The construction machinery industry is hard to say

After experiencing a year-long low tide, the construction machinery industry has recently received some warmth.

With policy adjustments shifting to “steady growth”, coupled with the acceleration of project approvals by the NDRC, this gave the market reason for optimism. 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, can construction machinery industry usher in the turning point 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. Zoomlion and Sanyue are the industry leaders and their performance will be far better than other listed companies.

Continuing to usher in policies

In the past two weeks, 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. The Zhanjiang and Fangchenggang steel projects have been approved. Many airport construction projects in Heilongjiang Fuyuan, Shihezi in Xinjiang, Qingyang in Gansu, and Jiangbei in Chongqing have also received approval.

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 property policies are not loosened, the expectation of accelerating infrastructure investment in the second quarter will continue to increase. At the same time, the base number will be greatly reduced and the pulling effect will emerge. After May construction machinery The sales growth of the industry will gradually improve.

Guided by good policy, the A-share market has responded this week. "Daily Economic News" reporter found that from May 28 to 30, the machinery industry sector rose 4.35%, ranking among the top in all sectors; related stocks such as Sanhe Intelligence, XGMA shares, Liugong, Xugong Machinery, Sanyi Heavy Industry, Zoomlion and others 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 during the three trading days after this week. 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%.

Sales are still at freezing point

The Development and Reform Commission’s rumor poured a cool pot of water into the fiery market. But what worries the market is that from the April data, the situation faced by the construction machinery industry is still not optimistic. "Daily Economic News" reporter noted that April should have been the peak season for sales of construction machinery industry, but 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, 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 may not improve in the near future.

June inflection point dispute

With the gradual emergence of policy effects, can construction machinery industry usher in an inflection point in June? According to interviews by reporters, the industry has different views on the June market, and the difference is whether the downstream infrastructure can boost sales data.

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 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 boosted 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 or continued differentiation

Although there are still controversies as to when the industry inflection point has arrived, the deployment of leading companies such as Zoomlion and Sany Heavy Industry has become a consistent strategy for the industry.

Reporter statistics of 7 A-share engineering machinery industry stocks (Sany Heavy Industry, Zoomlion, Xugong Machinery, Liugong, XGMA, Shanhe Intelligent, Anhui Heli (600761)) found in both the annual report and the quarterly report this year, 2011 The seven listed companies have achieved growth in their operating income and net profits, but the growth rate has been 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%), which was far lower than that of China United and Sany.

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. In spite of this, Zoomlion and Sany Heavy Industry have achieved growth in revenue and net profit; in sharp contrast, the operations of the other five companies have all experienced declines in varying degrees, with the highest decline in revenue. Liugong was down by 42.31% year-on-year, and Sanhe's smartest net profit fell by 78.90%.

The above-mentioned analyst, who declined to be named, told the "Daily Economic News" that in the long run, the division of the industry may continue. The products and services provided by the leading companies Zoomlion and Sany will have more advantages and will be better in terms of performance.

This prophecy will be realized. On May 30th, Zoomlion’s first fleet of 80 ZE360E excavators was sent 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 also becoming new profit growth points for 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. Zoomlion’s overseas revenue also exceeded domestic revenue growth. Not only that, both parties have completed overseas mergers and acquisitions, Zoomlion and Hony Capital have jointly acquired Italian CIFA, and Sany Heavy also acquired Putzmeister.

An analyst of a brokerage firm stated that after the merger of Putzmeister with SANY Heavy Industry, one of the main directions was to use its overseas network to further open up the international market.