The Zhitong Finance App learned that Guolian Securities released a research report saying that every year from March to May is the traditional peak sales season for the construction machinery industry. Under the steady growth policy, demand is expected to pick up in 2024; with the gradual implementation of infrastructure policies in various countries, construction machinery exports will increase total sales. As the country gradually stabilizes, leading construction machinery companies with high value-added products and perfect overseas layouts will develop better. Beneficiaries: Sany Heavy Industries (600031.SH), Xugong Machinery (000425.SZ), Hengli Hydraulic (601100.SH), Zhejiang Dingli (603338.SH), Anhui Heli (), Hangcha Group (US), etc. 600761.SH 603298.SH

Industry events:

CME predicts that domestic excavator sales will be around 14,800 units in March 2024, an increase of 6.48% over the previous year. Exports of 10,200 units were exported, down 12.66% year on year. Total sales volume was about 25,000 units, down 2.26% year on year, and the overall decline narrowed.

The main views of Guolian Securities are as follows:

Domestic sales of excavators are expected to increase year-on-year in March, but the domestic sales growth rate in Q1 was still negative

According to data from the China Construction Machinery Industry Association, the domestic market sold a total of 1,1258 excavators from January to February 2024, a year-on-year decrease of 24.6%. According to CME forecasts, the domestic market is expected to sell a total of 26058 excavators in Q1 2024 (about 28,828 domestic excavators sold in Q1 2023), a year-on-year decrease of 9.61%. Judging from historical data, due to the impact of new construction starts at the beginning of the year, March is the peak sales season. Compared with other months, the League of Nations Securities believes that if the growth rate of domestic excavator sales recovers in March, it can be maintained throughout the year, and domestic excavator sales are expected to gradually bottom up.

Excavator exports were affected by a high base in March, and the growth rate was still negative

According to data from the China Construction Machinery Industry Association, overseas markets sold a total of 13,726 excavators from January to February 2024, a year-on-year decrease of 19.1%. According to CME forecasts, overseas markets are expected to sell a total of 23,926 excavators in Q1 2024 (about 28,643 overseas excavators sold in Q1 in 2023), a year-on-year decrease of 16.47%. Guolian Securities believes that the export growth rate has experienced a period of rapid growth and has formed a high base. Currently, it is gradually transitioning to a period of steady development, and is expected to maintain a slight growth trend in the future. According to domestic and international data, in Q1 of 2024, the overall sales volume of excavation machinery in China may be about 49,980,000 units, a year-on-year decrease of about 13%.

The number of hours Komatsu excavators started is yet to pick up

In February 2024, the operating hours of Komatsu excavators in China were 29.0 hours, down 61.48% year on year. The main reason may be greatly affected by Spring Festival factors, but compared to 2022 (Spring Festival is February), the operating rate in February 2024 fell 38.8% compared to 2022, and the number of hours Komatsu excavators started in 24 was still low. The low number of hours of operation indicates that excavators are currently underused in the industry, and some excavators are still idle. Idle equipment will have an impact on excavator renewal demand and new demand, and new demand will be greatly affected. If the domestic sales growth rate recovers in the next few months, the stock update is expected to bottom out, and overall domestic demand is expected to rebound in the future as the number of hours started increases.

Infrastructure investment continues to improve, and the decline in real estate development investment narrows

Looking at fixed asset investment in 2024, the country's fixed asset investment (excluding rural households) was 5084.7 billion yuan in January-February '24, an increase of 4.2% over the previous year; of these, infrastructure investment (excluding electricity, heat, gas and water production and supply) increased 6.3%. In January-February, the country invested 1184.2 billion yuan in real estate development, down 9.0% year on year. The cumulative year-on-year decline continued, but the decline narrowed compared to 2023.

From a policy perspective, there is a trend of relaxation in domestic real estate policies. Currently, several major domestic cities have introduced relevant policies. Currently, the issuance of relevant treasury bonds is gradually being implemented. Guolian Securities believes that in the future, as marginal and positive effects of policies continue to spread to infrastructure and other fields, there will be a marginal positive impact on the continued steady and positive transformation of excavator demand.

Risk warning: Macroeconomic environment development falls short of expected risk, risk of overseas market development falling short of expectations, risk of price fluctuation of raw materials, etc., risk of exchange rate fluctuation