Dongwu Securities: Promoting oil service equipment with strong certainty when going overseas and with a low share

The Zhitong Finance App learned that Dongwu Securities released a research report saying that in 2020-2024, China's total investment & construction projects in the energy industry in the six countries of Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Qatar, and Angola (Africa) reached US$50.28 billion, of which the main oil and gas projects were US$29.15 billion, and showed an upward trend year by year, driving rapid growth in oil service equipment exports. Looking ahead, the Middle East oil service market is 100 billion US dollars, of which the oil service equipment market is at least 10 billion US dollars. China's oil service equipment companies are currently in their infancy in the Middle East. Their market share is relatively low, and their high growth potential is less affected by industry beta (oil prices, etc.).

The main views of Dongwu Securities are as follows:

Investment Rating: Accumulation (maintenance)

Recommended Combinations

North Huachuang (002371.SZ), Sany Heavy Industries (600031.SH), Zhongwei (688012.SH), Hengli Hydraulic (601100.SH), CIMC Group (000039.SZ), Tuojing Technology (), Haitian International (01882), Baichu Electronics (Dubai), Jingsheng Electromechanical (300316.SZ), Jerry Co., Ltd. (002353.SZ), Zhejiang Dingli (Chengdu), Hangcha Group (System), Maiwei 688072.SH 688188.SH 603338.SH 603298.SH Shares (300751.SZ), Pilot Intelligence (300450.SZ), Changchuan Technology (300604.SZ), Huazhe Testing (300012.SZ), Anhui Heli (600761.SH), Precision Electronics (300567.SZ), Neway (603699.SH), Core Source Micro (688037.SH), Green Harmonics (), Haitian Precision (Dow), Hangke Technology (), Yizumi (300415.SZ), Xinlai 688017.SH 601882.SH 688006.SH Applied Materials (300260.SZ), Gaosheng Co., Ltd. (688556.SH), Neway CNC (688697.SH), Huazhong CNC (300161.SZ).

Key investment points

[Oil service equipment] China's foreign investment is growing rapidly, and oil service equipment exports to the Middle East are at the right time

In 2020-2024, China's total investment and construction projects in the energy industry in the six countries of Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Qatar, and Angola (Africa) reached US$50.28 billion, of which the main oil and gas projects were US$29.15 billion, and showed an upward trend year by year, driving rapid growth in oil and service equipment exports. The oil service equipment industry has characteristics such as high standards, long application cycles, and the need for dual industry & customer authentication. It has built deep technical barriers while also bringing about a good competitive pattern. In recent years, domestic oil service equipment leader Jerry Co., Ltd. and Neway Co., Ltd. have all achieved explosive growth in Middle East orders. In 2024, Jerry Middle East orders increased 100% year on year; overseas orders for 25Q1 of Neway shares increased 60% year on year, with orders from the Middle East & Africa accounting for 44%, an increase of 17 pcts over the full year of 24. Looking forward to the future, the Middle East oil service market is 100 billion US dollars, of which the oil service equipment market is at least 10 billion US dollars. China's oil service equipment companies are currently in their infancy in the Middle East. Their market share is relatively low, and their high growth potential is less affected by industry beta (oil prices, etc.).

[Lithium battery equipment] The risk of impairment has been fully released, and the expansion of domestic and foreign production and the acceleration of solid-state battery industrialization will benefit equipment manufacturers

In 2023-2024, the lithium battery equipment industry prepared a total of 5.7 billion yuan for depreciation, including 3.3 billion yuan for credit impairment and about 2.4 billion yuan for inventory price reduction. Subsequent accounts receivable are expected to be recovered at an accelerated pace as downstream production resumes and expansion. The domestic focus is on the expansion of production in the Ningde Era. The Hong Kong stock IPO raised HK$35.3 billion, and about 90% of the capital raised (HK$27.6 billion) will be used for the construction of the Debrecen plant in Hungary. The gigafactory is planned to have a total production capacity of 72 GWH, which will be built in two phases. The first phase of the project has an investment of 700 million euros, and is expected to be put into production in 2025. After delivery, it will support European car companies such as BMW and Mercedes-Benz to serve the European market; Complete vehicles such as Tata Plant expansion. Solid-state batteries are the mainstream direction of next-generation battery technology, and new and old players at home and abroad are speeding up the deployment. BYD will launch a batch demonstration loading application for all solid-state batteries around 2027, and large-scale launch will be achieved after 2030, and equipment manufacturers are expected to benefit first. Investment suggestions: Focus on recommending the lithium battery equipment leader [Pioneer Intelligence], which binds the back-end equipment leader of overseas first-tier battery manufacturers [Hangke Technology]; it is recommended to focus on the laser welding leader [Lianying Laser] and the module/PACK leader [Xianhui Technology].

