In the process of social and economic construction, the development of heavy industry has driven the derivation and growth of many local economies, and is deeply valued by the secondary market and economic market. However, with the development of the social era, the heavy industry is gradually saturated and has a downward trend.
According to the data, since February 18, 2021, the share price of Sany Heavy Industry, a heavy industrial enterprise, has fallen from 47.33 yuan to 16.50 yuan, down more than 65%. Sany Heavy Industry's share price fluctuates too much. The market defines this phenomenon as the weak cycle of the cyclical industry, and believes that the whole construction machinery industry has fallen into the quagmire of sharp decline, resulting in certain problems.
Construction machinery enters a weak cycle
According to the stock market situation released by Dongfang fortune, the market value of Sany Heavy Industry was 145.5 billion on March 28, which has evaporated 281.3 billion yuan compared with the highest point of 426.8 billion yuan in 2021. Although the market value fell, Sany Heavy Industry is still one of the largest enterprises in the construction machinery industry, and Liang Wengen led Sany group to the front of the world. It is obviously unreasonable to dismiss due to the fluctuation of market value, but it is a foregone conclusion that the construction machinery industry has entered a weak cycle.
Why can the strong and weak cycle theory become a lookout for the trend of the construction machinery industry?
Firstly, cyclical industry refers to the industry whose prosperity is highly positively correlated with the external macroeconomic environment and presents a cyclical cycle. Cyclical industries are characterized by cyclical fluctuations in product prices, demand and production capacity. When the peak of industry prosperity comes, product demand rises and prices rise sharply. In order to meet the suddenly expanding demand, production capacity expands greatly, while it is just the opposite in the depression.
Most people in China believe that construction machinery is cyclical, and its main demand is reflected in infrastructure investment, real estate speculation and the renewal of construction machinery. Some people believe that the service life of general construction machinery is 8-12 years. The last change in excavator sales in China began in 2004, peaked in 2011, and then declined all the way. It fell to the bottom in 2015, which has experienced a cycle of nearly ten years.
After recovering in 2015, it has gone through a six-year rising period to 2020. It seems that the construction machinery industry has reached the peak of the industry in 2021. According to public data, from 2017 to 2020, the domestic construction machinery industry has developed cyclically, continuously and rapidly, with a year-on-year growth of more than 10%. In 2017, the revenue of the whole industry was 540.3 billion yuan, and in 2020, the revenue of the whole industry was 775.1 billion yuan. In 2021, the operating revenue of the whole industry exceeded 800 billion yuan, with a year-on-year increase of about 3%.
However, as of the first half of 2021, the data is in the state of growth, and the trend of the stock market has changed in the second half of 2021. Therefore, many people believe that the next stage is the decline stage of construction machinery, that is, the weak cycle described by the market.
As the market value of Sany Heavy industry continues to fall, the market believes that the weak cycle will come after all. Therefore, the characteristic of too strong periodicity of the industry is considered to be the fundamental reason why the secondary market is not optimistic about the track of the industry.
In fact, according to the statistics of 26 excavator manufacturers by China Construction Machinery Industry Association, 40090 excavators were sold from January to February 2022, a year-on-year decrease of 16.3%; Among them, there were 25330 sets in China, a year-on-year decrease of 37.6%. 14760 units were exported, a year-on-year increase of 101%. Data confirmed that the domestic market may be the support basis for the weak cycle, but the growth of export data may become a new turnaround.
The market labels construction machinery periodically, which has also become the biggest disadvantage in the industry that is not favored by the secondary market. Construction machinery enterprises such as Sany, Zoomlion and XCMG have to go through ups and downs in the industry. Moreover, in the construction machinery industry, competition is particularly important. Peers compete with each other for technical ability and product ability to highlight their strength, so as to gain the upper hand in sales, For the top five brands in the industry, they have their own stable channels. Perhaps it is more important to explore whether cyclical problems can be alleviated and solved.
What are the characteristics of this weak cycle?
The last round of excavators had been in a downturn for five years (2011-2015). Will this time be different?
To answer this question, we must first look at the industry background.
