东吴证券:3月挖机内销高于此前CME预期6%增速 中大挖复苏仍待启动

Dongwu Securities: Domestic excavator sales in March were higher than CME's previous 6% growth rate, and the recovery from mining is still yet to begin

Zhitong Finance ·  Apr 10 03:28

The Zhitong Finance App learned that Dongwu Securities released a research report saying that in March it sold 24,980 excavators of various types, down 2.34% year on year. Of these, 15,188 units were sold in China, up 9.27% year on year, higher than the previous CME forecast of 6% growth. It is expected that the structure is biased towards small excavation growth, and the recovery of medium and large excavation has yet to begin. Looking ahead to the future market, we need to focus on: ① Downstream infrastructure and other construction requirements and funding conditions; ② April sales data: Domestic sales of excavators from March to April 2023 accounted for about 30% of domestic sales throughout the year, laying the foundation for sales throughout the year. If the industry achieves positive growth in April 2024, base pressure will be drastically reduced starting in May, and demand will be renewed at the same time, and the annual growth rate is expected to rise month by month from a slight decline to flat or growing.

Dongwu Securities believes that the bottom of the construction machinery industry is marginally rising, and investment value is gradually showing. Based on the competitiveness and valuation situation of enterprises, it continues to recommend Sany Heavy Industries (600031.SH), Xugong Machinery (000425.SZ), Zoomlion Heavy Industries (01157), and Hengli Hydraulic (601100.SH). It is recommended to focus on Liugong (000528.SZ), Shantui Co., Ltd. (000680.SZ), etc.

Main sales data for construction machinery in March:

① Excavators: In March, 24,980 excavators of various types were sold, down 2.34% year on year. Among them, 15,188 units in China were up 9.27% year on year, higher than the previous CME growth rate of 6%. It is expected that the structure is biased towards small excavation growth, and the recovery of medium and large excavations has yet to begin; 9,792 units were exported, down 16.2% year on year.

② Loaders: In March, the industry sold 12324 loaders, a year-on-year decrease of 5.78%. Its sales volume in the Chinese domestic market was 6,629 units, down 15.2% year on year; export sales volume was 5,695 units, up 8.13% year on year. In March, 686 electric loaders were sold, and the electrification rate was 5.57%.

The renewal cycle is getting closer, and a series of large-scale equipment renewal policies are boosting the market recovery

The issuance of trillions of treasury bonds has increased investment in infrastructure. As local financial pressure improves, the volume of new downstream infrastructure projects and the operating rate are expected to increase, thereby increasing the marginal improvement in domestic demand for construction machinery. Furthermore, the construction machinery and equipment renewal cycle may be approaching, and a series of large-scale equipment renewal policies are expected to boost the market recovery.

Dongwu Securities pointed out that the upward cycle for construction machinery in the last round is 2016-2020. According to the 8-year service life, the equipment sold in the previous round is already in a large-scale life replacement period. 2023 is the low life span replacement point. Starting in 2024, the number of updates will begin to rise year by year, and the industry beta will rise marginally. As demand for updates increased in the second half of the year and the base figure declined, the industry is expected to usher in a new round of renewal cycles from the second half of '24, and a series of policies such as large-scale equipment updates to boost the industry's recovery.

The construction machinery industry is at the bottom of history, with strong marginal upward flexibility

Dongwu Securities said that in December '22, the switch from country three to country four caused some demand to be put ahead, compounded by macroeconomic policy adjustments, and the real estate market entered a phase of downward adjustment, which put pressure on construction machinery sales in '23. From an industry perspective, domestic sales of excavators in '23 were only 90,000 units, far lower than the average annual renewal demand center of 150,000 to 200,000 units. Looking at the market value on April 9, 2024, Dongwu Securities expects XCMG Machinery's dynamic PE to be only 10 times higher in 2024, and that Sany Heavy Industries and Zhonglian Heavy Industry's dynamic PE will only be 15-20 times higher. If the sector renewal cycle starts, it is expected that the industry cycle will quickly absorb valuations under the flexibility+scale effect, and profits will grow nonlinearly.

Risk warning: downstream investment falls short of expectations; industry cycle fluctuations; international trade disputes.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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