In the near-term strategy, we continue to mention investment opportunities in the procyclical sector, and recent market trends generally conform to our judgment. On the investment target, we mentioned the investment opportunities in the large financial sector and achieved a good rate of return. This time, we continue to focus on another segment of the procyclical industry-construction machinery. We have always recommended it in other channels, and the Alpha Optimal Portfolio has also held relevant targets. This article attempts to sort out several logics of this section for readers' reference.
1. The high boom of construction machinery continued, and the performance growth of listed companies in the third quarter continued to be strong, exceeding market expectations.
Previously, the market was worried that the macro economy, especially investment growth, was slower than expected, which would affect the operation logic of the sector. In fact, the industry’s actual prosperity is stronger than expected. The announced third-quarter results of the 16 major listed construction machinery companies have greatly exceeded market expectations, driving industry companies to rise. Industry revenue in the Q3 quarter increased by 42% year-on-year, and net profit increased by 52% year-on-year. In contrast, the industry revenue and net profit growth rates in the Q2 quarter were 8% and 28%, respectively. Data shows that with the release of demand for rush work after the epidemic, and the continued high boom of the superimposed industry, the performance of construction machinery is accelerating, and the intensity and continuity will exceed market expectations.
2. The fourth quarter is still optimistic, and the stocking status of the industry at the end of the year is expected to continue to maintain high growth in the construction machinery industry in the fourth quarter.
Looking ahead, after the local government's special debt funds are in place, the infrastructure demand in the fourth quarter is still expected to rebound. From the observed project launch and construction conditions are good, the demand for construction machinery will continue to increase. It is expected that excavator sales in October will exceed 50% year-on-year, and the high growth in the fourth quarter is expected to continue. In addition, the welcome change in the industry is that the downstream payment has improved significantly compared with the first half of the epidemic, the overdue rate is controllable, and the upstream and downstream industries have significantly improved.
3. The combination of pro-cyclical and consumption, the industry has achieved sustained and stable growth.
The nature of the cycle attribute of the construction machinery industry is very strong, but from the perspective of this round of construction machinery market since 2016, the industry has demonstrated both cycle and consumption attributes. With the upgrading of environmental protection, the upgrading of machinery, and the replacement of labor, the logic of the industry's continued growth has been strengthened. At the same time, the increase in industry concentration also improves the endogenous growth of the leader. The strong one is always strong, and the leading company is more competitive. You can continue to pay attention.
In the direction, focus on the leading targets with low valuations and steady growth in performance, as well as the continuation of domestic substitutions, and the leading construction machinery sub-industry with core components.
Investment is risky, and the information is for reference only. The above information comes from listed companies. The above list involves listed companies only as a statement of their company dynamics and not as a specific recommendation. Investors should make investment decisions independently and bear the investment risks.
