It will take time for excavator sales to decline or narrow in July and construction machinery to get out of the "trough"

Affected by the three consecutive declines in excavator sales, the overall performance of the construction machinery sector has been sluggish since the second quarter, but there is a signal worthy of attention. According to the latest CME estimate, the sales volume of excavators (including exports) is expected to be about 18500 in July this year, a year-on-year decrease of about 3%, and the decline began to narrow. The reporter learned from relevant listed companies that the sales growth from April to June this year did not meet expectations, mainly due to the decline in growth rate caused by the previous advance effect.

Sany Heavy Industry (600031. SH) said that from the perspective of industry demand trend, July is expected to be better than May and June, and the year-on-year decline will be narrowed. For example, projects in Inner Mongolia, Xinjiang and other regions that had not started before July 1 have been started one after another. On the other hand, some special government bonds have not been issued before, and the funds are slowly in place.

The relevant person said that according to internal judgment, there will be no "cliff type" decline in this industry. From the cumulative growth rate of the industry in the first half of the year, in fact, the industry is growing positively, mainly from the year-on-year basis in May and June. Due to the high base in the same period of last year, there is a decline of about 20%. By convention, the industry is in the off-season from May to August, and there is generally a small peak season in the fourth quarter. The reporter learned from insiders of Zoomlion (000157. SZ) that the company's excavator sales in April and may increased by more than 25% year-on-year. The products are mainly medium and large excavation products, with an average price of more than 30000 or 400000. Large excavation is mainly used in mining and other fields, and the growth rate of high-end excavator will be higher than the average growth rate. In addition, the excavator business did not account for a large proportion of the company's profits, and the sales of other products increased by double digits year-on-year in June.

In addition to the high base in the first half of the year, has the long-term logic of the construction machinery industry changed? The reporter noted that on July 8, 2021, entrusted by the equipment industry department of the Ministry of industry and information technology, China Construction Machinery Industry Association officially issued the "14th five year plan" for the development of construction machinery industry. In terms of industry scale, during the 13th Five Year Plan period, the scale of China's construction machinery industry increased from 457 billion yuan to 775.1 billion yuan, with an average annual compound growth rate of 11.14%.

In terms of the main varieties of construction machinery, during the 13th Five Year Plan period, the sales growth of wheeled cranes and excavators was the most obvious. Among them, the number of wheeled cranes increased from 9327 to 54176, an increase of 481%; Excavators increased from 60514 to 327605, an increase of 441%. In the "14th five year plan" of the industry, by 2025, the scale target of China's construction machinery industry will be 900 billion yuan and the export target will be 28 billion yuan. The average annual growth is expected to be in the range of 3% - 5%.

From the perspective of the average annual growth rate of the industry in the new five years, compared with the past five years, it has been reduced from double digits to single digits. The plan points out that at present, the industry has structural overcapacity, especially the overcapacity of low-end products, serious homogenization and insufficient capacity of high-end products. The target put forward in 2025 is that the market share of domestic brands in the excavator industry will reach more than 60%; Among them, the market share of high-end large-scale excavation exceeded 55%; The localization rate of core hydraulic parts exceeds 60%; Excavator Cr4 exceeds 60% and CR8 exceeds 80%.

From the data analysis, the number of excavators has increased from more than 60000 in the past five years to nearly 330000 at present. This year, the production expansion of major main engine plants is in progress. Once the growth of the industry slows down, the excess of market ownership over demand will become an important factor. Previously, a person in charge of the construction industry disclosed that "more cars and less work" on the construction site. This may be a silhouette of the current excavator short-term supply and demand market.

Sany Heavy industry stakeholders believe that if the industry maintains an average annual growth rate of 5% in the future, the domestic leading companies can still maintain steady growth. First, with the enhancement of product competitiveness, the domestic market share is increasing; Second, the growth rate of overseas markets is relatively fast. In terms of short cycle, according to the latest view of Pacific Securities, at present, the overall sales volume of excavators will improve year-on-year in July, and there are signs of outbreak of large excavation demand recently, mainly due to the sharp increase in coal demand and tight coal supply. With the implementation of infrastructure, real estate and other projects, the demand for excavators in the peak season from September to October may exceed expectations.

In addition, the local private placement manager told reporters that due to the unsatisfactory sales data of excavators, it will cause negative expectations for the whole construction machinery sector, and the market will think that the peak of the cycle has arrived. Although individual stocks in this sector are at a low level, it is unlikely to regain the recognition of funds such as institutions in a short period of time.