Shandong Shantui Construction Machinery Co., Ltd., which focuses on engineering and mining machinery, has recently uploaded its listing application documents, seeking to be listed in Hong Kong.
<h4>Key Points:</h4>
<ul>
<li>The company's profit increased by 9% year-on-year last year.</li>
<li>High gross profit margin in overseas business, rapid growth in excavator business.</li>
</ul>
Bai Xinrui
Global cloud vendors are increasing investments in AI infrastructure, which not only drives general power and other infrastructure but also stimulates mineral demand and related investments. Shandong Shantui Construction Machinery Co., Ltd. (000680.SZ), which specializes in engineering and mining machinery, has been listed in mainland China and recently submitted its listing application documents in Hong Kong amid the new stock frenzy, planning to be listed in Hong Kong.
Shantui's predecessor was the Shandong Bulldozer General Factory, an important backbone enterprise under Shandong Heavy Industry Group, which also includes listed companies in both mainland China and Hong Kong such as WEICHAI POWER (000338.SZ, 2338.HK) and China National Heavy Duty Truck Group (000951.SZ, 3808.HK). Currently, the major shareholder of Shantui is Shandong Heavy Industry, holding 24.29% of the shares, while Shandong Heavy Industry holds 15.78% of Shantui through WEICHAI POWER.
<h4>Bulldozers Account for 43.5% of Total Gross Profit</h4>
According to the listing application documents, Shantui's business mainly consists of two major segments: construction machinery and components. The construction machinery segment includes bulldozers, excavators, loaders, road machinery, mining trucks, and concrete equipment, while the components mainly include tracked chassis parts and transmission components.
In particular, the bulldozer business is the core business of Shantui, with the group expected to achieve a 10.2% share of the global bulldozer market by 2025, ranking third globally. In mainland China, it is the industry leader with a market share of 63%, maintaining its leading position in this market for 22 consecutive years since 2004. The bulldozer business accounted for 43.5% of the group's total gross profit of 3.03 billion yuan last year, reaching 1.32 billion yuan.
The global bulldozer industry continues to grow rapidly, mainly benefiting from accelerated global infrastructure construction and increased mining activities. Bulldozers are primarily used for pushing soil, leveling, transporting, and mining operations, widely applied in various scenarios such as mining, railway construction, and port development. Driven by rapid urbanization, increased mining activities, and land development in developing countries, research institutions expect the global bulldozer market to steadily expand, estimated to grow from USD 7.8 billion in 2025 to USD 9.2 billion by 2030.
<h4>Rapid Growth of Excavators</h4>
As for Shantui's excavator business, it is also noteworthy as it is one of the growth engines of the group. The gross profit for this business is projected to be 519 million yuan and 1.09 billion yuan in 2024 and 2025, respectively, representing year-on-year increases of 115% and 110%, accounting for 18.9% and 36% of the group's total gross profit, making it the second-largest source of gross profit contribution. Notably, excavators are widely used in infrastructure construction, mining operations, and urban development, with the global excavator market size expected to reach USD 70.6 billion in 2025, significantly larger than that of bulldozers; it is projected to reach USD 97.1 billion by 2030, and Shantui, as one of the major players in the industry, stands to benefit directly
Affected by the adjustment of the domestic real estate cycle, the engineering machinery industry is inevitably impacted. Fortunately, driven by the &#34;Belt and Road&#34; initiative and markets in Southeast Asia, Africa, and South America, the proportion of overseas gross profit continues to rise, increasing from 76.7% of total gross profit in 2023 to 81.2% in 2025. Additionally, the overseas gross profit margin is expected to reach 28.1% in 2025, significantly higher than the mainland business's 9.6%, resulting in a year-on-year profit increase of 9.1% to 1.21 billion yuan for the group last year.
<h4>Weak Sales in the Third Quarter</h4>
It is worth noting that the engineering machinery industry has a distinct seasonal pattern, with the first and second quarters of each year being traditional peak seasons. After the Chinese New Year, major engineering projects across the country typically commence, making March to June the peak procurement period. However, due to the generally rainy weather from July to September, orders are fewer, marking the traditional off-season for the industry, with a rebound occurring in the fourth quarter, particularly driven by the release of some year-end fiscal budgets and rush work before the winter break.
Moreover, steel is one of the basic raw materials in the engineering machinery industry, involving important components such as structural parts, load-bearing parts, and functional parts. Its main applications include key components like tracked chassis, frames, body shells, and attachments. The cost of steel accounts for about 20% to 30% of the total manufacturing cost, making it a key factor in determining product cost fluctuations and gross profit margins. Since the Middle East conflict, the prices of various raw materials globally have risen, and it is necessary to closely monitor whether this will affect the gross profit margin of Shantui Construction Machinery Co., Ltd.
Currently, the two leading companies in the mining and engineering machinery sectors are Caterpillar (CAT.US) listed in the United States and Komatsu Ltd. (6301.JP) in Japan, with global market shares of 15.8% and 11% respectively by 2025, and expected price-to-earnings ratios of 38 times and 18 times this year. As for SANY Heavy Industry (6031.HK; 600031.SH) listed in Hong Kong, the expected price-to-earnings ratio is around 16 times.
With the backing of WEICHAI POWER, if Shantui Construction Machinery Co., Ltd. is valued below ten times upon listing, it would be considered quite attractive. A valuation of 16 to 18 times would be at a reasonable level, but if it exceeds 30 times, the valuation would become relatively expensive due to its lower market share compared to Caterpillar and Komatsu

02338

山推工程机械股份有限公司

Shantui Construction Machinery Co., Ltd. recently submitted an application for listing in Hong Kong, seeking to go public in the region. The company's profit increased by 9% year-on-year last year, with a high gross profit margin in overseas business and rapid growth in the excavator sector. Shantui is an important enterprise under Shandong Heavy Industry Group, with bulldozer business accounting for 43.5% of total gross profit. The global bulldozer market is expected to grow from USD 7.8 billion in 2025 to USD 9.2 billion in 2030, driven by the growth of infrastructure construction and mining activities

BambooWorks

WEICHAI POWER

SHANTUI

Weichai Power

CNHTC-JNTC

SINOTRUK

Caterpillar

Komatsu Ltd.

SANY HEAVY IND

Sany

Komatsu

Supported by Weichai Group, Shantui Construction plans to go public in Hong Kong