GF Securities: Quarterly Report Approaching Focus on Export Chain Performance Clues

The Zhitong Finance App learned that GF Securities released a research report saying that it entered the annual report forecast season in December '24. As Superstar Technology and other companies' forecasts exceeded expectations, the export chain was driven by EPS expectations and ushered in a wave of upward trends. After the Spring Festival, we entered a period of poor performance, and the export chain pulled back again. Currently, many companies' 25-year PE has fallen back to the agreed range of 10-15X. As we gradually enter the quarterly earnings reporting season, we can once again pay attention to the export chain's performance clues.

Machinery: Durable products are cyclical, and the competitiveness of industrial products is enhanced. For overseas durable goods, we recommend Superstar Technology (002444.SZ), etc., and it is recommended to focus on Yindu Co., Ltd. (603277.SH), etc.; for overseas industrial products, we recommend Sany Heavy Industries (600031.SH), etc.

The main views of GF Securities are as follows:

Judging from the stock price performance over the past 2 years, there is a pattern of stock performance in the export chain. The earnings season is worth paying attention to: most of the increases occurred during the performance period, which means that EPS money can often be earned; while during the financial reporting period, stock price performance is average. Judging from the stock price performance over the past year, it is difficult for export chain companies to make money by increasing their valuations, and they often need to make EPS money by cashing in on the boom. The upward cycle of stock prices basically occurs during the earnings season, which is expected to improve trading fundamentals.

In December '24, we entered the annual report forecast season. As the forecasts of companies such as Superstar Technology exceeded expectations, the export chain was driven by EPS expectations and ushered in a wave of upward trends. After the Spring Festival, we entered a period of poor performance, and the export chain pulled back again. Currently, many companies' 25-year PE has fallen back to the agreed range of 10-15X. As we gradually enter the quarterly earnings reporting season, we can once again pay attention to the export chain's performance clues.

Strategy: The quarterly report is approaching, and focus on export chain performance clues. According to export data for January-February, transformers, wind power units, motorcycles, air conditioners, injection molding machines, buses, hand tools/power tools, etc. achieved an increase of more than 10%. Furthermore, this year's export chain to Europe is worth paying attention to. Inverters, power batteries, hand and power tools, electric meters, forklifts, buses, white electricity, etc. are highly exposed to Europe.

Machinery: Durable products are cyclical, and the competitiveness of industrial products is enhanced. Overseas durable goods recommend Superstar Technology, Quanfeng Holdings, etc., and recommend focusing on Yindu Co., Ltd. and Lingxiao Pump; for overseas industrial products, we recommend Sany Heavy Industries, Xugong Machinery, Zhonglian Heavy Industry, Liugong, Zhejiang Dingli, Hangcha Group, and Anhui Heli.

Home appliances: Leading overseas production capacity layout is leading, and US tariffs accelerate the improvement of the export competition pattern. US tariffs have led to a rapid increase in the short-term share of leading companies exporting to North America, so it is recommended to focus on OEM companies that account for relatively high exports to the US: Xinbao, Osun Electric, and Dechang.

Textile clothing: The upstream textile manufacturing sector is expected to perform steadily in 25Q1. 2025Q1. Although the US imposes tariffs on China and the export environment is under pressure, most companies in the sector have a global production capacity layout in recent years, which has better withstood disruptions to performance due to increased trade frictions, and individual companies have benefited from major customer orders or changes in product structure, and performance is expected to increase dramatically.

Military industry: emphasizes opportunities for the global development of the industry, and the demand for military trade in civil aviation can be expected to boom. Military trade focuses on: Guorui Technology, Aerospace Nanhu, Hongdu Airlines, China Airlines Xifei, Aerospace Electronics, Aerospace Rainbow, China Airlines Chengfei, etc.; Outbound support focuses on: Ruichuang Weina, China Airlines Xifei, China Aviation Heavy Equipment, Aviation Asia Technology, etc.

Automobiles: Passenger vehicle PHEV exports are speeding up, commercial vehicle export growth is slowing in the short term, and the long-term market space is broad. Recommended attention for passenger cars: (1) BYD (A/H), Great Wall (A/H), Changan Automobile, and Chery under the “self-centered” path; (2) Geely, Zero Sports, and SAIC passenger cars under the “overseas cooperation” path.

Light industry: Export companies expect their 25Q1 performance to be divided. Domestic exports to the US may face profit pressure in the first quarter, and future trends may intensify. Vietnam's exports to the US remain profitable, and the revenue boom is relatively high. Companies that export to Europe may be relatively bright on the revenue side, and there may be fluctuations on the profit side.

Core hypothetical risks: downward pressure on the economy exceeds expectations, fluctuations in the profit environment exceed expectations, etc.