Key points:
In November, the decline of excavator sales continued to expand, and the operating hours remained stable
According to the data of Construction Machinery Association, the total sales volume of excavators in China in November 2021 was 20444 units, a year-on-year decrease of 36.60%. Among them, China sold 14014 sets, a year-on-year decrease of 51.40%; 6430 sets were exported, with a year-on-year increase of 89.00%. From January to November 2021, the cumulative sales volume of excavators in China was 318746, with a year-on-year increase of 7.66%. Among them, the sales volume in China was 258934 units, a year-on-year decrease of 2.49%; 59812 sets were exported, with a year-on-year increase of 95.91%. In November, the operating hours of Komatsu China excavator was 109.70, a year-on-year decrease of 19.52%, still at the lowest level in the same period in recent five years. In China, downstream demand continued to weaken, leading to a year-on-year decline in excavator sales. In terms of exports, although the export volume of excavators has reached a new record and the growth rate continues to rise, it is difficult to fully hedge the decline of Chinese sales because the proportion of exports is still low. In addition, the operating hours of excavators have been at the lowest level in recent five years for eight consecutive months, reflecting that the downstream demand is still relatively low, indicating that it is difficult for the subsequent sales rate of excavators in China to stabilize and recover.
The growth rate of sales of other construction machinery continued to decline, confirming the gradual decline of the industry boom
Other construction machinery. In November, the sales volume of loaders was 9975, a year-on-year decrease of 8.53%. From January to November, the cumulative sales volume was 131652, a year-on-year increase of 9.77%. The sales volume of truck cranes in October was 1686, a year-on-year decrease of 55.20%, and the cumulative sales volume from January to October was 44588, a year-on-year decrease of 1.24%. In October, the sales volume of forklifts was 83900, with a year-on-year increase of 6.73%. From January to October, the cumulative sales volume was 930600, with a year-on-year increase of 45.49%. Similar to excavators, under the influence of factors such as the continuous weakening of China’s downstream demand and the decline of export growth, the sales growth of construction machinery such as loaders, truck cranes and forklifts also gradually decreased or even turned negative, confirming that this round of industry cycle has gradually entered the downward stage.
The pace of issuing special bonds continued to accelerate, and various indicators of the real estate industry continued to weaken
In terms of infrastructure, China’s infrastructure investment in November The cumulative growth rate (excluding electricity) was 0.50%, and the growth rate continued to decline. From January to November, the issuance scale of new special bonds was about 3.48 trillion yuan, a year-on-year decrease of 1.79%, and the decline continued to narrow, accounting for 95.43% of the total annual budget. The pace of special bond issuance continued to accelerate. In terms of real estate, China’s land purchase area decreased by 11.20% from January to November, and the sales of commercial housing increased by 8.50% The completed capital increased by 6.00% and the newly started area decreased by 9.10%. Under the policy tightening, the capital pressure of real estate enterprises and the decline of investment willingness have led to the continuous weakening of various indicators of the real estate industry.
Investment advice
The current boom cycle of construction machinery industry, which began in early 2016, is mainly driven by the recovery of traditional downstream fields such as infrastructure and real estate, as well as other factors such as manual substitution, equipment renewal and export increase. With the gradual end of the peak of equipment renewal, the weakening of artificial substitution effect and the weakening trend of downstream demand, China’s demand is expected to gradually fall. Although exports have benefited from the epidemic and increased rapidly, their proportion is still low, and with the gradual recovery of foreign supply chains, exports are also likely to decline. Therefore, we expect that the demand of the construction machinery industry will gradually return to the normal level in the future and maintain the “overweight” rating of the industry.
Risk statement
The weaker than expected economy has led to an inflection point in infrastructure and real estate policies.
