Downgrade Sany Heavy Industry to Neutral We downgrade Sany's rating from Buy to Neutral, and the 12-month target price is still RMB 14.3. Following the recent strong performance of the stock (up from 15% in the past two months and only 5% in the industry), the current target price implied only upside is 4%. We still believe that Sany Heavy Industry is a leading company in the industry. The management team is highly motivated, has a good incentive mechanism, and has an excellent execution record. The company's product line is the most abundant in the industry, and it has a leading market position in all core market segments. However, the stock's current stock price corresponds to a 2012 forward P/E of 12.5, while the global leader Caterpillar is 11 times, and the profitability of the latter is much more predictable. We believe that Sanyâ€™s current valuation is less attractive than before.
Mean Return Opportunities; Buy Tiandi Technology Tiandi Technology has been 20% behind the entire mechanical sector in the past two months. Therefore, we believe that there should be an average return opportunity for the stock.
Our 12-month target price is still RMB 19.4, implying 18% upside. We believe that Tian Di's diversified business model (coal coal, coal sales and services, etc.) should provide the company with better defensiveness in the current uncertain macroeconomic environment.
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