key investment points:
1. In 2021, the sales volume has gone from soaring to returning to rationality, and the leading valuation has entered a "depression";
2. The industry predicts that the industry will face a double-digit year-on-year decline, and the inflection point or Q2 will appear;
3. The real estate market and the progress of infrastructure investment will become the biggest variables next year;
4. The leading share increased, and "overseas export + electrification" weakened the cyclical fluctuation.
The growth rate is high before and low after, and the sales volume is hot outside and cold inside, which has become the key words of construction machinery in 2021. After five consecutive years of positive growth, in 2021, the sales of construction machinery such as excavators and loaders in China were high before and low after. The sales have declined for eight consecutive months. The industry shows a cyclical downward trend, and the competition pattern of the industry has shifted from incremental market to stock market.
According to the feedback from experts and some machinery companies, the sales of construction machinery may face a year-on-year decrease of 15% to 20% in 2022. Considering the increasing downward pressure on the economy in the first quarter of 2022 and the advance release of the amount of special bonds, infrastructure is becoming the main focus of this round of steady growth. With the advance issuance of the new special debt limit next year and the acceleration of fiscal expenditure, the growth rate of infrastructure investment is expected to enter the stage of stabilization and recovery, and the valuation of construction machinery companies has also reached the bottom of history, and there is repair flexibility next year.
the boom fell in 2021 and the valuation entered the low area
"Next year's overseas export and electrification are the focus of increment. But on the whole, due to the downward pressure on China's sales volume, referring to the past experience of the industry, the downward cycle will last for a certain time, but it is expected that the downward range and duration of this cycle will be narrowed," an insider of a Guangxi engineering machinery company told the financial associated press.
The construction machinery sector is the largest market value sector of machinery and belongs to a typical investment driven variety. There are two companies with a market value of 100 billion, namely Jiangsu Hengli Hydraulic Co.Ltd(601100) (601100. SH) and Sany Heavy Industry Co.Ltd(600031) (600031. SH). The main sub categories of the industry are earth moving machinery, crane, concrete machinery, pavement machinery, aerial work machinery, etc. Representative construction machinery products are excavators, loaders, cranes, etc.
The industry experienced two consecutive years of high growth from 2019 to 2020, and the growth rate showed a correction. In 2020, the whole industry realized an operating revenue of 775.1 billion yuan (a year-on-year increase of 16%). Since March 2021, due to the continuous decline in the cumulative year-on-year growth rate of infrastructure and real estate investment, the demand for construction machinery has decreased, and the annual growth rate is high before and low after. China Construction Machinery Industry Association predicts that the operating revenue of construction machinery will exceed 800 billion in 2021, which is slightly higher than that in 2020.
Excavator sales volume is the "barometer" of the landscape of construction machinery. According to the latest statistics of major excavator manufacturers disclosed by China Construction Machinery Association, 318746 excavators were sold from January to November this year, with a year-on-year increase of 7.66%, which is lower than the annual growth expectation of 10%. The 13 sample companies in the construction machinery sector selected achieved a revenue of 288.8 billion yuan in the first three quarters of 2021, a year-on-year increase of 26%, and the net profit attributable to the parent company increased by 11.3%. The overall gross profit margin of the sector was 22.5%, down 3.2 percentage points year-on-year.
(data source: China Construction Machinery Association data sales of various categories of products from January to October)
In terms of the trend of the whole year, according to the classification of securities industry index, the construction machinery index fell from 1741 points in the year (February 18) to 1178 points on December 20, a decrease of 32.3%. The share prices of Companies in the sector have fallen to varying degrees, especially the valuation of leading companies has been close to the "depression" area within two years. Statistics show that the latest P / E ratio of the construction machinery sector is about 11 times, the average p / E ratio in recent one year is about 14 times, the highest value in the year is 21 times and the lowest value is 10 times.
In this regard, a private placement manager focusing on the machinery industry told the financial associated press that the leading construction machinery companies have experienced many periodic tests, and the current cycle fluctuation will be shorter than the previous cycle. From the perspective of valuation, the leading companies have entered a reasonable range. However, from the perspective of institutional allocation, the growth space and certainty of other tracks in the machinery industry, such as lithium battery, photovoltaic and semiconductor equipment, are higher, while the downward trend of the cycle of the construction machinery sector is not over and is currently in a wait-and-see state of low allocation.
The statistical data also confirm the above view. In Q3 of 2021, the active stock based positions were concentrated in semiconductor equipment, photovoltaic equipment, lithium battery equipment and industrial control automation. Among them, there were four companies in the semiconductor and photovoltaic sectors in the top 20. The top three companies with market value of positions are Naura Technology Group Co.Ltd(002371) , Wuxi Lead Intelligent Equipment Co.Ltd(300450) , Shenzhen Inovance Technology Co.Ltd(300124) .
may face double-digit decline in 2022, and the inflection point is expected to appear in Q2
Stock prices often reflect expectations in advance. For the market prediction next year, the relevant person in charge of a machinery company in Hunan told the financial associated press that the Q4 sales of the company this year is expected to be similar to that in Q3. Due to the high Q1 base this year, the growth rate in the same period next year is expected to remain at a low level, but the growth rate is expected to increase later, and the annual growth rate will be the trend of low in the first and high in the second. The growth rate of all product lines will not change much next year, and the pressure of excavator is relatively large.
Insiders of a construction machinery company ranking high in the industry hold a similar view. The overall judgment of the industry in 2022 is still cautious. The overall prediction of the sales of construction machinery is that the sales volume will decline by 20% year-on-year, the use of concrete machinery (Commencement index) may decline by 5% year-on-year, and the demand for pump trucks may decline by 30% year-on-year. The overall crane will decrease year-on-year, but the range will not be too large. Large tonnage cranes may maintain positive growth, and the mixer truck will be relatively stable.
