As a "barometer" for the construction machinery industry, excavators have entered the "post-epidemic era" since mid-March this year. Due to the concentrated release of the backlog of demand after the Spring Festival, the excavator orders in April and May were good. Some brokerages believe that the performance of listed construction machinery companies in the second quarter will increase significantly, and the industry is expected to maintain a prosperous period from 2020 to 2021.
As a "barometer" for the construction machinery industry, excavators have entered the "post-epidemic era" since mid-March this year. Statistics from the China Construction Machinery Association show that the cumulative sales of excavators from January to April this year reached 114,000 units, a cumulative increase of 10.5% year-on-year.
Although the authoritative data on excavator sales in May have not been released, the Caidian reporter learned from multiple channels that due to the concentrated release of the backlog after the Spring Festival, the orders in April and May are all good. Prosperity, entering the traditional low season in July and August.
Some brokerages believe that the performance of listed construction machinery companies in the second quarter will increase significantly, and the industry is expected to maintain a prosperous period from 2020 to 2021. Under the trend of manufacturing upgrading and import substitution, the increase in the proportion of domestic leading enterprises is a trend, and the pattern of the strong will never change.
The upstream supporting factory thinks the demand has been delayed
Tianyan check shows that as of May 28, subject to the industrial and commercial registration, my country has established more than 2,800 new excavator-related enterprises in 2020, of which 851 were added in April, an increase of 26.26% from March.
Behind the increase in the number of enterprises is the excavator sales in March and April, which have hit record highs and second highests. Driven by downstream infrastructure demand, project deadlines, and stock equipment updates, various types of construction machinery are in short supply. Among them, the growth rate of small excavator sales is particularly prominent. In addition, due to the acceleration of import substitution, the domestically-listed companies supporting the OEMs have benefited the most.
With the rapid recovery of sales, the market value of many leading listed companies hit or approach a new high this year. As of June 1, the top four market capitalization companies in the machinery industry are: Sany Heavy Industry (18.910, 0.28, 1.50%) 158.8 billion (600031.SH), Hengli Hydraulics (71.560, 1.86, 2.67%) 64.5 billion (601100.SH), XCMG (6.040, -0.05, -0.82%) 47.1 billion (000425.SZ), Zoomlion (6.470, -0.04, -0.61%) 42.5 billion (000157.SZ).
A reporter from the Finance Association learned from the staff of Hengli Hydraulics, a leading company in upstream parts and components, that the sales in the second quarter are estimated to be very good, and the demand from the (main engine factory) will drive the release of the company's production capacity.
For the current situation of strong sales of excavators, he believes that it is mainly due to the impact of the early epidemic. The relevant demand has been pushed back, followed by the resumption of some major projects, and the start of new projects will cause the shortage of excavator circulation links, which will Let OEMs and spare parts manufacturers show explosive growth. The other is manual replacement to increase demand. Many tasks are done by small excavators.
Another upstream company, Eddie Precision (32.070, -0.10, -0.31%), also believes that due to the impact of the epidemic, the relevant parties will invest more in key infrastructure and engineering projects, and the infrastructure will use a larger amount of engineering equipment. Will lead to relatively rapid growth in demand, will definitely have an impact on the construction machinery industry sales in the second quarter.
Leading OEMs have good orders
The upstream core parts factory's view has been recognized by many midstream host manufacturers. A person from the Xugong Machinery Securities Department told the Cailian reporter on the phone: Many projects in the first quarter were delayed due to epidemic factors. Construction is now being stepped up. The company's sales are better in the second quarter than in the first quarter, and the chain is expected to increase.
Earlier, an executive of the company said bluntly: "Since March, each product line has been full and high-yield, and there has been a situation where individual products are in short supply, and it is currently seen that this trend will continue in the first half of the year."
A relevant person of Zoomlion Heavy Industry believes: "At present, the country has fully resumed work, and the rate of resumption of construction in progress has basically reached 100%. Crushing time and equipment are common. It has reached or even surpassed the level of the same period last year, and the demand for new equipment is extremely high. The environmental protection overtaking policies in various places have also played an additional role in promoting the replacement demand."
He also revealed that the production capacity of most of the company's production lines is generally higher than last year, and the orders are still queued, and the schedule is continuously extended, so the construction machinery industry in the second quarter is very good.
Regarding the company's recent production schedule, Zhejiang Dingli (94.600, 2.59, 2.81%) Dong Mi Liang Jin also said: "The company's production is currently in full production."
