A few days ago, the Politburo held a meeting, which pointed out that it is necessary to increase the hedging of macro policies and effectively expand domestic demand. In terms of fiscal policy, it is appropriate to raise the fiscal deficit ratio, issue additional special national debts, and special local government debts for infrastructure and tax cuts.
1. Overweight counter-cyclical policies
The Politburo meeting was held, the counter-cyclical policy was overweight, the annual growth rate of infrastructure was stronger than expected, and the decline in loan interest rates was positive for real estate. Compared with previous years, in 2020, the Ministry of Finance issued special debts earlier and more credits. As of March 19, a total of 1.0134 trillion yuan of special debts was issued, accounting for 78.6% of the special debts issued in advance. It is expected that the scale of local special bonds will increase to more than 3 trillion in 2020. According to policy requirements, special bonds are mainly invested in infrastructure projects. The new infrastructure represents the future direction and is expected to continue to maintain rapid growth, but traditional infrastructure is the main force of reverse cycle adjustment. In 2019, the investment in traditional infrastructure exceeded 18 trillion, which is much higher than the investment in new infrastructure, which is about 2.5 trillion. We believe that traditional infrastructure Both the new infrastructure and the new infrastructure are policy-driven, and there is a poor expectation in the market in terms of the stimulus intensity of traditional infrastructure. In addition, the meeting proposed to lead the loan market interest rate downward, which means that there will still be downward space for LPR in the future, which will benefit developers, such as loosening land and loosening financing.
2. Press the "fast forward button" to resume the construction machinery
The press conference of the National Development and Reform Commission mentioned on March 21 that among the 11,000 key projects in all provinces except Hubei, as of March 20, the rate of resumption of key projects was 89%, and the rate of resumption of key projects in the southern region was 98%. The northern region weighs 60%. As the follow-up resumption rate is further improved and workers are in place, the demand for construction machinery from infrastructure projects will be further released. Since the resumption of construction machinery companies in February, OEMs such as Sany and XCMG have not only achieved close to 100% recovery rates themselves, but also helped suppliers and related logistics and trade companies to resume work and open up the industrial chain. The OEM opened an online platform, opened offline channels, drove orders with full horsepower, and busy shipping, pressing the "fast forward button" to resume production. March 2019 is the peak period of annual sales. It is expected that sales of construction machinery such as excavators and pump trucks will be flat compared with the same period last year in March this year, exceeding market expectations.
Third and second quarter excavator sales will exceed expectations
Judging that sales of excavators in the second quarter will exceed market expectations: sales of excavators are expected to grow by 50% in April and 40% in the second quarter. 1. According to survey feedback, since mid-to-late March, construction machinery sales have risen rapidly, and some models have begun to be out of stock. It is expected that sales of excavators will be flat year-on-year in March, exceeding market expectations. The sales volume of the excavator industry in January-February decreased by 37% year-on-year, and the decline in January-March is expected to narrow to about 20%. With the further advancement of downstream resumption, the peak season shifted back, and the sales growth rate of the excavator industry was initially judged to be a positive month-on-month growth rate in April, but the year-on-year growth rate exceeded 50%. 2. From another perspective to verify from the core parts factory, downstream OEMs actively take delivery to cope with the rapid recovery of demand. In March, excavator cylinder production reached a record high, and there was a time lag between the sales of parts and the sales of the whole machine. The production of oil cylinders hits a record high, and the sales volume of excavators in April is expected to reach a record high. 3. Considering that the current domestic investment in downstream infrastructure and real estate has exceeded expectations at the beginning of the year, the demand cycle for the replacement of superimposed excavators has not been completed. It is expected that the annual growth rate of excavator sales in 2020 will be about 10%. Based on the 10% growth calculation for the whole year, we judge that if the second quarter fully covers the gap in the first quarter excavator sales, the single quarter sales growth rate in the second quarter will be about 40%, exceeding market expectations.
4. Investment advice
Recommend to increase the strength of construction machinery leaders, the main leader's profit forecast remains unchanged. Moreover, in the medium and long term, factors such as increased demand for domestic equipment renewal, enhanced environmental protection, and artificial substitution continue to drive the increase in sales of construction machinery, and are optimistic about the mainframe and spare parts of construction machinery. Continue to recommend Sany Heavy Industry (600031, shares), Hengli Hydraulics (601100, shares), XCMG (000425, shares), Zoomlion (000157, shares).
risk warning. Infrastructure and real estate investment were below expected risks, macro-policy control risks, and the spread of overseas new coronary pneumonia epidemics exceeded expectations.
