Hengli Hydraulic's Headcount Increase Weighed on Operating Margin | Morningstar

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 27% of revenue in 2023. Excavator demand is highly cyclical, and Hengli’s excavator hydraulic cylinder revenue fell by 54% from 2011 to 2015 due to the industry downturn. Since the industry entered another downcycle in mid-2021, we expect Hengli’s excavator hydraulic cylinder revenue to trend lower and bottom in 2024.