On the one hand, listed construction machinery companies have published their excellent "transcripts" in the first half of the year; on the other hand, the terminal market also has good news.
Information from various sources shows that the sales of excavators in July increased by more than 40% year-on-year. The boom of construction machinery was not weak in the off-season, and the market performance exceeded expectations.
The construction machinery market is hot
July is the beginning of the second half of the year and a magnifying glass of industry trends.
After grassroots investigation and market research, CME Engineering Machinery Network believes that sales of excavators (including exports) in July 2020 are expected to reach 17,500 units, a year-on-year growth rate of about 42%. Among them, 15,200 units in the domestic market, a year-on-year growth rate of about 49%; about 2,300 units in the export market, a year-on-year growth rate of about 7%.
Guojin Securities believes that the current schedule of core parts manufacturers in June and July has increased by more than 70% year-on-year. Combined with the inventory consumption of OEMs, it is expected that excavator sales in July will continue to maintain a high-speed growth year-on-year. The growth rate is initially expected in July. Above 60%, the annual sales of excavators are expected to approach 300,000 units, and the growth rate is expected to exceed 25%.
A person in charge of Sany Heavy Industry Marketing Company said that at present, the application scenarios of construction machinery and equipment such as excavators are very wide, not only for traditional infrastructure such as bridge repair and road paving, but also for the new infrastructure to bring various types of urban small-scale engineering construction climax, such as new energy. Charging piles and 5G base stations will also increase demand for construction machinery and equipment. In addition, business scenarios such as urbanization and speeding up infrastructure construction in rural areas are also driving forces for the ever-increasing market demand for excavators.
The performance of leading companies increased significantly in the first half of the year
The continuous surge in excavator sales has added to the icing on the cake for the first half of the report card of related listed companies.
Zoomlion released the 2020 semi-annual results forecast on July 14. The announcement shows that the net profit attributable to shareholders of listed companies from January to June is expected to be 3.8 billion to 4.2 billion yuan, an increase of 47.50%-63.03% compared with the same period last year.
Eddie Precision released the report card for the first half of 2020 on July 22. During the reporting period, the company's operating income was 1.094 billion yuan, a year-on-year increase of 47.26%, and the net profit attributable to shareholders of listed companies was 294 million yuan, a year-on-year increase of 61.93%.
Sany Heavy Industry has not yet released its semi-annual report. However, the reporter learned from the company that in the first half of 2020, SANY’s various operating performances have been on the rise, achieving historical breakthroughs.
The industry boom will continue for a long time
Regarding the boom trend of construction machinery in the second half of the year, industry insiders believe that two major factors are driving the industry to continue to grow.
First, strong support for downstream real estate development, infrastructure investment, and favorable macroeconomic policies have ensured an increase in demand for construction machinery products such as excavators.
As of mid-July, the 3.75 trillion yuan of new local government special bonds approved by the National People's Congress have been issued 2.24 trillion yuan, with expenditures of 1.9 trillion yuan, about 1.5 trillion yuan of special bonds are pending issuance, of which over 80% of the special bonds are invested Three major areas such as transportation infrastructure. The State Council urges local governments to speed up the issuance of bonds, support the “two new projects and one heavyweight”, and the construction of public health facilities, which will help drive the growth of infrastructure investment in the second half of the year.
Haitong Securities further pointed out that the weather in the south generally turned fine in late July, and the start of infrastructure projects may enter the peak season in August after the rainy season. With the commencement of new projects in August, it is expected that the driving force of demand will switch to "starting", and construction machinery is expected to enter the second "small peak season" for sales from the "low season".
Second, environmental protection upgrades will facilitate the elimination and replacement of old models of excavators, thereby providing additional demand for construction machinery.
At present, there are about 1.5 million excavators in the market, and more than 500,000 units of China's second and lower equipment. In addition to old equipment, the demand for inventory renewal accounts for nearly 50%. With the improvement of emission standards under environmental protection requirements, the demand for replacement is expected to inject additional driving force into the sales of new machines for construction machinery companies. Concrete and crane equipment are expected to see rapid growth in relay excavators.
The reporter learned that based on environmental protection and investment factors, the China Construction Machinery Industry Association believes that the industry's prosperity will continue for a long time. The association predicts that from 2021 to 2025, the average annual growth rate of the construction machinery industry will reach 5%.
Which listed companies have growth potential?
Haitong Securities believes that with the significant rebound in downstream infrastructure investment, the construction machinery sector is expected to usher in investment opportunities for the entire industry chain. It is recommended to pay attention to Sany Heavy Industries, the leading OEM with low valuations and a potential rise in market share, and Hengli Hydraulics, which has accelerated import substitution and whose performance is expected to continue to exceed expectations. At the same time, it benefits from prefabricated buildings and construction machinery that is on the downward trend in interest rates. , Pay attention to Zoomlion, Xugong Machinery, etc.
Minsheng Securities said that considering the current valuation of leading companies is still at a low level, as the time window disclosed in the semi-annual report is approaching, leading construction machinery with low valuation and stable performance are expected to gain market favor. At the same time, the overseas epidemic has affected the supply of overseas parts and components, and the potential risks of the construction machinery supply chain have attracted the attention of domestic companies, and the localization rate of core parts is expected to increase.