In the past, although China's economic growth rate was high, it was concentrated in medium and low-end industries, belonging to rough development. Real estate also has a great weight in economic development. This is the main reason why excavator sales are highly related to real estate and infrastructure investment. However, although the changes in excavator sales since 2016 are still closely related to infrastructure + real estate investment, there has been some independence.
The reason is that in addition to the outbreak of renewal demand, after the high-level put forward the concept of high-quality development, the industry also has more new characteristics different from the past.
Intellectualization
In recent years, with the disappearance of demographic dividend, "machine generation" has gradually become an important trend of China's economic development. On the one hand, it will increase the demand for construction machinery, on the other hand, the intelligence of equipment is becoming more and more important. The former brings demand increment, while the latter determines the size of increment and the competitiveness of enterprises.
The construction machinery industry has formed a consensus on Intellectualization and has a thorough understanding. In addition to the substitution of equipment for manpower, driverless and intelligent production have also become the development direction of construction machinery enterprises. Among them, driverless construction, which has gradually emerged in the past two years, has made greater progress in 2021.
In September 2021, the "first time" column reported that XCMG unmanned cluster carried out maintenance operation in Suzhou section of Nanjing Shanghai Expressway, which is the first successful application of unmanned cluster in high-speed pavement maintenance construction in the world. In October and November, Sany also realized the intelligent construction of unmanned spreader group in Hunan and Shandong respectively. Liugong driverless vibration rolling equipment also appeared in Gansu construction in August. In the same month, Zoomlion, the global leader of tower crane, demonstrated the remote intelligent control system of 5g tower crane for the first time and completed the first hoisting.
It can be seen that the artificial intelligence, 5g, Beidou high-precision positioning and other technologies required for unmanned driving have already entered the arsenal of construction machinery enterprises.
In addition to the changes on the demand side, the supply side is mainly reflected in the application of artificial intelligence, 5g, industrial Internet and other technologies in the production field, which will significantly improve production efficiency, save costs and enhance competitiveness.
In September, Sany piling machine Beijing factory was selected into the list of "lighthouse factories" in the global manufacturing industry in the new issue of the world economic forum, becoming the first certified "lighthouse factory" in the global heavy industry. In April, Zoomlion launched the management consulting project of "facing the future and leading for 30 years", and worked with Accenture to build a "lighthouse factory" and an intelligent manufacturing sample of high-end equipment. XCMG machinery has 19 Jiangsu demonstration intelligent workshops and 2 Jiangsu intelligent factories. It is the only enterprise in the industry that has systematically reached level 4 of intelligent manufacturing capability maturity.
new energy
The "double carbon" goal has driven the A-share new energy vehicle sector all the way north, which has not only created "ningwang", but also spawned more companies with a market value of 100 billion yuan.
The layout of construction machinery enterprises in the field of new energy has also lasted for many days. Electrification has long become the development strategy of major enterprises. Industrial vehicles represented by forklifts have even achieved the reverse exceeding of the proportion of electrification.
As of 2021h1, Sany Heavy Industry has launched a total of 26 electric products, and its electric mixer, dump truck, tractor and other products have been promoted and tried in more than 20 cities. The first intelligent power exchange station of Sany group was officially unveiled in November, and the power exchange task can be completed automatically in less than 5 minutes. Zoomlion once disclosed in the semi annual report that it has carried out research and development of nearly 30 new energy products, of which 16 products have been offline. Liugong Electric Loader and concrete equipment were also delivered in batches in July.
In the field of hydrogen energy, Anhui Heli and jiehydrogen technology released the first 4-5-ton hydrogen fuel cell forklift in China. Cummins (China) also landed the hydrogen energy China headquarters in Shanghai port.
internationalization
While the sales volume of domestic excavators has decreased for eight consecutive years, the export data of excavators in China is very bright.
According to the data of China Construction Machinery Industry Association, from January to November 2021, the sales volume of domestic excavators was 258900, a year-on-year decrease of 2.49%; However, 59800 units were exported, a year-on-year increase of 95.9%. Coincidentally, in the first 11 months, when the sales volume of domestic loaders increased by only 2.19% year-on-year, the export sales volume increased by 43.9% year-on-year. The proportion of export sales increased significantly.
