Affected by the global epidemic since April last year, raw materials have entered an upward cycle, and the construction machinery industry has been under pressure.
At the same time, the domestic medium and long-term "carbon peak" and "carbon neutral" policies have promoted structural adjustments on the supply side, and supply and demand have shown a tight trend.
Superimposed on the air outlet of green intelligence, the construction machinery industry once again stands at the crossroads of reform and innovation.
On June 8, the 21st Century Business Herald interviewed and learned that construction machinery leaders represented by Sany Heavy Industry, Zoomlion, Sunward Intelligent, and Xugong Machinery are seizing major sales and production opportunities in the domestic and international markets; at the same time , The rise of raw materials and new requirements for green production force companies to develop intelligent production equipment and processes. In terms of green production, the domestic construction machinery industry has broken in many areas. According to BCG forecasts, China's pure electric construction machinery market will reach a flashpoint in 2025-2026. By 2035, the penetration rate of pure electric construction machinery may reach 30%.
Li Zhe, an analyst at Essence Securities, pointed out that the current rise in raw materials has boosted the new round of price increases for construction machinery. Internationally, the global economy has moved from recession to recovery after the new crown epidemic. Domestically, on the one hand, China’s economy will be in the second quarter of 2020. It began to gradually complete the resumption of work and production, and demand picked up; on the other hand, the "carbon neutral" policy was introduced to promote supply-side adjustments.
Cracking the rise of raw materials
The upstream of the construction machinery industry is mainly the material industry that provides raw materials and parts, motor and parts manufacturing, such as steel for construction machinery, internal combustion engines, hydraulic systems, bearings, tires, etc. The raw materials account for more than 90% of the total cost of construction machinery enterprises. Wind data shows that the raw material costs of Sany Heavy Industry, Zoomlion, and Xugong Machinery accounted for 90.78%, 95.28%, and 84.94%, respectively.
Recently, the price of iron ore raw materials in the international market has soared, which has led to the continuous increase in steel prices. According to my steel net data, the average price of rebar (take HRB40020mm: national average price as a sample) has risen from less than 3,600 yuan/ton in early April 2020 to nearly 6,350 yuan/ton in early May this year, a nearly 13-month increase. 80%.
Under the skyrocketing raw materials, the construction machinery leaders are obviously under pressure. At present, corresponding price adjustments have been made for products with a relatively large share of steel (such as construction cranes, mixing plants, etc.), which partly transmits cost pressures. On the other hand, the company negotiates with suppliers to jointly absorb part of the cost and jointly respond to market fluctuations.
Data shows that since June 1st, Zoomlion has raised the price of station machinery and construction crane products by 1,000 yuan/ton; XCMG also issued a price adjustment letter in mid-May, and its full range of tower cranes and construction elevators Increase prices in June.
In addition to raising prices, leading construction machinery companies are also taking a variety of ways to respond.
"When making the budget at the beginning of the year, the company predicted the price fluctuations of steel, and the current cost increase is within the budget range." Zoomlion introduced to the 21st Century Business Herald reporter.
The relevant person in charge of Sunward Intelligent also told the 21st Century Business Herald reporter: "In terms of cooperation with suppliers, the company and key suppliers jointly face the market, improve process and management, increase material utilization, and sign short-term contracts. Achieve monthly pricing of bulky materials, bind bulk raw materials to formulate a pricing mechanism, and change payment methods to reduce the pressure on suppliers’ funds; in terms of procurement methods, analyze and update raw material trends at any time, control inventory scope or stocking, and “purchase nearby” '; In terms of expanding channels, the company is looking for new supply channels and substitutes to find alternative materials on the basis of ensuring the physical quality of the products."
Li Zhe pointed out that the increase in raw materials will reduce the gross profit space of midstream construction machinery companies. Under the background of strong demand, reducing cost pressure is an important option.
In the raw material price increase cycle, the competitive advantage of leading companies will be more obvious. Li Zhe analyzed that leading companies have strong scale advantages, many means to control material costs, and strong bargaining power in the industry chain. Therefore, the pressure brought by the price increase of raw materials is a good time for leading companies to reflect their competitiveness.
The growth trend of leading companies also appeared in last year's annual report.
In 2020, Sany Heavy Industry's excavation machinery products accounted for 28% of the domestic market, operating income was 100.054 billion yuan, a year-on-year increase of 31.25%, and the net profit attributable to the parent was 15.431 billion yuan, a year-on-year increase of 36.25%; the two cores of Sunward Intelligence Products excavating machinery and piling machinery also achieved rapid growth during the period.
In addition, XCMG Machinery’s revenue from its main sectors in 2020 has reached a record high. 11 types of mainframe products have ranked first in the domestic industry, and 9 types of mainframe products have increased year-on-year higher than their counterparts in the industry.
The road to international growth
It is worth noting that the overseas deployment of leading domestic companies that began more than a decade ago has not been slowed down by the global epidemic. Behind the collective high growth of leading enterprises last year is the concentrated performance of the increase in overseas market share after Chinese construction machinery enterprises have gradually stepped onto the stage of the world's first echelon.
In 2008, CIFA, an Italian construction machinery manufacturer acquired by Zoomlion, is the second largest manufacturer of concrete pumps and pump trucks in Europe and the United States. Putzmeister, acquired by Sany Heavy Industry in 2012, is the inventor of the world's first concrete pump and the number one brand of concrete machinery in the world. In 2012, XCMG Machinery acquired Shi Weiying, a world-renowned leader in complete concrete equipment. As three domestic companies have completed the acquisition of the international three giants of concrete machinery, the global concrete machinery industry is basically under my country's control. Among them, Sany Heavy Industry occupies more than 60% of the global concrete machinery market share, ranking first in the world.
