Affected by the epidemic at the beginning of the year, the market became more concerned about whether the excavator industry could maintain its prosperity; as the epidemic was gradually brought under control, the sales of the excavator industry achieved rapid growth. The cumulative sales in the first half of the year increased by 24.2% year-on-year. Looking forward to the whole year of 2020, driven by multiple favorable factors such as expansion of infrastructure investment to guarantee new demand, and tightening of environmental protection and accelerated renewal demand release, the industry will continue to maintain a high level of prosperity. Leading OEMs will rely on their advantages in technology, scale, and channels to increase their performance. With greater certainty, OEMs are expected to usher in a "performance + valuation" double increase in the second half of the year. In addition, upstream parts supporting companies benefit from the continued boom in the excavator industry, and their performance is expected to continue to increase. The agency pointed out that it continues to strongly recommend leading construction machinery companies with high performance certainty and low valuations.
Core logic
1. Sales of excavators in June hit a record high over the same period, up 62.9% year-on-year. Sales in June hit a record high over the same period. In June, the total sales of excavators at home and abroad was 24,625, +62.9% year-on-year, setting a record high for the month. Among them, the domestic sales volume was 21,724 units, which was +74.8% year-on-year; the export sales volume was 2,901 units, which was +7.6% year-on-year.
2. Export resilience is still strong, and the future is expected to continue to increase. Affected by the spread of the overseas epidemic, the export of excavators has been under pressure. Since the beginning of this year, the proportion of exports has declined, but the export sales volume has still maintained a high growth rate, with a year-on-year growth of 7.6% in June and a cumulative year-on-year increase of 17.8% from January to June. Strong. At present, the proportion of exports is still low. With the continuous acceleration of domestic OEMs' overseas business layout, it is expected that the export of excavators is expected to maintain a relatively high growth rate in the future, and there is still room for increase in the proportion.
3. Since the resumption of work, the entire industry chain of excavators has always maintained a high level of prosperity. From the perspective of downstream operations, the operating hours of Komatsu excavators from April to June were 144.0, 147.2, and 126.2 hours/month, respectively, up 3.8%, 3.0% and 1.8% year-on-year, reflecting the high prosperity of the downstream in the second quarter. The leading domestic OEMs seized the industry growth opportunities and continued to create historical success. The production and sales of Sany Heavy Industry, Xugong and Zoomlion continued to break new highs. From the perspective of the upstream core component industry, the spread of the overseas epidemic has accelerated the process of domestic substitution of core components, and the production of core supporting enterprises has reached a record high.
4. The infrastructure construction is expected to increase, and the demand for excavators is delayed but the stamina is sufficient. On May 22, 2020, Premier Li Keqiang of the State Council stated in his government work report that this year plans to arrange local government special bonds of 3.75 trillion yuan, an increase of 1.6 trillion yuan over last year, focusing on supporting both the promotion of consumption and the people’s livelihood and structural adjustments to increase stamina. The "two new and one heavy" construction. In the context of counter-cyclical regulation, the three batches of special bonds issued in advance of 2019.11, 2020.02 and 2020.05 totaled 2.29 trillion yuan, and they were invested in areas such as transportation infrastructure, energy projects, ecological and environmental protection projects, people's livelihood services, municipalities and infrastructure. At present, the remaining 1.46 trillion yuan has not been released. With the release of the remaining special debt in the second half of the year, the demand for construction machinery for the whole year is highly certain.
5. The high growth rate in Q3 is highly certain, and the boom is maintained throughout the year. The operating hours of excavators are still at a high level and the production schedule of parts and components companies has maintained a high year-on-year increase, indicating that the industry's sales volume in July and August is expected to maintain a relatively high growth. The industry growth rate is expected to exceed 50% in July, and the base sales of excavators in 2019Q3 are not high. , 2020Q3 is expected to maintain a relatively high growth rate. New demand and renewal demand resonated, maintaining a high boom throughout the year. On the one hand, in the context of increasing downward pressure on the economy, infrastructure investment is expected to become the main force for stimulating investment and stabilizing economic growth, and the expansion trend is obvious under the catalysis of special debt and deficit rate policies; in addition, real estate investment remains resilient throughout the year , The degree of machine replacement is also deepening, and multiple factors guarantee new demand. On the other hand, the industry is still at the peak of renewal, and the tightening of environmental protection policies has accelerated the release of renewal demand, and the renewal demand is highly certain. In the context of the resonance of new demand and update demand, we expect the excavator industry to sell 294,022 units in 2020, a year-on-year growth rate of 25%.
6. The leading domestic OEMs are expected to usher in a double increase in "performance + valuation". In the context of the high degree of certainty of the industry’s prosperity, leading OEMs have steadily increased their market share by virtue of their advantages in technology, scale, and channels, and their performance growth is more certain. At present, the corresponding valuation of OEMs’ 20-year performance is generally 10 times Around that, there is still room for repair, and OEMs are expected to usher in a double increase in "performance + valuation" in the second half of the year. In addition, upstream parts supporting enterprises benefited from the continuation of the excavator industry boom, and their performance is expected to continue to increase.
Good company
Haitong Securities predicts that although the utilization rate of construction machinery will be affected by the weather in the near future, the sales growth rate of excavators in July is still expected to maintain a +50% growth on a low base. We continue to recommend focusing on Sany Heavy Industry, Hengli Hydraulics, Zhejiang Dingli, Construction Machinery, and Zoomlion, Xugong Machinery, etc.
Minsheng Securities pointed out that the country's counter-cyclical policies are exerting force, and the steady growth of infrastructure is expected to be strengthened again to enhance the industry's prosperity. In addition, benefiting from the cost reduction needs of OEMs and the impact of overseas epidemics, core component manufacturers are expected to take the opportunity to break through and accelerate domestic substitution. Focus on: Sany Heavy Industry, Xugong Machinery, Zoomlion, Hengli Hydraulics, Construction Machinery.
Founder Securities pointed out that it will continue to recommend leading companies in complete machines and core components such as Sany Heavy Industry, Zoomlion, Construction Machinery, Hengli Hydraulics, Xugong Machinery, Zhejiang Dingli, and Aidi Precision.
Industrial Securities pointed out that it is recommended to continue to configure the construction machinery sector, focusing on recommending the core supporting enterprises in the industry chain Hengli Hydraulics, recommending Sany Heavy Industry, Zoomlion, and Eddie Precision; in addition to related companies in the excavator industry chain, continue to recommend overweight Tower crane rental is the leading construction machinery and aerial work platform leading Zhejiang Dingli.
