1Q26 EBIT +34% YoY above expectation; net profit dragged by FX loss

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR <GO> OR http://www.cmbi.com.hk 1 MN 28 Apr 2026 CMB International Global Markets | Equity Research | Company Update Jiangsu Hengli (601100 CH) Jiangsu Hengli (601100 CH) - 1Q26 EBIT +34% YoY above expectation; net profit dragged by FX loss 1Q26 EBIT +34% YoY above expectation; net profit dragged by FX loss Hengli’s 1Q26 net profit came in at RMB653mn, which increased only 6% YoY largely due to the recognition of net finance expense (RMB162mn vs net finance income of RMB199mn in 1Q25) as a result of the appreciation of RMB. EBIT grew 34% YoY to RMB775mn, driven by an impressive revenue growth of 33% YoY. Meanwhile, operating cash inflow in 1Q26 surged 9x YoY from a low base to RMB518mn. We see these as a set of decent operating results. We think FX volatility is normal and believe it should not affect the core valuation of Hengli. Maintain BUY with an unchanged TP of RMB109, based on 42x 2026E P/E (+1SD above the historical average unchanged, to reflect the machinery upcycle and humanoid robot components growth). Hengli’s 1Q26 results highlights Source: Company data, CMBIGM  Risk factors: (1) Slowdown of demand for hydraulic components; (2) slower-than-expected new business development. Target Price RMB109.00 Up/Downside 12.4% Current Price RMB96.94 China Capital Goods Wayne FUNG, CFA (852) 3900 0826 waynefung@cmbi.com.hk Stock Data Mkt Cap (RMB mn) 129,979.1 Avg 3 mths t/o (RMB mn) 1,098.5 52w High/Low (RMB) 123.74/66.70 Total Issued Shares (mn) 1340.8 Source: FactSet Shareholding Structure WANG's family 64.3% Source: SSE Share Performance Absolute Relative 1-mth 1.2% -4.4% 3-mth -14.2% -15.3% 6-mth 3.2% 2.0% Source: FactSet 12-mth Price Performance Source: FactSet Related reports: Jiangsu Hengli – 4Q25 earnings miss on gross margin and FX loss; But structural growth outlook still intact – 21 Apr 2026 (link) Capital Goods – Strong export of earth-moving machinery in Feb – 9 Mar 2026 (link) Capital Goods - Strong momentum of non-earth-moving machinery sales in Jan – 16 Feb 2026 (link) Earnings Summary (YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 9,390 10,941 12,702 14,438 16,161 YoY growth (%) 4.5 16.5 16.1 13.7 11.9 Adjusted net profit (RMB mn) 2,508.7 2,734.0 3,471.5 4,036.0 4,585.0 EPS (Reported) (RMB) 1.87 2.04 2.59 3.01 3.42 YoY growth (%) 0.4 9.0 27.0 16.3 13.5 Consensus EPS (RMB) na na 2.55 3.02 na P/E (x) 51.8 47.5 37.4 32.2 28.4 P/B (x) 8.2 7.5 6.6 5.9 5.2 Yield (%) 0.7 0.9 1.1 1.3 1.5 Net gearing (%) (49.8) (51.1) (47.8) (54.3) (53.2) Source: Company data, Bloomberg, CMBIGM estimates (RMB mn)1Q251Q26Change YoYTotal revenue2,4223,21032.5%Cost of sales(1,468)(1,972)34.3%Gross profit9541,23829.7%Other income(27)(28)4.7%S&D expenses(58)(69)19.0%Administrative expenses(137)(166)21.4%R&D expense(149)(183)23.0%Asset impairment(4)(16)266.9%EBIT57977533.9%Net fi