三一重工:Excavator sales growth accelerated;Raised earnings est.&TP

Industry sales growth of excavator accelerated in Sep. According to thelatest figure from CCMA, excavator sales volume by major players in Chinasurged 65% YoY to 26k units in Sep, the highest growth rate since May. Large/ mid-size excavator sales growth reached 53%/106% YoY in Sep, whichsuggested strong demand from infrastructure and property constructionprojects. In 9M20, excavator sales growth reached 32% YoY.Raise industry sales projection. Based on Jiangsu Hengli’s (601100CH,BUY) latest production plan of hydraulic cylinders (see our latest note onHengli [link]), we foresee strong excavator demand growth with high visibilityin 4Q20E. We raise our industry excavator sales volume assumption in2020E/21E by 13%/10%. We expect 35%/3% YoY growth in 2020E/21E, withkey drivers coming from resilient construction activities, replacement of labourand stringent environmental policies.SANY continues to outpace industry growth. SANY’s excavator salesvolume in Sep surged 85% YoY, outpacing the industry growth of 65%.SANY’s market share reached 28.5%/26.3% in Sep / 9M20. SANY is one ofthe very few players that consistently delivers market share gain. We believeimport substitution and export market are two structural drivers for SANYgoing forward.3Q20E results preview: We forecast SANY to deliver 60% YoY net profitgrowth in 3Q20E, driven by 44% YoY increase in revenue and operatingleverage. SANY is scheduled to report on 29Oct.Key risks:

(1) Risk of overseas business due to pandemic;

(2) Slowdown ofconstruction activities;

(3) Risk of expanding to financing business.