As major OEMs competed for market share in the early stage, product prices continued to decline. After the domestic brand excavator market share reached nearly 70%, this year's domestic excavator ushered in a price increase.
In April, Sany Heavy Industry (600031.SH) successively raised the prices of concrete pump trucks and excavators by more than 5%. Many construction machinery companies such as Zoomlion Heavy Industry (000157.SZ), Xugong Machinery (000425.SZ), Liugong (000528.SZ) have raised prices for excavators and other products, and the price increases are basically consistent with Sany Heavy Industry. .
According to industry sources, after the decline in excavator sales in the first two months, sales in March increased by 11.6% year-on-year, and sales rebounded rapidly. Some analysts pointed out that the excavator industry is expected to grow by about 10% in 2020. In the case of insufficient supply of foreign excavators, domestic domestic excavator parts production companies such as Hengli Hydraulics and Eddie Precision may increase the speed of domestic substitution, and the domestic excavator supply chain will usher in opportunities.
Excavator sales rebounded rapidly in March
On April 9th, Sany Heavy Industry Pumping Division issued a letter of caution to customers. Due to the spread of the new overseas epidemic, European heavy truck chassis manufacturers have successively announced suspension or reduction of production, and the shortage of imported chassis resources for pump trucks. , The company decided to increase the price of concrete pump trucks by 5% -10%. On April 11th, Sany Heavy Industry once again issued a letter of advisory to customers, the price of excavators will be raised, of which small excavations will be increased by 10% and Zhongda will be increased by 5%.
In fact, not only Sany Heavy Industry, but also Zhonglian Heavy Industry, Xugong, Liugong and other construction machinery companies began to raise prices for pump trucks, excavators and other products, and the price increase was basically the same as Sany Heavy Industry.
According to a report released by Guoyuan Securities, as of the first quarter of 2020, Sany Heavy Industry's excavator market share reached 26.6%, and only Sany's has increased by nearly 25.5% from 1.1% in 2006, becoming the localization of excavator host The main contributor. The Xugong and Liugong markets accounted for 17.0% and 8.3%, respectively, an increase of 2.8% and 1% compared to 2019. The former foreign giants Caterpillar and Komatsu have gradually shrunk their share in the excavator market. Their market shares in the first quarter of 2020 were only 10.6% and 3.0%, which were 1.8 and 0.7 percentage points lower than in 2019, respectively. The market share of domestic brand excavators reached 69%, an increase of 6 percentage points from 2019, and the Japanese, Korean, and European and American brand markets all declined.
Domestic excavators have an advantage in the competition with foreign-owned excavators, and more importantly, the demand for excavators is strong, or the reason for this price increase.
Data show that the sales of excavators in January-February 2020 were 19,222 units, a year-on-year decrease of 37%. The big year-on-year decline in excavator sales was mainly due to domestic factors, while overseas engineering demand was not affected by the Spring Festival. Export sales from January to February were 4,555 units, a year-on-year increase of 48.2%. In the current situation, the above data still exceeds market expectations. In March, construction projects began to start one after another. The data showed that the sales of excavators (including exports) were 49,400 units, an increase of 11.6% year-on-year, and the sales volume rebounded rapidly. This is also the reason for excavator manufacturers to increase their prices.
With steady growth in demand, infrastructure investment is expected to continue to increase. As of the end of March, a total of 1.08 trillion yuan of new special bonds were issued across the country. The issuance scale increased by 63% year-on-year, and the proportion of investment in infrastructure was greatly increased. Guoyuan Securities Research predicts that the excavator industry will grow at a rate of about 10% in 2020, and the growth rate of cranes will exceed 10%. At the same time, 2020-2022 will be the peak period for pump truck replacement. It is expected that the growth rate of concrete machinery sales in 2020 is expected to reach 20%.
Opportunities for domestic replacement of excavator parts ushered in
The demand for excavators at home and abroad is still maintained at a high level, and in the case of problems in the supply chain of imported parts, the domestic supply chain may usher in opportunities for substitution.
According to the official website of Sany Heavy Industry, in order to alleviate the operating pressure of its partners, on March 16, Sany Golden Ticket announced that it will lower its annual interest rate for financing from 5% to 4.5% to help cooperative suppliers overcome difficulties. According to the calculation of issuing 20 billion yuan of gold tickets throughout the year, this time the interest rate is reduced by 10%, which is equivalent to helping suppliers save about 100 million yuan in financing interest every year.
Currently, more than 100 suppliers have completed effective registration. Huang Jianlong, chief financial officer of Sany Group, said that Sany is committed to building a "supplier alliance" and hopes to establish a "longer, more stable, and closer" strategic partnership with upstream and downstream suppliers through platforms such as "gold ticket". It proves that Sany Group has made active efforts to maintain the stability of the domestic supply chain.
The important parts of excavators are hydraulic pumps, motors and hydraulic valves. Among them, Hengli Hydraulics is mainly engaged in the research, development, production and sales of special cylinders for excavators and non-standard cylinders for heavy equipment. It is the four major domestic suppliers of excavator cylinders. One, the main products of Eddy Precision are hydraulic breakers, hydraulic pumps, hydraulic motors, and multi-way control valves, which also have strong competitiveness.
Hengli Hydraulics began research and development of new products such as hydraulic pump valves and hydraulic systems in 2013. The excavator cylinders are the first to achieve import substitution. At present, the company's customers include Carter, Sany, Xugong and other domestic and foreign leading companies. Pumps and valves are in the stage of rapid substitution imports The market share of excavator cylinders is more than 50%. As of the end of last year, the main control valve pumps for small and medium-sized excavators have been supplied in batches, the market share has steadily increased, and product sales and sales have increased significantly; and Eddie Precision has successfully developed The hydraulic pumps, walking and rotary motors, multi-way control valves and other products have achieved the localization of high-end hydraulic parts, breaking the long-term monopoly of foreign brands.
Hengli Hydraulics estimated that the net profit attributable to shareholders of listed companies last year was 1.23 billion yuan to 1.280 billion yuan, an increase of 47.02% to 52.99% year-on-year; Aidi Precision achieved a net profit attributable to shareholders of listed companies of 342 million yuan, an increase of 51.96% year-on-year.
With the increase in demand for excavators this year, while domestic excavator manufacturers attach importance to the domestic supply chain, the performance of domestic excavator parts companies such as Hengli Hydraulics and Eddy Precision may further increase.
