A few days ago, the Central Economic Work Conference proposed that infrastructure investment should be carried out in a moderate advance. Industry insiders believe that this will benefit the construction machinery industry. Although the industry has entered the adjustment period, whether it is the form of downward cycle remains to be confirmed. At the same time, electric, intelligent, energy-saving and environmental protection are the development trend of the construction machinery industry, and bring the third new opportunity of energy revolution to the industry, and become the new power driving the long-term development of the industry.
Welcome Policy Benefits
Lu Ying, Deputy Secretary-General of China Construction Machinery Industry Association, said in an interview that it is a positive signal to carry out infrastructure investment in a moderate way in advance. "Based on policy expectations, relevant departments will be prepared, funds are guaranteed, projects are reserved, and implementation is more effective." Luying said.
Relevant leaders of Sany Heavy Industries said that the clear monetary and fiscal policies of the Central Economic Work Conference are helpful to the development of construction machinery industry. "In addition to clearly pointing out that infrastructure investment should be properly carried out ahead of schedule, monetary policy and other policies will play a role in the production data side, reducing the start-up costs of downstream enterprises and increasing the initiative of downstream enterprises to start-up."
Anxin Securities pointed out that the "dark period" of the construction machinery sector has passed, and the leading undervalued construction machinery enterprises have experienced the test of the downward period of the industry. There is no doubt about their competitiveness. They have medium and long-term allocation value and are expected to realize value return earlier next year under the catalysis of policies.
However, some insiders believe that although the policy is good for the industry, it may take some time to be effective. "'Properly investing in infrastructure ahead of schedule'is good news for companies and industries, but the data embodied in the consumer side will be delayed to a certain extent, mainly due to the funds in place and the stimulus to the market." The head of a listed company in construction machinery industry said that it is expected that the construction machinery industry as a whole will decline slightly in 2022, but exports will keep growing substantially, offset some of the downturn in the domestic market, and if good, will remain flat.
"It does take some time for the policy to come out, but the expectation that it will be in place is beyond doubt. December has been lowered, with 120 million yuan released, indicating that the policy has been steadily moving forward. Although a higher base in the first quarter of this year will put some pressure on the same period next year, it will be helpful for the industry to land throughout the year." Sany Heavy Industry related person in charge said.
Cycle has weakened
"In fact, we are not pessimistic about the industry next year until the relevant favorable policies are clear. The industry has experienced a five-year period of rapid growth from 2016 to the present, and there has been an adjustment since May this year, but this adjustment is normal." The responsible person of Sany Heavy Industries said that the current adjustment of construction machinery industry is significantly different from the previous downturn cycle. The current adjustment time will be shorter and the depth of adjustment will be much lower than the previous downturn cycle.
Construction machinery export boom will hedge the decline of domestic market demand. According to the statistics of China Construction Machinery Industry Association, the number of excavators exported from January to November reached 598,800 units, an increase of 95.9% year on year. Guokai Securities believes that the overseas demand is expected to continue to grow, the market competitiveness of superimposed domestic brands is constantly improved, the overseas channel layout is increasingly improved, and the export market is expected to become an important revenue growth point of the industry.
Since this year, overseas business revenue of related listed companies has increased substantially. In the first half of this year, Sany Heavy Industry's international sales revenue reached 12.444 billion yuan, an increase of 94.69% year on year. Xugong Machinery achieved export revenue of 4.854 billion yuan, an increase of 68.50% year on year. Zoomlion's overseas revenue reached 2.768 billion yuan, an increase of 52.28% year on year. Shanhe Intelligent International Market realized a revenue of 970 million yuan, an increase of 44.34% year on year, of which the overseas sales of excavators increased 125% year on year.
"Ten years ago, we were also an importer of construction machinery and equipment. By November this year, the number of excavators exported had reached 60,000 units and the difference between positive and negative was nearly 100,000. Internationalization has greatly smoothed cyclical fluctuations." Industry insiders said.
Sany Heavy Industries'responsible person said that the mature development of the industry and the demand for manual substitution also weakened the cyclicality of the construction machinery industry. "The quality of operations and customers has been improving in the industry over the past few years. Customers buy equipment with payback periods and operational capabilities in mind, which is quite different from what happened in 2011. Conditions were low at that time, leveraging and leveraging were more severe, and many unqualified customers flooded in."
At the same time, with the reduction of labor force and the increase of labor cost, the phenomenon that machinery replaces labor becomes more and more common. "On the one hand, the labor force in our country, especially in the traditional urban infrastructure industry, is decreasing; on the other hand, the promotion of new rural construction has changed the cultivation mode and gradually replaced the labor force by machines. Construction machinery is essentially a work robot, a tool and has a wide range of uses."
New opportunities in the industry
Electricalization, intelligence, energy saving and environmental protection are the development trend of construction machinery industry, and bring the third new opportunity of energy revolution to the construction machinery industry, and become the new power to drive the long-term development of the industry. Sany Heavy Industry said that in the second half of 2021, the electric engineering vehicle market showed a rapid growth momentum, and the electric engineering machinery industry is expected to achieve rapid growth in the next 5-10 years.
Since this year, the new energy heavy card market has continued to improve. From January to November, the total domestic sales of new energy heavy cards was 7442. Among them, the domestic sales of 1852 new energy heavy cards in November increased 45% year on year, up 668% year on year, creating the largest increase since 2021.
Sany Heavy Industry responsible person introduced that the company has long been in the layout of electric construction machinery and is currently at the leading level in the industry. In October this year, Sany Heavy Industries successfully signed 1000 electric mixing trucks, setting a record number of single electric product contracts in the domestic industry. At present, Trinity Electric Mixer, Dump Truck, Tractor and other products have been promoted and tried in more than 20 cities such as Zhengzhou and Nanyang, with a total order of over 2000 units.
Zoomlion recently held a new technical conference on new energy products and carbon fibre composite materials, and released 8 series and 16 new energy products, such as pure electric pump truck, off-highway pure electric wide body dump truck, etc. Shanhe Intelligent also launched a 20-ton lithium battery excavator, and the aerial work platform is also powered. Industry insiders predict that the penetration rate of electrochemical products will reach 25% by 2025.
Huatai Securities pointed out that with the gradual maturity of the "three power" technology and the continuous reduction of manufacturing costs, the attraction and economy of electric construction machinery products will be continuously improved, and the trend of electric construction machinery is gradually approaching. The sub-categories applicable to closed and fixed working environments such as ports, urban construction and mines have taken the lead in electrification. The demand for electrification of mainstream construction machinery such as excavators is expected to grow rapidly from 2024 to 2025, and the demand for renewal and replacement is expected to support the growth of domestic construction machinery industry.
