Goldman Sachs published a research report, upgrading the investment rating of SINOTRUK (03808.HK) from "Sell" to "Buy," with a target price significantly raised from HKD 21 to HKD 51, mainly due to better-than-expected performance in the second half of last year, with net profit growing 40% year-on-year, reflecting a recovery in heavy truck export sales that exceeded expectations, offsetting profit margin pressures.
The firm stated that SINOTRUK continues to expand its market share in the export market, accounting for 45% of China's heavy truck export volume by 2025. Management is confident in achieving the performance targets for 2026, expecting revenue to grow 15% year-on-year to RMB 125.5 billion, with a pre-tax profit margin of 8.5%. The firm raised its earnings per share estimates for 2026 to 2027 by 28% to 33% to reflect the strength of the export business.
The firm believes that as the export business remains strong and the domestic market is expected to enter an upward cycle in 2027, valuations are likely to be reassessed, with the target price corresponding to 15 times the projected price-to-earnings ratio for 2026 (previously 8 times)