The competitiveness of China's construction machinery enterprises is not only reflected in the large scale, but also significantly stronger from the perspective of strength. In 2021, China's construction machinery enterprises do have many "show muscle" operations.
In October, Zoomlion, the global leader of tower crane, held the offline ceremony of the world's largest rotary tower crane; In November, the concrete pump truck became the third Zoomlion product to win the national manufacturing single champion after tower crane and crawler crane. Liugong group's Excavator company, agricultural machinery company and olan air conditioner were newly selected as national specialized and new enterprises.
Crane is an important place for the three giants to show their muscles. In March, Zoomlion set a new record for China's export of the largest tonnage cranes overseas; Sany Heavy Industry has set a new record of the world's largest tonnage crane; Xca130 all terrain crane independently developed by XCMG_ E. It has obtained the first EU wvta certificate for out of gauge vehicles from local enterprises.
With the support of product strength, Sany Heavy Industry's overseas sales of excavators exceeded 20000 in November, with an average growth rate of more than 500% in the United Kingdom, Canada, Italy and other European and American developed countries. The export volume of XCMG wheeled cranes in the first July increased by 51% year-on-year, while the export to the high-end markets in Europe, America and Australia increased by more than 150% year-on-year. Liugong's overall overseas sales in the first three quarters also increased by 70% year-on-year, and the overall sales in Europe even reached a year-on-year growth rate of 120%.
In addition, local enterprises have made great breakthroughs in the field of shield machines. China railway equipment exported to Europe, and the super large diameter (12.2m) earth pressure balance shield machine successfully passed the online acceptance; CCCC Tianhe independently developed and exported China's first ultra large diameter shield machine overseas, and completed the Bangladesh project in October, breaking the monopoly of developed countries on the overseas ultra large diameter shield market.
Seek the next growth point
Many people believe that periodicity brings short-term downhill to enterprises. Enterprises get multiple times more resources in strong cycles than normal enterprises. Then the weak cycle may bring a gentle period of the industry, which can give these construction machinery enterprises room for technological upgrading or technological upgrading.
Some investors also believe that the investment risk of cyclical industries is too high. Once the enterprise or industry enters the weak cycle, the value of the enterprise will continue to degrade. Although there is the possibility of growth in the future, failure in the weak cycle will become the biggest risk for investors. Therefore, the secondary market is very cautious about cyclical industries.
When the weak cycle of the industry is coming, some people who know the industry believe that in the future, the industry will face three trends: seeking growth from the stock market, the transformation and development of digitization, intelligence and green energy saving of the construction machinery industry, and the new demand of customers for products after digitization.
From the above data, it can be seen that the problem faced by construction machinery is that its domestic development is weak, but its export demand is growing. Therefore, if the domestic industry enters a weak cycle, it may be possible to make deep development in terms of export to make up for the vacancy in the domestic market.
In addition, the environmental protection and over limit policies in the construction machinery industry are becoming stricter and close to the standard implementation day, which is expected to shorten the renewal cycle of construction machinery and become a new way out for the growth of industry demand.
The new trend is one of the directions of future growth. At this stage, Sany Heavy Industry is not only facing the impact of weak cycle, but also the change of top management will trigger discussion in the market. However, in these aspects, what is explored is only the future development and risks of the enterprise.
The top management is the decision of the enterprise in a specific period, and the new top management of Sany Heavy Industry is changed after the internal recognition of the enterprise, which is not too controversial. Instead, it pays attention to the problem of growth. According to relevant data, the gross profit margin of Sany Heavy Industry is high, increasing from 30.34% in 2010 to 38.6% in 2019, an increase of 8.3%, reaching a high of 40.6% in 2017. Compared with traditional concrete machinery and hoisting machinery, the gross profit margin is relatively low, In 2019, 29.8% and 24.3% respectively.
