The Construction Machinery Industry is Still Bottoming Out, and Exports are Improving

In May, domestic excavator sales fell more than 40% year-on-year, and the construction machinery industry is still bottoming out.

According to the China Construction Machinery Industry Association official wechat news on the evening of June 7, in May this year, 26 excavator manufacturing enterprises sold all kinds of excavators 16809 units, down 18.5%, of which domestic 6592 units, down 45.9%; Exports of 10,217 units, an increase of 21%.

From January to May, major manufacturing enterprises sold 93,052 excavators, down 23.9% year on year; Among them, 44,933 domestic units, down 43.9%; Exports of 48,119 units, an increase of 13.9%.

Since the beginning of this year, the monthly sales of domestic excavators have been in a year-on-year decline.   Up to now,   the domestic excavator market has entered a downward cycle for two years. During the period, the monthly sales of excavator exports continued to grow, and the export volume was at a historic high.

Domestic construction machinery leading enterprises to increase overseas layout.Construction machinery leader Sany Heavy Industry (600031) Secretary CAI Shenglin said at the company's 2022 performance presentation on May 29 that the internationalization process of Sany Heavy Industry has accelerated, and overseas revenue has accounted for more than 50% of the company's revenue.

Xugong Machinery (000425), also the industry leader, said that in the first quarter of this year, international revenue exceeded 10.6 billion yuan, setting a record for a single quarter, accounting for 45% of total revenue.Excavator is the "standard configuration" of infrastructure construction, and it is a weather vane that reflects infrastructure construction and observes economic changes such as fixed asset investment.

According to the National Bureau of Statistics, in the first four months of this year, the national fixed asset investment (excluding rural households) was 14,748.2 billion yuan, up 4.7% year on year, down 0.4 percentage points from the January to March period. Among them, infrastructure investment increased by 8.5% year on year, and real estate development investment fell by 6.2% year on year.

Essence Securities research report shows that effective investment is expected to continue to expand this year, infrastructure investment continues to speed up can be expected, traditional infrastructure and new infrastructure are ushered in development opportunities, water conservancy construction, urbanization municipal construction, pumped storage, power construction segments investment planning considerable, growth is expected to exceed the overall growth level of the industry.

In terms of actual construction, according to the latest data of the "CCTV Financial Excavator Index" jointly created by CCTV Finance and Sany Heavy Industry and Root Internet, the average operating rate of national construction machinery in April was 64.69%, which was basically flat with March. Of the 31 provinces, 28 provinces have an operating rate of more than 60%, and 10 provinces have an operating rate of more than 74%.

Xugong machinery said in an investor survey that the overall decline in the industry is expected to narrow this year, down between 5-10%; It is expected that the turning point of this cycle is around the middle of 2024, and it will enter the business cycle again in 2025.

Oriental Securities research report shows that the relative surplus of excavator is the main cause of sluggish domestic demand, excavator sales need greater stimulus or a more substantial demand recovery. With the continuous counter-cyclical regulation and the low base effect in the second quarter of 2022, domestic sales growth is expected to recover; Due to the downturn in some overseas regions and the high base in the same period last year, the growth rate of excavator export market sales this year will gradually slow down. Overall, the industry boom turning point remains to be observed.