After experiencing a year-long low tide, the construction machinery industry has recently received some warmth. With the policy adjustment shifting to “steady growth”, the NDRC has accelerated project approval and the construction machinery market has become optimistic. However, the loosening of policy still remained at the expected level. In April, the sales data of sub-sectors such as excavators and bulldozers still fell year-on-year and year-on-year, which also made it difficult to completely change the pessimistic atmosphere.
With the gradual change of policy, when will the turning point of construction machinery arrive in June? For this issue, all parties in the industry are unconvinced. However, the consensus in the industry is that the performance of listed companies in the construction machinery industry will continue to diverge in the second quarter, and the pattern of the strong and permanent will be further highlighted. Some leading companies in the industry will perform much better than other listed companies.
Continuing to usher in favourable policies Over the past few years, the construction machinery industry has continuously welcomed policies. On May 23, the executive meeting of the State Council stated that “advancement of major projects under the 12th Five-Year Plan will be implemented on schedule and a batch of major projects that are related to the overall situation and strong initiatives will be launched. The railways, energy conservation and environmental protection, rural and western regions have been identified. Projects in the areas of facilities, education, health, and informatization should speed up the progress of the preliminary work."
In addition, Premier Wen Jiabao’s speech on “stabilizing growth to a more important position” also made the market clarify the expectations of policy improvement. Even more exciting is that the National Development and Reform Commission has also accelerated the approval of new projects. Guangdong Zhanjiang and Guangxi Fangchenggang steel projects have been approved; Heilongjiang Fuyuan, Xinjiang Shihezi, Qingyang, Gansu, Chongqing Jiangbei and other airport construction projects have also been approved.
Analyst Chen Yaobang of Huatai Securities believes that with the government’s “steady growth” efforts, the future investment growth will recover. CI Hui Company analyst Wu Huimin believes that under the premise that the economy continues to bottom out and real estate policies are not loosened, the expectation of accelerating infrastructure investment in the second quarter will continue to increase. At the same time, as the base number is greatly reduced, the pull effect will appear, and construction machinery will be available after May. The sales growth of the industry will gradually improve.
Guided by good policy, the A-share market has responded in the near future. The author statistics found that from May 28th to 30th, the machinery industry sector rose by 4.35%, ranking among the top in all sectors; related stocks such as Shanhe Intelligence (002097, closing price of 9.71 yuan), Xiamen Engineering Corporation (600815, closing price of 9.98 yuan ), Liugong (000528, the closing price of 13.86 yuan), Xugong Machinery (000425, the closing price of 15.27 yuan), Sany Heavy Industry, Zoomlion, etc. have all surged.
However, the spree brought about by the policy did not last long. Recently, the National Development and Reform Commission denied the so-called new round of economic stimulus plans and "4 trillion investment in version 2.0" and other news. Du Ying, deputy director of the National Development and Reform Commission, also stated at the press conference of the State Council that the country's economic growth should be built on the basis of expanding domestic demand. Affected by this, the construction machinery industry continued to decline in the next three trading days. On May 30 and 31, Zoomlion, Sany Heavy Industry, Xugong Machinery, Xiagong Engineering Co., Ltd., Liugong, etc. all experienced minor declines. On June 1, the Shanhe Intelligence Group, which had a larger increase in the previous period, fell by 5.54%.
The sales volume is still at the freezing point of development and reform committee's "roofing" to put a pot of cold water on the hot market. But what worries the market is that from the April data, the situation faced by the construction machinery industry is still not optimistic. The author noticed that April should have been the peak season for sales of the construction machinery industry, but the sales data for each segment in the month was lower than expected. No matter whether it is on a year-on-year basis or on a quarter-on-quarter basis, it will decline.
Data show that in April 2012, sales of excavators, truck cranes, loaders, bulldozers, and road rollers fell by 41.88%, 52.24%, 23.85%, 33.56%, and 54.57%, respectively, year-on-year, falling by 33.89%, 4.84%, and 17.12% respectively. , 9.28%, 2.83%.
