Morgan Stanley: China construction machinery third-quarter results diverge: Sany leads growth as Zhejiang Dingli faces revenue-to-profit pressure

Why did Sany Heavy Industry stand out in a weak industry?

In the third quarter of 2026, Sany Heavy Industry’s revenue rose 17% year on year to 24.907 billion yuan; over the same period, Zoomlion grew 5% and XCMG grew 10%. Morgan Stanley noted that Sany’s growth came against a backdrop of weak industry sales and expectations that had already been lowered.
Sany’s gross margin was 28.7%, up 0.3 percentage points year on year and approximately 0.5 percentage points quarter on quarter; despite multiple cost pressures, net profit rose 21% year on year to 2.314 billion yuan. Selling expenses rose 24% year on year, faster than revenue.
Morgan Stanley believes Sany’s results reinforce its existing view and expects the market consensus for its earnings per share over the next 12 months to be revised slightly upward.

Zoomlion’s third-quarter revenue rose 5% year on year to 12.884 billion yuan. Domestic revenue grew 10%, outperforming Morgan Stanley’s earlier, more pessimistic expectations; overseas revenue grew just 1%, a marked slowdown.
The company’s overall gross margin rose 1.7 percentage points quarter on quarter to 27.8% . Overseas gross margin exceeded 31%, rising approximately 4 percentage points quarter on quarter, a rebound greater than the bank expected.
The improvement in gross margin failed to offset changes in expenses and non-operating income: selling expenses rose 28% year on year, non-operating income fell 72%, and net profit consequently declined 26% year on year to 859 million yuan. Morgan Stanley believes the results weaken its existing view.

Zhejiang Dingli’s third-quarter revenue rose 45% year on year to 3.39 billion yuan, accelerating from the 25% year-on-year growth recorded in the first half. Morgan Stanley believes the revenue performance may still exceed market expectations, even though there were already signs of accelerating industry growth.
But third-quarter gross margin fell to 27.9%, down 8.2 percentage points year on year and approximately 4.3 percentage points quarter on quarter, a decline that surprised the bank; net profit grew 10% to 598 million yuan, markedly slower than revenue.
Morgan Stanley believes both the revenue beat and the weaker-than-expected gross margin may be related to stronger domestic sales in the third quarter. The bank’s earnings reaction framework leaves its existing view on Zhejiang Dingli unchanged.