High gross profit margin has become an important factor for Sany Heavy Industry to achieve profitability. At the same time, it is also an important means for enterprises to face the weak cycle calmly. Compared with these large heavy industry enterprises, the weak cycle is not necessarily a risk, but may also be the precipitation before the tuyere, so as to make far more achievements in the next tuyere period.
Generally speaking, construction machinery has entered the weak cycle stage. Although some investors are not optimistic about it, for enterprises, risks and opportunities always coexist. It may be difficult to face the sales dilemma on the downhill road, but the future freshmen will still be the peak.
Is there any chance for mechanical equipment in weak cycle?
"After the baptism of the last cycle, the construction machinery industry has become more mature and more adaptable. There is a unified understanding in the whole industry that the total scale is relatively stable and there can be no drastic changes. Therefore, in expanding the market, the industry enterprises have done something or not, ensuring that there is no cliff like decline in the industry, and the overall level is still the highest in history." Analysis by LV Ying, Deputy Secretary General of China Construction Machinery Industry Association.
Favorable domestic and foreign conditions ease the downward weakness
"As a post cycle product of construction machinery, construction hoisting machinery will continue to have a peak period of equipment renewal in the next two years. It is expected to relay excavators and prolong the boom cycle of construction machinery." Yu Lekang said.
"Local infrastructure projects have been launched one after another. At the same time, there are" two new and one heavy ". The key projects represented by Sichuan Tibet railway have been started one after another, which can form a huge pulling effect on the concrete machinery industry. I think it is worth looking forward to the market development in 2022. There must be a relatively good growth rate in 2022 compared with 2021." Fu Zhongxuan said.
Compared with the last downward cycle, it is obvious that China's construction machinery market is more mature, the downstream market demand is stable, and the continuous promotion of overseas expansion will also smooth the cyclical fluctuations of the construction machinery market.
In December 2021, the Ministry of Finance issued 1.46 trillion yuan of new special debt in 2022 to all underground, about three months ahead of 2021. The special debt will focus on transportation infrastructure, guaranteed housing projects, urban renovation and transformation, municipal and industrial park infrastructure and other important projects. Senior officials of the central government and various ministries and commissions have repeatedly said that they should carry out infrastructure investment moderately ahead of schedule, accelerate the promotion of 102 major engineering projects in the 14th five year plan, implement the special bonds issued by local governments in the fourth quarter of 2021 into specific projects as soon as possible in accordance with the requirements of "funds follow the projects", pay close attention to the issued amount, and strive to form more physical workload in the first quarter.
In terms of overseas exports, the export amount of China's construction machinery has increased significantly in recent 10 years. From 2009 to 2019, the export amount increased from US $7.7 billion to US $24.3 billion, especially the overseas income of leading enterprises. In 2021, the export growth of construction machinery is nearly doubled, which is expected to reach US $34 billion, with a surplus of about US $30 billion.
Despite the complex external environment, in the medium and long term, the overseas market expansion of China's construction machinery will still maintain a certain growth rate, which is expected to further weaken the cyclical downward trend caused by the lack of domestic incremental market. Some institutions predict that the annual sales volume of China's excavators in the next three years is expected to stabilize at about 300000 units, without a sharp decline.
As the number one project of China's railway construction, the construction of Sichuan Tibet railway has been started. Nearly 100 sets of Zoomlion concrete equipment have been constructed, container mixing plants have been installed and put into operation, and the tunnel specific concrete pump customized and developed for the construction environment of Sichuan Tibet tunnel has been successfully offline and will be delivered to customers soon; Orders for super tunnel equipment of China railway construction heavy industry are pouring in, with full power and efficient production; Liugong and Lingong pure electric loaders are experiencing the severe test of plateau extreme working conditions, expanding growth space for new energy engineering machinery.
With the commencement of domestic large-scale project construction, various complex and difficult working conditions have put forward greater tests and demands for large hoisting equipment, rotary drilling rig and full rotary full casing drilling rig with stronger construction capacity and larger drilling diameter. Zoomlion and XCMG construction machinery have a lifting torque of 10000 ton meter tower crane, and XCMG and Shanhe intelligent output torque of 1200kN Large rotary drilling rigs of more than m are about to come on stage to meet the challenge.
