In May, sales of excavators exceeded +68% year-on-year and exceeded expectations, the contradiction between supply and demand eased
The sales volume of excavators in May exceeded +68% year-on-year, and the contradiction of insufficient supply in the industry has eased. In May 2020, 31,744 excavators were sold, +68% year-on-year, exceeding market expectations by 50%. In May, 29,521 units were domestic, +76.3% year-on-year; 2,223 units were exported, +3.3% year-on-year. From January to May 2020, a total of 145,800 units were sold, +19.4% year-on-year. Among them, 134,169 domestic units, +19.3% year-on-year; 11,631 units exported, +20.7% year-on-year, a decline, accounting for 8.7% of total sales. Since March, the industry has been in short supply and production capacity has been tight. In May, the shortage of supply has eased. It is expected that the increase in demand after the impact of the epidemic from June and July will gradually weaken and the market trend will return to normal levels.
Mining continues to lead the industry growth. In terms of tonnage in the domestic market, sales of small excavations (0-20 tons) in May were 19,299 units, +99.9% year-on-year; sales of medium excavations (20-30 tons) were 8,170 units, +84.5% year-on-year; large excavations (>30 tons) 4,345 units were sold, +67.9% year-on-year. Mining continues to lead the industry growth. In May, domestic sales of small, medium and large excavations accounted for 60.8%/25.7%/13.7%, respectively, +2.8pct/-0.3pct/-1.3pct year-on-year. In the long run, the proportion of small (micro) mining driven by the demand for machine generation will still tend to increase. In the short term, with the recovery of demand for mining in the north, especially in the northwest, we expect that the demand for medium and large-scale excavations will gradually be released.
The sales volume of domestic leading excavators in May was +61% year-on-year, and the cumulative year-on-year market share was 19%. The monthly market share remained stable at 25%; the sales volume of the second-largest domestic excavator in May was +75% year-on-year and the market share was 15%; The sales volume of overseas leading excavators was +33% year-on-year, and the monthly market share was 10%.
2 Production of core parts manufacturers is booming, and sales of excavators are expected to continue during the peak season
Production of core parts manufacturers is booming, and the peak season for excavator sales is expected to continue in 2020. Excavator core parts manufacturers have been continuously overloading their production since March. In June, the production schedule has declined month-on-month, but it has continued to rise year-on-year. Considering the gradual implementation of the follow-up infrastructure policies, the growth rate of infrastructure is expected to improve, and industry demand will be released simultaneously. We judge that the peak season of excavator sales in 2020 is expected to continue. As the leading excavator, Sany has an increasing market share, and sales growth is expected to reach more than 10%.
The target of special debts has landed, and construction machinery has grown deterministically. In May, the State Council released the government work report for 2020, planning to arrange a full year deficit rate of 3.6% or more, issue 1 trillion special anti-epidemic bonds, local government special bonds 3.75 trillion yuan, and increase the proportion of special bonds that can be used as project capital . Since the beginning of this year, there have been continuous catalysts for infrastructure policies. We believe that the annual growth rate of infrastructure investment is about 8%-10%, the internal demand for upstream construction machinery has increased, and the high certainty of the construction machinery industry continues.
Investment Advice
Key recommendations [Sany Heavy Industry (19.500, -0.20, -1.02%)]: The competitive advantage of the full range of product lines and the continuous increase in the concentration of leading companies; exports continue to exceed expectations; leading industry valuation premium. [Heng Li Hydraulics (74.650, -0.89, -1.18%)] The leading domestic hydraulic industry, overseas expansion + full discharge of pump valves, growth is expected. [Zhonglian Heavy Industry (6.250, -0.15, -2.34%)] The crane and concrete machine leader, the concrete machine has just started the update cycle, and the sales of tower cranes are expected to continue to exceed expectations. It is recommended to pay attention to Liugong (6.510, -0.03, -0.46%) and China Dragon.
