As discussed in our 2026 sector outlook published today (link), we see largesizemining excavators in overseas as well as emerging markets as key growthareas in 2026E. In China market, we believe drivers will come from (1) thereplacement-driven upcycle of excavators, and (2) an early stage of cranedemand recovery. We revise up SANY’s 2025E-27E earnings forecast by 2-5%, after incorporating higher sales volume and finance income following therecent HK IPO. Accordingly, we revise up our TP for SANY-A to RMB27 (fromRMB24), after rolling over our valuation base to 2026E with an unchangedtarget P/E of 24x (equivalent to 0.5SD above the average of 20x since 2017,to reflect the earnings upcycle). Reiterate BUY. We also extend our coverageto SANY-H with a BUY rating and TP of HK$29.5 (assuming no discount to Ashare).

Mining excavator will be a focus over the coming years. In the 3Q25earnings call, SANY revealed a plan to separate its mining excavatoroperation with an aim to better collaborate with SANYI’s (631 HK, BUY)mining truck unit to expand the overseas mining equipment segment.SANY targets to boost the annual mining excavator sales from RMB2bn in2025E to RMB6bn in 2028E.

Enhanced financial strength post HK IPO. Following the HK listing,SANY raised ~HK$15bn (or ~RMB13.7bn). We forecast SANY’s net cashto reach RMB25bn by end-2025E. More than half of the proceeds will bespent on global sales network and overseas capacity expansion.

Key risks: (1) Slowdown of overseas demand; (2) lack of sustainablerecovery of non-earth-moving machinery demand in China; (3) decline inmining capex.