1H21: Results In Line; Heavy R&D And Overseas Markets To Support Growth

Sany Heavy reported a record-high interim net profit of Rmb10b, up 17% yoy, due to margin squeeze in 2Q21 from raw material price hikes, but this was partially offset by surging overseas exposures. Looking ahead, we expect to see margin stabilisation and demand recovery in 4Q21, and the company’s heavy R&D investments would help it to maintain its market-leading position in the global market, with near-term pressure on margins. Maintain BUY and cut target price to Rmb32.00