Xiaomo: The profit and cash flow of Chinese machinery and heavy truck companies beat expectations, and the sentiment is bearish or excessive

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that China's machinery and heavy truck companies' overall operating performance in the third quarter was positive, with most companies' recurring profits and operating cash flow beating expectations. The October data showed that core business continued to improve, profit margins were stable, new products and automation initiatives were accelerated, and overseas market growth was still strong; the bank believes that investors' bearishness is excessive, and there is no fundamental support for recent sector fluctuations and risk aversion.

The bank pointed out that in October, excavator sales increased 11.8% year on year to 20,225 units, loader sales increased 10.7% year on year to 11,820 units, and electric loader performance continued to be strong. Heavy truck sales fell by about 13% year on year, mainly due to the 2025 subsidy program, which concentrated sales in the second half of the year, especially in the fourth quarter, which led to a high base. Heavy truck sales in the first ten months of this year continued to rise 10% year on year to 1.02 million units, and exports increased about 20% year on year.

The bank maintains “excess” ratings for Weichai Power (02338) and Sany Heavy Industries (06031), and expects limited short-term policy risks.