In October, the decline in excavator sales continued to expand, and the number of operating hours rose seasonally. According to the data of Construction Machinery Association, the total sales of excavators in China in October 2021 was 18964, a year-on-year decrease of 30.60%. Among them, the domestic sales volume was 12608 units, a year-on-year decrease of 47.23%; 6356 sets were exported, a year-on-year increase of 84.80%. From January to October 2021, the cumulative sales volume of excavators in China was 298302, with a year-on-year increase of 13.06%. Among them, the domestic sales volume was 244920 units, with a year-on-year increase of 3.47%; 53382 sets were exported, a year-on-year increase of 96.79%. In October, the operating hours of Komatsu China excavator was 109.80, a year-on-year decrease of 20.03%, still at the lowest level in the same period of nearly five years.
Domestically, downstream demand continued to weaken, superimposed on last year's high base, and the growth rate of excavator sales continued to decline. In terms of export, although the export volume of excavator hit a new record and the growth rate picked up slightly, the total sales volume of excavator continued to decline due to its relatively small proportion. In addition, due to seasonal factors, the operating hours of excavators have rebounded month on month, but they are still at the lowest level in recent five years, reflecting that the downstream demand remains depressed, indicating that the growth rate of subsequent excavator sales is difficult to stabilize and recover.
The growth rate of other construction machinery sales also continued to decline, confirming the gradual decline of the industry boom in other construction machinery. In October, the sales volume of loaders was 9276, a year-on-year decrease of 12.30%. From January to October, the cumulative sales volume was 121677, a year-on-year increase of 11.60%. The sales volume of truck cranes in September was 1864, a year-on-year decrease of 54.00%. The cumulative sales volume from January to September was 43530, a year-on-year increase of 5.18%. In September, the sales volume of forklifts was 91000 units, with a year-on-year increase of 8.22%. From January to September, the cumulative sales volume was 846700 units, with a year-on-year increase of 50.92%. Similar to excavators, under the influence of factors such as weak downstream demand, gradual weakening of low base effect and decline of export growth rate, the sales growth rate of loaders, truck cranes, forklifts and other construction machinery also began to decline or even turn negative, confirming that the business cycle of the industry has begun to decline gradually.
The pace of issuing special bonds continued to accelerate, and various indicators of real estate continued to weaken. In terms of infrastructure construction, the cumulative growth rate of China's infrastructure investment (excluding power) in October was 1.00%, and the growth rate continued to decline. From January to October, the issuance scale of new special bonds was about 2.91 trillion yuan, a year-on-year decrease of 18.03%, and the decline continued to narrow, accounting for 84.02% of the total annual budget. The pace of special bond issuance continued to accelerate.
In terms of real estate, from January to October, China's land acquisition area increased by - 11.00%, commercial housing sales increased by 11.80%, investment completion increased by 7.20% and new construction area increased by - 7.70%. Policy tightening has led to a decline in the investment willingness of real estate enterprises, and various indicators of the real estate industry are still weakening.
Investment advice
The current boom cycle of construction machinery industry, which began in early 2016, is mainly driven by the recovery of traditional downstream fields such as infrastructure and real estate, as well as other factors such as manual substitution, equipment renewal and export increase.
With the gradual end of the peak of equipment renewal, the weakening of artificial substitution effect and the weakening trend of downstream demand, domestic demand is expected to gradually fall. Although exports have benefited from the epidemic and increased rapidly, their proportion is still low, and with the gradual recovery of foreign supply chains, exports are also likely to decline. Therefore, we expect that the demand of the construction machinery industry will gradually return to the normal level in the future and maintain the "overweight" rating of the industry.