Judging from the global construction machinery 2020YellowTable announced by the British KHL Group, there are nine Chinese companies in the top 50 rankings in the world in 2020, followed by Xugong Group, Sany Heavy Industry, Zoomlion, Liugong, Lonking, Shantui , Sunward Intelligent, Lovol and Xiagong, among which Sany Heavy Industry ranked fifth with a market share of 5.4%. Caterpillar continues to maintain the world's largest turnover of 32.882 billion U.S. dollars, with a market share of 16.2%.
From the perspective of product sales, Sany Heavy Industries achieved overseas revenue of 14.104 billion yuan in 2020, and sales exceeded 10,000 units, a year-on-year increase of more than 30%. Its market share in some countries in Southeast Asia has risen to the first place. Off-Highway data shows that in 2020, the company sold 98,705 excavators, accounting for 15% of the global excavator market, ranking first in the world in terms of sales.
From a global perspective, mining machinery is the most valuable category of construction machinery. According to Wind and Off-highway statistics, global excavator sales accounted for 58% of the construction machinery industry in 2019. In the past few decades, my country's export of excavators has increased from 3,527 units in 2009 to 34,741 units in 2020, with a compound annual growth rate of 23.12%.
Zheng Liansheng, an analyst at Bohai Securities, believes that the excavator markets in Europe, the United States, and Japan are becoming more mature. Since 2016, sales growth has gradually slowed down, and demand has basically stabilized. If you want to seek the growth of this product overseas, emerging developing countries represented by India have the characteristics of low urbanization rate and large industry demand potential, and they may seize the opportunity to achieve faster growth.
In terms of cranes, in 2020, XCMG Machinery's mobile crane scale ranks first in the world, leading the sales of 1,000-ton wheeled cranes; in the same year, Sunward Intelligent's overseas revenue reached 3.832 billion yuan, an increase of 7.38% year-on-year, of which the export sales of engineering cranes increased year-on-year More than 35%; the export sales of Zoomlion's construction cranes increased by more than 35% year-on-year. Among them, the ZCC9800 crawler crane was exported to Europe, setting a record for the largest tonnage of Chinese crane manufacturers exported to the European and American high-end markets, and sold dozens of crawler cranes in Vietnam.
In terms of other products, XCMG Machinery’s large-scale mining machine bucked the trend and became an export highlight, and signed an export project worth 500 million yuan, and won the bid for an external construction mining machine project worth 260 million yuan. Sunward's market share of pile cranes in Vietnam has also reached a new high.
In addition, in terms of localization strategy, Sunward Intelligent currently has more than a dozen overseas subsidiaries, including two mature subsidiaries in Europe and the United States, with a localized staff ratio of 90%, reducing the impact of the epidemic on overseas trade. And Zoomlion, which has carried out many overseas mergers and acquisitions, is also advancing its localization strategy. At present, the company has used overseas localized employees to understand the local market and customer needs, and unified information into the company’s big data platform. "End-to-end" between customers.
Green intelligence becomes the next outlet
Since the National "Two Sessions" in 2021, "Carbon Peak" and "Carbon Neutrality" have received great attention from the whole society, and high-quality development has become the only way for all industries.
In fact, green production in the construction machinery industry has taken the lead. In 2020, the Ministry of Industry and Information Technology of the People's Republic of China issued the "Action Plan for Promoting the Electricity of Vehicles in the Public Domain" to promote the electrification of construction machinery and accelerate the transformation of the construction machinery industry to new energy sources. Xiang Wenbo, president of Sany Heavy Industry, believes that “carbon neutrality” and “carbon peaking” are a new track that allows companies to compete on the same starting line with their international counterparts. "For the global industrial chain and future development, we must start with new energy, which will reconstruct the global industrial system. Sany will actively promote electrification and increase R&D investment in intelligence and environmental protection."
"But overall, the current penetration rate of electric construction machinery products is still less than 1%." BCG research believes that the electrification of the construction machinery market is still in its infancy, and only some domestic and foreign first-tier companies have a layout, mainly from mining The machine products have entered electrification, and only sporadic electric product pilot projects have been launched.
Judging from the current achievements of the company, in 2020, Zoomlion’s world’s first pure electric truck crane ZTC250N-EV will roll off the production line, creating a history of pure electric cranes. The country's first pure electric intelligent excavator SWE240FED independently developed by Sunward Intelligent is undergoing a comprehensive field test under high-altitude and low-temperature environments on the Qinghai-Tibet Plateau. In addition, the company successfully developed a coupled hydraulic hybrid power system and completed a 1,000-hour mine industrial assessment.
Cost is still the core of green smart production. If you want to accelerate the process of change in the wave of carbon emissions and new energy, you need to consider the core factor of conversion costs, and in terms of cost reduction, batteries may become a breakthrough.
Construction machinery products such as excavators and loaders have always been known as "oil tigers", and construction machinery has high requirements for battery capacity and energy density, and the harsh construction environment also leads to high battery costs. BCG research believes that “the prospects for the electrification of construction machinery are still optimistic. Under the background of technological upgrading, it is expected that battery costs are expected to fall by 5%-10% every year in the future. This means that as battery costs drop, it will take about 7 years. , The total cost of ownership TCO balance period of electric construction machinery will also be shortened to less than one year."
Regarding the transformation of the production line, Xiang Wenbo believes: "Most of the production lines do not need to be rebuilt. For example, the company did not produce diesel engines in the past. The company just turned the diesel engines into motors. The working structure of the excavator will not change. ."
However, Xiang Wenbo also pointed out: "It does not rule out the possibility of higher production costs in the future. The increase in prices requires the entire society to pay costs, and the government and the market need to promote it."
From the perspective of the entire industry chain, BCG research predicts that the electrification of construction machinery will inevitably spawn many new players and new models in the value chain.
