift our TP to HK$11.9 (24x 2021E P/E, on the back of 24% earnings CAGR in 2021E-22E). We believe further support from SANY Group and potential M&A will offer additional upside. Reiterate BUY.
- Robot business supported by group company’s orders. At present, there are three major products, namely robotic integrated system, automated guided vehicle (AGV) and electric forklift. Revenue from robot reached RMB400mn in 2020, accounting for ~5% of total revenue. The sales were driven mainly by SANY Group’s lighthouse factories upgrade and construction. The upcoming upgrade of dozens of lighthouse factories will offer high visibility to SANYI’s robot business. At present, backlog reaches RMB530mn. This, together with RMB140mn orders for electric forklift, accounts for 14% of total backlog of the Company. SANYI plans to achieve external sales next year after establishing solid track record.
- High growth of wide-body truck to continue. Sales volume of wide-body truck reached ~1.2k units in 2020E. SANYI targets to deliver 2k units this year. SANYI expects gross margin for wide-body truck will continue to expand (currently 14%) with the launch of 80t/100t models and rising sales in overseas.
- Crusher machinery to be launched in 2H21E. SANYI believes the low industry concentration in crusher industry (several thousand players) will offer room for penetration. SANYI plans to launch crusher machinery in 2H21E with a focus on the high end in order to achieve import substitution. SANYI will leverage on SANY Group’s distribution network to speed up the sales. Going forward, SANYI will not only offer equipment sales but also EPC and services for customers.
- Major risk factors: (1) weakness in mining activities; (2) higher-than-expected expense to drive the introduction of new products.
