Due to the impact of the new coronavirus epidemic, the delay in the resumption of construction industry has caused a temporary impact on the demand of the construction machinery industry; we updated the CIGI Excavator Utilization Index (CEUI) and found that the utilization hours of major construction machinery categories dropped significantly from January to February However, with the gradual recovery of industry demand in March, the year-on-year decline in utilization hours and industry sales data is expected to narrow significantly. We maintain our judgment on the steady growth of the construction machinery industry throughout the year.
From January to February 2019, the CICC excavator utilization index fell 22.4% year-on-year, and the cumulative decline in the first three months is expected to narrow.
In January and February 2020, the "CICC Excavator Utilization Index" was 50.0 / 33.3 hours, down 28.1% / 11.7% year-on-year respectively. The decline in February narrowed month-on-month, mainly due to the low base caused by the Spring Festival in the same period last year; During the same period, Komatsu's utilization hours were 59.1 / 32.0 hours, down 42.9% / 28.9% year-on-year, and the trend of narrowing in February was consistent with our data. Cumulatively from January to February 2020, the CICC excavator utilization index was 83.3 hours, a year-on-year decrease of 22.4%; we expect the cumulative decline to be narrowed further by March.
Chart: CICC Excavator Utilization Index
Source: Company announcement, CICC Research
CICC utilization hours show that crane and concrete machinery utilization hours decreased by about 30% year-on-year
From January to February 2020, the utilization hours of CICC truck cranes were 70.6 / 28.7 hours, a year-on-year decrease of 31% / 25%, and a cumulative year-on-year decrease of 29.4% from January to February. From January to February 2020, the utilization hours of CICC pump trucks were 43.4 / 6.2 hours, a year-on-year decrease of 32.9% / 31.4%, and a cumulative year-on-year decrease of 32.7% from January to February. We expect that the year-on-year decrease in the utilization hours of lifting machinery and concrete machinery in March will also narrow significantly.
Chart: CICC Truck Crane Utilization Index
Source: Construction Machinery Industry Association, CICC Research
Chart: CICC Pump Truck Utilization Index
Source: Construction Machinery Industry Association, CICC Research
Industry sales decline in line with expectations, manufacturers' shipments have improved weekly since March
From January to February 2020, the excavator industry sold 9,942 units / 9,280 units, respectively, a year-on-year decrease of 15.4% / 50.5%. From January to February, the sales volume of China's excavator industry fell 37% year-on-year. Among them, from January to February, a total of 14,667 units in the domestic mainland market (excluding Hong Kong, Macao and Taiwan) were sold, a year-on-year decrease of 46.5%; exports were 4,555 units, a year-on-year increase of 48.2%. We communicated with manufacturers and found that industry shipments have improved weekly since March, and the year-on-year data trough has passed.
Chart: Excavator industry sales growth
Source: Company announcement, CICC Research
Epidemic causes downward pressure on 1Q20 performance, but we remain cautiously optimistic about full-year demand
Under the influence of the epidemic, we expect that the revenue end of construction machinery mainframe manufacturers in 1Q20 may decline by 0-20%; however, as construction machinery accounts for about 20% of the annual revenue in the first quarter, we expect that with the improvement of subsequent demand, listed companies Operation throughout the year will remain stable. In terms of different products, we still maintain the same year-on-year sales of earthmoving machinery in 2020, and judge that truck cranes and concrete pump trucks will achieve double-digit growth.
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Downstream demand was less than expected.