Hua Tai Securities analyst Wang Yuming believes that from the survey situation, because the downstream construction is still insufficient, dealer inventory still needs 2 to 3 months to digest, in May sales did not improve. Although the investment in infrastructure has resumed normal speed, the real estate new construction area still shows no signs of bottoming out. Due to the greater impact of real estate investment on the sales of new equipment, it is expected that the sales data in the second quarter will not be optimistic.
"The key is to see if the policy is expected to improve." An analyst who declined to be named said that there is a process of policy transmission and sales data are unlikely to improve in the near future.
The inflection point of construction machinery in June With the gradual emergence of policy effects, can construction machinery inflection point in June usher in? The author's understanding of the situation shows that the industry's views on the June market are mixed, and the difference between the focus is whether the downstream infrastructure can boost sales data to pick up.
Guotai Junan analyst Lu Juan believes that the important downstream of the construction machinery industry, such as real estate, large-scale infrastructure is showing a warming trend. According to the statistics of the project network under construction, since March, the project design of infrastructure projects such as railways and highways has increased significantly. It is expected that the demand for construction machinery will be driven in June. It is expected that the fundamentals of the industry will usher in a marked improvement in June.
Wang Yuming believes that the real estate investment and new start-up area growth rate fell sharply from January to April. The government still emphasizes “stabilizing and strictly implementing the real estate market regulation and control policies” and it is expected that real estate policies will not be relaxed in the short term. Real estate companies are currently the most concerned about how to inventory, before the completion of the inventory is basically completed, the willingness to start a new job is not high. The slump in real estate investment will affect the time and intensity of sales of construction machinery.
Lu Juan also said that the return of real estate sales data feedback to the real estate investment and construction has a lag period of 3 to 6 months, real estate investment and start-up data will not be able to rise until July.
Chang Cheng Securities analyst Zhang Cheng believes that the improvement of existing policies is mainly reflected in the resumption of the original project, the new start-up projects are less; the current resumption of the work is conducive to improving the profitability of stock equipment, but the incremental demand for equipment to pull limited; Resumption of work can be understood as the gradual restoration of normal railway construction. However, due to the slowdown in the start-up pace, the demand for construction machinery has been limited.
The above-mentioned brokerage analysts who do not wish to be named indicate that every year from June to August is the industry's traditional off-season, with little reference. If the September and October sales data pick up, the industry's reversal can be basically determined.
Chang Cheng Securities analyst Zhang Cheng also believes that in the short term, the policy adjustment will not change the downward trend of the chain.
Performance of listed companies may continue to diverge Despite controversy over when the turning point of construction machinery arrived in June, leading companies such as Zoomlion, Sany Heavy Industry, and XCMG have become the unanimous strategies of the industry.
The author counts 7 A-share engineering machinery industry stocks (Sany Heavy Industry, Zoomlion, Xugong Machinery, Liugong, XGMA, Shanhe Intelligent, and Anhui Heli). Last year's annual report and quarterly report found that in 2011, this 7 Listed companies have achieved an increase in operating income and net profit, but the growth has been very wide. Zoomlion and Sany Heavy Industry recorded year-on-year revenue growth of 43.89% and 49.54%, and net profit increased by 72.88% and 54.02% respectively. The other five companies saw the highest revenue growth rate as Xugong Machinery (28.03%). The highest growth rate was Liugong (16.56%).
In the first quarter, the prosperity of the construction machinery industry was poor, coupled with a high base last year, so the performance of related listed companies was not satisfactory. Despite this, Zoomlion and Sany Heavy Industry have achieved growth in revenue and net profit. The above-mentioned analyst, who did not wish to be named, told the author that in the long-term, the division of the industry may continue. The products and services provided by leading companies are more advantageous, and their performance will be better.
This prophecy will be realized. On May 30th, Zoomlion’s first batch of 80 ZE360E excavator-loaded fleets were dispatched to Inner Mongolia to deliver customers. This is the single largest sales order since Zoomlion Earth Machinery was established, creating a record of 200 units sold by the excavator industry. In fact, exports are becoming new profit growth points for leading companies such as China United and Sany. In 2011, Sany Heavy Industry’s revenue from international operations increased by 60.72%, far exceeding the domestic 48.03% growth rate.
