Guosheng: Initiates "Buy" rating on EACON (07687), target price HK$97.49

Guosheng released a research report predicting that EACON's (07687) operating revenue for 2026-2028 will be RMB 1.8/2.5/3.2 billion, representing year-on-year growth of 28%/37%/28%; considering the company's leading position and growth potential, it believes the company's reasonable market value is HK$14.7 billion (target price HK$97.49), corresponding to 5x 2027 P/S, initiates coverage with a "Buy" rating; the bank believes that the increase in autonomous mining truck penetration, the company's overseas expansion and asset-light strategy are worth favoring. Guosheng's main points are as follows: EACON is a leading enterprise in China's commercial vehicle intelligent driving sector, with closed mining areas as its core scenario In 2020, the company was the first to adopt the TaaS model, self-owning autonomous mining truck fleets and charging service fees based on the volume of services provided to customers (e.g., transportation volume), cultivating customer usage habits and building trust. In 2023, the company began launching the ATaaS model, in which customers own the fleet, advancing asset-light operations. As of 2026H1, the company has more than 3,100 autonomous mining trucks in operation, with a market share of over 53% by scale of operating autonomous mining truck fleets, leading the industry. Industry analysis: Combining low cost and high safety, penetration is expected to rise rapidly Due to frequent accidents in mining areas, harsh and remote environments, an aging workforce, and low economic efficiency, mining is in fact unsuitable for manual operations. The bank estimates that compared with manned mining trucks, a single autonomous mining truck can save RMB 460,000 per year in labor costs, and if it is a pure electric autonomous mining truck, it can further save approximately RMB 200,000 in energy costs, offering strong economic benefits. National policies also strongly support mining area unmanned operations, and future penetration is expected to rise rapidly. Frost & Sullivan expects China's autonomous mining truck sales to increase from 4,500+ units in 2026 to approximately 15,000 units in 2030, with a CAGR of 34.4%; China's autonomous mining truck ownership penetration rate to rise from 4.4% in 2025 to 41.3% in 2030, and sales penetration rate to gradually increase from 12.1% in 2025 to 52.1% in 2030. The global mining area autonomous driving solutions market size is expected to reach approximately RMB 50 billion by 2030. Competitive advantages: Understanding vehicles, mining, and algorithms, deeply binding customers, leading position 1) Capabilities: The company independently developed the industry's first hundred-ton-class electric autonomous mining truck drive-by-wire and electronic control chassis platform. The drive-by-wire platform "Yushi" is compatible with 100+ vehicle models including brands such as Tongli, Lingong Heavy Machinery, Yutong, and Inner Mongolia North Hauler Joint Stock, with a failure rate below 5% and a measured fuel-saving rate stable at 20%+, covering both wide-body trucks and rigid mining trucks. The core management team is deeply rooted in mining areas, covering mineral types including coal mines/metal mines/limestone mines, and has achieved normalized unmanned application of 60 vehicles at the Julong Copper Mine at an altitude of over 5,000 meters, setting an industry benchmark for extreme working conditions. The algorithm possesses excellent perception and interaction capabilities. 2) Customers: The company is backed by downstream industrial capital such as Shanghang State-owned Assets and Zijin Mining Group, and has also obtained strategic support from industrial shareholders such as Contemporary Amperex Technology, Tongli, and XCMG. Its solutions have been deployed in 30 mines operated by leading mining groups such as China Energy Investment Corporation, State Power Investment Corporation, TBEA Co., Ltd., Zijin Mining Group, Shougang Group, Guanghui Energy, and Baowu Group. Over the past few years, the company has been recognized by a large number of high-quality customers, with a customer retention rate of 100% for three consecutive years. 3) Position: First-mover advantage and economies of scale, with a solid leading position. Growth drivers: Overseas expansion + asset-light transformation, scalable replication of benchmark projects 1) The company was the first to lay out in the high-potential Australian market, having achieved all-weather operation of 6 vehicles. In terms of per-vehicle value, the annual driver cost for one mining truck in China/Australia is RMB 400,000+/RMB 3 million+ respectively, and the value anchor of autonomous driving systems is amplified several times in Australia, with stronger profitability expected in Australia in the future. 2) In 2026H1, ATaaS (asset-light) revenue accounted for 66%, with room for further increase in the future. With the advancement of the asset-light strategy, the company's future profitability will also gradually improve. 3) The company has accumulated a large number of benchmark projects. As of the end of 2025, the company had deployed in 42 mines, and among all 41 open-pit coal mines in China with annual approved production capacity exceeding 10 million tons, 19 have deployed its solutions. In 2025, the number of projects contributing revenue at the hundred-million level each was 5. In the future, leveraging the implementation experience accumulated in benchmark projects, it is expected to continue expanding customers, and with repeat purchases from existing customers and increased penetration at individual mines, revenue is expected to continue growing rapidly. 4) The mining processes and working environments of metal mines are more complex, and the penetration of autonomous mining trucks is slower. The Tibet Julong Copper project implemented by the company in May is the largest scaled autonomous mining truck project in a single mining area in the metal mining industry, and is expected to be replicated at scale in the future. Risk warnings Risks of penetration increase falling short of expectations, industry competition risk, risk of profitability improvement falling short of expectations, risk of overseas business falling short of expectations, risk of metal mine replication falling short of expectations, customer concentration risk, share lock-up expiration risk, liquidity risk, and assumptions and estimates risk.