Hengli Hydraulic's Nonexcavator-Related Sales Pressured by Overcapacity and Trade Uncertainty

Hengli Hydraulic is best known as the largest hydraulic cylinder supplier for excavators, commanding over 50% market share in China and about 30% globally. Excavator hydraulic cylinders accounted for 23% of revenue in 2024. Excavator demand is highly cyclical, and Hengli’s excavator hydraulic cylinder revenue fell by 37% from 2021 to 2024 due to the industry downturn. As major excavator manufacturers in China have maintained positive monthly shipment growth since April 2024, we believe excavator demand has bottomed out and anticipate a rebound in excavator cylinder sales in 2025.