The engineering machinery sector is heavily service-oriented, often described as "30% equipment, 70% service." This represents a significant weakness for foreign brands and forms an irreplicable core barrier for Sany Heavy Industry Co.,Ltd. (600031.SH) in its overseas expansion.

What is in decline today may shine brilliantly again tomorrow, and what is highly favored now may gradually wane in the future. This sentiment aptly describes the recent trajectory of Sany Heavy Industry.

In the first quarter of 2026, Sany's top ten shareholders featured prominent institutional investors, including two social security funds, two insurance funds, and a new position from the Abu Dhabi Investment Authority. This contrasts sharply with the situation in 2022. Back then, the domestic engineering machinery industry faced unexpected shocks, with market demand contracting sharply and the sector entering a downward adjustment cycle. Sany experienced negative year-on-year performance growth for two consecutive years in 2022 and 2023, a far cry from its current standing.

What actions did Sany take to revive its performance and regain the favor of institutional capital?

I. Committed Overseas Expansion In 2024, Tang Xiuguo, Rotating Chairman and President of Sany Group, shared the group's globalization practices. He divided Sany's global journey into three phases: The first phase (2003-2012) focused primarily on exporting products based on imported components. The second phase (2013-2022) involved establishing a local presence with independent scenarios, intellectual property, and supply chains. The company is now in the third phase, advancing "global localization," shifting from merely offering products to providing comprehensive solutions.

The engineering machinery industry typically follows an 8-10 year cycle, similar to the service life of its core product, excavators. The previous cycle started in 2015 and peaked in 2021. In 2022, domestic sales plummeted by 44.6% year-on-year, marking the start of a downturn. Sany's domestic business contracted significantly as a result.

In stark contrast was its international business. International sales saw substantial growth in 2021, reaching 24.846 billion yuan, a sharp increase of 76.6% year-on-year. In 2022, international business revenue hit 36.571 billion yuan, accounting for 45.7% of total revenue and growing 47.19% year-on-year. In this context, a full-force push overseas became Sany's strategic priority to hedge against domestic cyclical fluctuations.

Since globalization was elevated to its top strategy, the growth momentum of international revenue has intensified. In 2023, the company achieved international sales revenue of 43.258 billion yuan, an increase of 18.28% year-on-year, representing 60.48% of its main business revenue. For the first time, international revenue surpassed domestic revenue. Notably, this figure was only 14.1 billion yuan, or 14% of the total, in 2020. In 2024, international main business revenue reached 48.513 billion yuan, up 12.15% year-on-year, accounting for 63.98% of the total. In 2025, international main business revenue grew to 55.86 billion yuan, a 15.1% increase, maintaining a 64% share of total revenue.

From a product profitability perspective, the gross margin of the international business has steadily improved. In 2025, the gross margin for Sany's international business reached 31.7%, 10.95 percentage points higher than that of its domestic business. The international business has been the decisive force enabling Sany to navigate the domestic cycle and achieve high-quality profit growth.

By the end of 2025, Sany's overseas product sales covered over 150 countries and regions. Regionally, multiple international markets achieved sustained high growth. The Asia-Australia region remained the largest overseas market, while Europe, the Americas, and Africa have successively become the fastest-growing emerging overseas markets in recent years. With accelerated infrastructure, real estate development, and industrial and mining investments in regions like Southeast Asia and Africa, overseas markets are expected to maintain relatively high prosperity in the future.

According to Frost & Sullivan statistics, Sany Heavy Industry's contribution and growth rate from overseas revenue have consistently exceeded the domestic industry average. In the global engineering machinery landscape, Sany currently holds the third-largest global market share, trailing foreign brands Caterpillar and Komatsu, and leads among Chinese peers.

What enables Sany Heavy Industry to secure a place in the fiercely competitive global market at a pace that leads its Chinese counterparts?

II. Why Sany Heavy Industry? To achieve product localization, continuously enhance product performance, and synergistically advance digital, intelligent, and low-carbon transformations to meet the higher safety, environmental, and efficiency standards of overseas markets, Sany deeply understands the principle of prioritizing R&D.

The company currently employs 5,720 R&D personnel, constituting 18.7% of its total workforce, with 40.28% holding postgraduate degrees or higher. From 2022 to 2024, Sany's average R&D expenditure accounted for 7.8% of its revenue. By April 2025, it had obtained over 9,100 patent authorizations globally, including 70 low-carbon patents in 2024 alone, facilitating the successful launch of more than 40 new energy products.

Targeting mature markets like Europe and the US, Sany has made breakthroughs with electrified and intelligent high-end products. Multiple product lines have obtained international authoritative certifications such as the EU CE mark and North American ASME standards. Considering Europe's plan to completely ban the sale of fuel-powered engineering machinery from 2035, electrified products are poised for significant growth. Products like Sany's electric mixer trucks are high-margin items; future benefits from expanded sales scale could further elevate the gross margin of its overseas business.

In emerging markets such as Southeast Asia and Africa, Sany has rapidly captured market share with customized products and localized operations, leveraging excellent cost-performance ratios. Taking the Indonesian market as an example, Sany established the Indonesia Lighthouse Factory there, the first overseas lighthouse factory in the Chinese engineering machinery industry. This smart factory has achieved extensive equipment connectivity, full-process data-driven operations, and widespread automation and human-machine collaboration, driving the company's goals of cost reduction and efficiency improvement.

The successful operation of the lighthouse factory, combined with customized R&D tailored to local needs and a deeply localized operational team, has enabled Sany to surpass Komatsu in market share in Indonesia, becoming the leading brand locally.

Beyond independent R&D, Sany Heavy Industry also acquired Putzmeister, the absolute global leader in concrete machinery based in Germany. This move instantly addressed three major shortcomings: high-end technology, distribution channels in Europe and America, and an international brand. Sany has become a global top manufacturer in concrete machinery, maintaining the world's number one market share for 15 consecutive years.