Regarding the impact of the overseas epidemic situation, the statements of the parties are slightly different. Xugong Machinery believes that the industry's exports have declined to a certain extent. It is expected that the construction machinery market will improve in the second half of the year as the global new crown epidemic situation is alleviated.
Zoomlion's latest statement on the interactive platform stated: "Since the second quarter, the overseas epidemic has spread rapidly, which has affected the company's overseas business. However, through the unremitting efforts of the team, the company's domestic export business from January to April has increased year-on-year compared with last year. , May is expected to continue to maintain the year-on-year growth trend."
A reporter from the Finance Association learned from relevant sources that the company’s export share is relatively low and the exports are mainly for countries such as Southeast Asia and the “Belt and Road”, so the impact is small, and it is more a logistics impact. The demand for construction machinery mainly depends on the domestic market. This year The shipment situation in the second quarter was good. Due to the acceptance of new and old orders, from a trend perspective, the market share has slightly increased.
China Merchants Securities (17.080, -0.12, -0.70%) Liu Rong, chief analyst of the machinery industry, believes that many sales of machinery companies are a record high, and the entire ownership has expanded, while the industry's operating rate is still increasing, indicating the demand of this industry Still a real demand.
She concluded: "The epidemic affected order delivery and corporate revenue confirmation, but this is only temporary, so it is not representative in the first quarter. The impact of product price increases on the company's gross profit margin will begin to appear in the second quarter. The performance in the second quarter of this year will increase substantially."
Societe Generale Securities (5.830, -0.05, -0.85%) also believes that the sales of construction machinery of OEMs will continue to be strong in May, and the sales of excavators will continue to maintain rapid growth year-on-year, and the output of core supporting enterprises will continue to remain high.
How long can the industry boom last?
It is understood that the current out-of-stock situation at the terminals of the first-line market has eased, but a small number of models of some brands still have out-of-stock phenomenon. From the perspective of subdivided varieties, Liu Rong's analysis predicts that excavators and cranes will grow by 5% to 10%, pump trucks will grow by 20%, and mixer trucks will grow by 30%. Tower cranes will benefit from increased industry concentration and construction industrialization is expected to grow by 30% about.
According to the "Full Market Transaction Volume Forecast" jointly released by the mechanical team of Ironclad and Haitong Securities (11.930, -0.14, -1.16%), the downstream boom remained flat in May, compared with 45,000 new excavator sales in April. Sales of new excavators are expected to be between 27,000 and 29,000, which is expected to increase by 45% to 55% year-on-year; sales of "new machines + used excavators" will fall by 32% to 35% from April. They believe that the peak season of construction machinery sales in 2020 will continue.
Another industry insider pointed out after investigation: "Most of the construction machinery regional market still maintained strong sales in May, but some regional markets have slowed down relative to April. It is expected that the market will gradually enter the annual cyclical off-season in June. This year's off-season may be shorter than in previous years."
The above time window is close to that of a domestic parts company in the machinery industry. Relevant sources told the Financial Associated Press: "Summer sales will decline month-on-month, because the overheating will reduce the operating rate, which is seasonal every year."
From the perspective of the industry's long-term trends, Liu Rong believes that the recovery of the construction machinery industry will not end. From 2020 to 2021, the equipment will enter a peak of update, and the update will smooth the industry cycle. Benefiting from loose fiscal policy, as well as the landing of local debt funds and economic shortcomings since the fourth quarter of last year, it is expected that the industry will maintain its prosperity from 2020 to 2021.
She pointed out that considering the uncertainties in the economy this year, downstream capital expenditures may decline, and it is necessary to look for companies with counter-cyclical or endogenous growth to find certainty in uncertainty. As the concentration of the industry increases, it is recommended to focus on companies including Sany Heavy Industry, Zoomlion Heavy Industry, Hengli Hydraulics, Aidi Precision, Zhejiang Dingli, etc.
Statistics show that the machinery industry index rose by 61% in 2019, and has risen by about 8.5% since the beginning of this year. A private equity person told a reporter from the Financial Associated Press that last year was a big year for the revenue and net profit growth of listed companies in the machinery industry. The increase was among the few leading companies, and the remaining mechanical stocks rose flat, including this year, the record high In a few cases, short-term adjustment and volatility are inevitable, but the pattern of the strong and constant will continue.