[Humanoid robot] Fulai New Materials releases second-generation electronic skin, Tesla Optimus mass production accelerates

1) On June 5, Fulai New Materials released a new second-generation electronic skin product. It has 3 key features: ① it can achieve full-dimensional curved surface integration to easily fit the surface of humanoid robots; ② it can sense three-dimensional force vectors and can sense vertical force and shear force; ③ it has multi-physical mode integration, including force, slip, temperature, etc. Compared with first-generation products, the core is an increase in flexibility and an increase in force perception. 2) Tesla accelerates domestic factory audits, and Optimus mass production continues to accelerate. We judge that the core catalyst for the subsequent industry still comes from the T-chain.

Core recommendation: the core vote is still optimistic about the T-chain, recommending [Hengli Hydraulic] [Green Harmonics], [Sanhua Intelligent Control], [Topu Group], [Beite Technology], etc.; the direction of marginal change favors the three major sectors — ① Electronic Skin: It is recommended to focus on [Fulai New Materials] [Hanwei Technology] [Riying Electronics] [Xingyuan Zhuo Mg] [Xusheng Group] [Xusheng Group] [Weike Technology]; ③ Screw equipment: It is recommended to focus on [Jinshang Machine Tool China] [Zhejiang Heideman] [New Coordinates] [Sijin Intelligence] [Huachen Equipment]. ②

[Construction machinery] Domestic sales of excavators declined in May, but the boom continued to recover without excavation & growth. I am optimistic about undervalued investment opportunities in the sector

According to statistics from the China Construction Machinery Industry Association, in May 2025, the average monthly working hours of major domestic construction machinery products were 84.5 hours, down 3.86% year on year, 6.25% month on month, and excavator boom declined. However, the non-excavation boom has begun to improve. In April 2025, the sales volume of rollers/pavers/graders was 1,713/200/ 756 units, respectively, +36%/+52%/+22%, respectively, and the cumulative year-on-year ratio in January-April was +30%/+38%/+20%. From January to April 2025, the cumulative sales volume of truck cranes, crawler cranes, and truck-mounted cranes was 7355/1021/ 9014 units, respectively, -9%/+0%/-0%, respectively, and continued to improve compared with 2024. In terms of exports, export excavator sales increased 9.0% year-on-year from January to April 2025. Exports are the main source of profit for domestic OEMs, and the restoration of export sentiment has a strong supporting effect on sector performance. Due to recent fluctuations in the domestic excavator boom, there has been a correction in the sector's stock price. Currently, the sector has reached a low valuation level. It is recommended to focus on it. Related stocks: Sany Heavy Industries, a leading company in all categories, Zoomlion Heavy Industries, Liugong, Shantui Co., Ltd., Hengli Hydraulic.

[Forklift] AI drives intelligent and unmanned logistics and warehousing industry to accelerate transformation. It is recommended to focus on leading targets in the industrial chain

In the era of large-scale language models, artificial intelligence models are developing rapidly, providing realistic background and technical support for the “AI+ Logistics” development model. Forklifts are the core handling equipment in the warehousing and logistics industry, and unmanned and intelligent continue to advance. The core link of the unmanned forklift industry chain mainly includes controller suppliers, vehicle body suppliers and integrators: (1) Controller: the “brain” of unmanned forklifts, which integrates sensory positioning, intelligent decision-making and motion control modules, and has SLAM, natural environment navigation, environmental sensing and obstacle avoidance functions, and can achieve functions such as visual semantic recognition and operation, robot and model parameter configuration. According to the prospectus of Xiangong Intelligence, the gross margin of the company's controller will reach 81% in 2024. (2) Vehicle body suppliers: composed of traditional forklift manufacturers and suppliers focusing on AGV/AMR. Competition is fierce, and the gross margin is mostly at the level of 15% to 20%. (3) Integrators: Provide customized complete solutions according to customer needs. At present, leading technology and logistics companies are cooperating more and more closely with forklift manufacturers. It is recommended to focus on (1) Forklift leaders: [Anhui Heli] has strategic cooperation agreements with Huawei, SF Express, and Jingdong Group to carry out all-round cooperation with smart logistics as the core. [Hangcha Group] has formed three major business groups: Hangcha Intelligence, Hangao Intelligence, and Hanhe Smart, forming an overall intelligent logistics solution covering AGV, vertical storage and software integration systems. [Zhongli Co., Ltd.] has successively invested in Chengdu Ruixinxing (intelligent visual safety and positioning) and Zhejiang Ke Titanium (forklift) Driving and logistics automation Solution), Shenzhen Youguang Image (VSLAM positioning and navigation technology), etc., leading technical reserves. (2) Leading integrators [Kunming Ship Intelligence] [Yinfei Storage] [Lanjian Intelligence], (3) core controller supplier [Xiangong Intelligence (to be listed)].