According to CME observations, the sales volume of excavators (including exports) in March 2021 is estimated to be 72,000 units, a year-on-year increase of 45.7% and a month-on-month increase of 154.4%, refreshing the historical monthly high and exceeding expectations. In terms of market segments: domestic sales are expected to be 67,000 units, a year-on-year increase of 43.8%; export sales are expected to be 5,000 units, a year-on-year increase of 78.7%.
Construction machinery data is expected to continue to exceed expectations. The sales data this time further confirmed my judgment about the industry's sales trends.
1. The peak season is coming and the superimposed special debt exceeds expectations, driving the high growth of excavator sales
March is the traditional "high sales season" for excavators, and the start of real estate and construction sites has strongly stimulated the demand for excavators. After the end of the Spring Festival holiday this year, the groundbreaking ceremonies of major projects were launched intensively across the country, and the investment started steadily. According to incomplete statistics, in February 2021, 9,533 major projects were started across the country, with a total investment of 6.52 trillion yuan, an increase of 125.6% from the previous month and a year-on-year increase of 658.6%.
In addition, the government work report of the "Two Sessions" proposed that local government special debts were planned to be 3.65 trillion yuan, which was better than the expected 3 trillion to 3.5 trillion yuan. 610 billion yuan is allocated for investment in the central budget. Continue to support major projects that promote coordinated regional development, promote the construction of "two new projects and one heavy", implement a number of major projects in transportation, energy, and water conservancy, and develop a modern logistics system.
At the beginning of March, the Ministry of Finance has issued some new special bond quotas of 1.77 trillion yuan in advance in accordance with the procedures, and requested local governments to match the special bond quotas to specific projects as soon as possible. With the approval of the project and the advancement of construction, it is expected to further stimulate the demand for construction machinery represented by excavators.
2. The US 3 trillion infrastructure plan may be announced in the near future. If successful, it is expected to drive overseas sales of construction machinery
On March 23, it was reported that the economic adviser to US President Biden was proposing to spend $3 trillion on a massive infrastructure project. The stimulus plan is expected to be the largest infrastructure plan in the United States since Roosevelt's New Deal. In terms of infrastructure, nearly $1 trillion has been invested in the construction of roads and bridges, railways, ports, electric vehicle charging stations, improvements to the power grid and other power industry facilities. Democrats in the White House and the U.S. Congress are already drafting strategies, which may be announced this month. But the earliest passage may be until the end of the year.
In 2020, the global construction machinery market was severely affected by the new crown epidemic, and demand in the industrial chain was sluggish. In 2020, the revenue of Caterpillar, John Deere, Volvo, Komatsu, and Hitachi decreased by 23%, 9%, 9%, 14% and respectively. 3%, the performance of overseas construction machinery companies has declined to a certain extent. China's resumption of work and production is ahead of other countries and has a positive effect on the stability of the industrial chain. Domestic companies have performed well and their market share is expected to increase. The launch of the US infrastructure plan will drive the overseas sales of domestic construction machinery.
3. Related companies
Sunward Intelligent [002097]:
The company's main business is piling machinery (55%) and construction machinery (30%) such as excavators. The company expects to realize net profit attributable to the parent company in the first quarter of 2021 from RMB 244 million to 311 million, a year-on-year increase of 80%-130%. The company's good performance in the first quarter was mainly due to the continued high boom in the construction machinery industry, and the shortage of sales drove the company's production capacity to further release. It is expected that the company's construction machinery sector revenue in the first quarter will increase by more than 100% over the same period last year.
Xugong Machinery [000425]:
The company's main business is hoisting machinery (36%), shoveling machinery (9%), road machinery and so on. Wheeled cranes have the largest market share in the world, and domestic truck cranes have a market share of 40%. After the mixed reform, high-quality assets such as excavators, concrete and tower cranes of the parent company are expected to be injected into XCMG.
Liugong[000528]:
The company's main business is earth and stone shoveling machinery, other construction machinery, accessories and so on. For an international company with nearly 20 product lines, the mixed correction has entered the final negotiation stage. The leading market share of the loader industry is 15.4% (second only to Lonking and Lingong), the excavator market share is 5.83%, the road roller market share is 9.38%, and the grader market share is 15.77%, ranking second.
