Since the beginning of 2022, the construction machinery sector has been active for a time, ushering in the undervalued repair market. Under the background of “steady growth”, the current direction of policy relaxation has been repeatedly confirmed. The landscape of the infrastructure sector has rebounded since November 2021, and the traditional infrastructure sector continued to rebound after the festival. We believe that the phased main line of A-Shares is still “stable growth”, and the infrastructure and real estate related industrial chain with marginal policy improvement will benefit, which will drive the recovery of the construction machinery sector. At present, the construction machinery sector is still at a relatively low valuation level, and the post Festival valuation repair market is expected.
The specific logic of the periodic valuation and repair of construction machinery: the central economic work conference set the goal of steady growth in 2022, raised the economic problem of steady growth to the height of political problem again at the beginning of the year, and fully mobilized the enthusiasm of local governments to cooperate. The time point of centralized commencement of major projects by many local governments in the first quarter of 2022 was advanced, and the local two sessions released the determination of steady growth, The construction of infrastructure and affordable housing has become the main focus of steady growth. The strength of steady growth policy before the national two sessions is expected to be strengthened and the pace may be accelerated; In December, the special bonds were issued in advance, the issuance of special bonds for the new year has been started, the proportion of general public budget expenditure invested in infrastructure has increased significantly, the capital chain of engineering projects has been improved, so that the infrastructure investment is appropriately advanced and effectively implemented, the edge of superimposed real estate policy has been relaxed, and the downstream demand of construction machinery is expected to be better in the first quarter.
Excavator as a barometer of infrastructure construction, China’s demand has been sluggish for 21 years, and the overseas performance was brilliant at the end of the year. According to the statistics of 25 excavator manufacturing enterprises by China Construction Machinery Industry Association, 24038 excavators of various types were sold in December 2021, a year-on-year decrease of 23.8%, and the decline narrowed; Among them, 15423 units in China, down 43.5% year-on-year; 8615 sets were exported, with a year-on-year increase of 105%. The overall demand for 21q4 excavators continues to be weak, and we expect the performance of 21q4 construction machinery to bottom out. With the recovery of infrastructure and real estate investment in 22q1, the performance of 22q2 is expected to be slightly boosted.
There is no fundamental change in fundamentals. At present, the industry as a whole is still in the downward cycle stage. It is expected that the next cycle will be 2024-2025. In the short term, we can pay attention to the valuation and repair opportunities of the sector. Stimulated by the main tone of steady growth, the stabilization and recovery of infrastructure investment is accelerated, and the expectation is strengthened. The superimposed industry is transforming to electrification and intelligence. We believe that the leading enterprises taking the lead in layout are expected to create unique weak cycle attributes. The main engine factory mainly recommends Sany Heavy Industry Co.Ltd(600031) , Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) , and pays attention to Xcmg Construction Machinery Co.Ltd(000425) , Guangxi Liugong Machinery Co.Ltd(000528) ; Focus on Jiangsu Hengli Hydraulic Co.Ltd(601100) for core parts and pay attention to Yantai Eddie Precision Machinery Co.Ltd(603638) .
Risk tip: infrastructure investment is less than expected, overseas market expansion is less than expected, and raw material prices rise.
