02:12 PM EST, 01/27/2025 (MT Newswires) -- Hitachi Construction Machinery reported its third-quarter results before market open, showing that the broader demand backdrop is mixed, with near-term North American mining outlook more nuanced, says National Bank.

Analyst Maxim Sytchev notes that global demand for hydraulic excavators for F2024E was upgraded by Hitachi +4% to 206k units (though still down -8% y/y) vs. last quarter's outlook, though the upgrade was driven entirely by the Asia (incl. Oceania and India) region. North American and Western European markets are still soft.

On the mining front, mining revenues across the Americas region is expected to fall -11% y/y for F2024E on a -10% fall in excavator sales and a -14% retraction in dump truck revenues, reported Hitachi. However, demand for ultra-large hydraulic excavators and dump trucks in North America seems to have improved vs. management's prior forecast, further complicating the picture, Sytchev notes.

Bottom line: Hitachi's mixed print brings no significant changes to National's positive outlook for the Canadian Caterpillar dealers as the key catalysts of rising LatAm copper production (Finning ( FINGF )), troughing residential construction and rental demand in Eastern Canada (Toromont Industries ( TMTNF )), as well as relatively attractive valuations on more realistic earnings estimates (both Finning ( FINGF ) and Toromont) remain intact. On the other hand, the lack of near-term momentum for North American excavator demand - especially in the mining space - suggests a turnaround for Wajax ( WJXFF ) could be pushed even further to the right. "Despite having seven large shovels in the backlog expected to be delivered through H1/26E, the lack of visibility is not encouraging," Sytchev concludes.

Finning ( FINGF ) is rated Outperform, with a $48 target.

Toromont Industries ( TMTNF ) is rated Outperform, with a $126 target.

Wajax ( WJXFF ) is rated Outperform, with a $24 target.

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