The reporter noted that a number of industry experts looked forward to next year's market at the 2021 China Construction machinery marketing & Post Market Conference held recently. The relevant person in charge of Guangxi Liugong Machinery Co.Ltd(000528) believes that the industry trend will be downward in 2022, but it will be gentle. Loaders are different from excavators. The decline of loaders should be more stable. Now 100000 units are half of the sales of 200000 units ten years ago, so even if the decline is about 5%. However, excavators are different. The sales volume of about 280000 units now is about 160000 units a decade ago, an increase of nearly 70%. Therefore, if it wants to decline, the actual decline will be more than that of loaders, more than 10% to 20%.
The relevant person in charge of Hitachi construction machinery (Shanghai) believes that the development of the industry has completely reached the stock market, and there are still very few new growth points. The main factor in the stock market is the problem of the project capital chain. Now, it is not that there is no project, but that it is necessary to advance funds to take over the project. Therefore, if the capital chain is not improved, the market will decline sharply next year. If the principles and policies can be implemented in a supporting manner, it will decrease by 15% - 20% year-on-year in 2022. If the funds continue to be insufficient, it is difficult to accurately predict.
According to the latest industry strategy of Anxin securities, the overall judgment of construction machinery in 2022 is that the short-term demand is under pressure, the annual growth rate is expected to be negative, and Q2 is expected to usher in an inflection point. Taking excavator as an example, under the background of high base, the annual growth rate is expected to be negative, but from the perspective of quarterly growth rate, the decline is gradually narrowed. The growth rate of Q1-Q4 in 22 years is expected to be - 16%, 1%, 5% and 27% respectively, and the inflection point is expected to appear in Q2.
investment in real estate and infrastructure becomes the largest variable next year
The demand for construction machinery mainly comes from the capital expenditure of China's infrastructure construction and real estate development. The change of industry environment is the biggest factor affecting the sales volume of the industry. Whether real estate enterprises can enhance their willingness to acquire land, promote the growth of new construction area of real estate, increase the capital lubricant to dredge the circular chain, so as to drive the stock and incremental market of construction machinery and realize the "soft landing" after the rapid growth of construction machinery for several consecutive years will be one of the biggest suspenses for the development of construction machinery in 2022.
"The real estate market is expected to be less optimistic next year, mainly depending on whether infrastructure investment can play a supporting role," an insider of a construction machinery company in Guangxi told the financial associated press. Statistics show that by the end of November, a total of 3.48 trillion yuan of new special bonds had been issued in the first November of this year, completing 90% of the annual progress, a significant increase compared with 60% at the end of September. At the same time, recently, many places are intensively applying for special bond projects in 2022. The central economic work conference held from December 8 to 10 emphasized that "infrastructure construction should be carried out moderately in advance".
"The policy is good news for the company and industry, but the data on the consumer side will be delayed to a certain extent. The degree of good mainly depends on the funds and the stimulus to the market." A relevant person from a construction machinery company in Hunan told the financial associated press.
In addition, insiders told reporters that the real estate market is still down, infrastructure needs to be undertaken, and the trend will continue. The RRR reduction at the end of the year indicates the direction for next year, which are positive signals, but it is certainly difficult to see a growth rate of more than 10% after the epidemic. In the construction machinery, the tower crane and concrete are under great pressure this year, and the probability of repair in the next few months is very high. From the micro perspective of construction machinery, the number of startup hours and orders have gradually improved slightly.
According to the data, the cumulative growth rate of fixed asset investment in 2021 was high before and low after. Infrastructure investment fell from 35% in February to 0.72% in October, and real estate investment fell from 38% in February to 7.2% in October. According to the analysis of China Securities Co.Ltd(601066) machinery researchers, the scale of local government special bonds released as a whole in 2021 is high, but they are mainly released in the second half of the year, which does not significantly promote the basic construction projects during the year.
The agency believes that with the transfer of special bond funds to the project end, infrastructure is expected to usher in a wave of recovery in 2022. Under the pressure of energy conservation and environmental protection, the downward pressure on the economy will increase. In 2022, we may further strengthen the counter cyclical economic regulation policy to benefit the development of infrastructure. From the perspective of construction machinery sales, the base in the first half of 2021 is high, and the data rate in the first half of 2022 is likely to increase negatively. However, driven by infrastructure construction, it is expected to usher in a year-on-year inflection point in the second half of the year.
The cycle of is weakened, and "overseas export + electrification" is still an incremental focus
The Chinese market has periodically entered a slow growth stage, and many enterprises have adjusted their strategies to seize the overseas market. In the first half of this year, Sany Heavy Industry Co.Ltd(600031) international sales revenue reached 12.444 billion yuan, a year-on-year increase of 94.69%; Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) overseas revenue reached 2.768 billion yuan, a year-on-year increase of 52.28%; Guangxi Liugong Machinery Co.Ltd(000528) in the first three quarters, the sales revenue in overseas markets increased by 60% year-on-year, the sales volume increased by 70% year-on-year, and the sales volume in some regions reached the highest level in history.
On the one hand, under the influence of the epidemic, most of the foreign manufacturing industries can not keep up with the production capacity. The surge in overseas market demand has significantly increased the share of China's major construction machinery enterprises in the overseas market. At the same time, with the recovery of overseas economy, countries' increasing investment in infrastructure construction has driven the demand for excavators in the international market.
From January to November 2021, the cumulative export sales volume of excavators reached 59800 units, reaching 95.91% year-on-year. The agency predicts that with the recovery of overseas economy in 2022, overseas demand may decline, but it will not have much impact on the whole. Exports can still maintain a high growth trend, which plays a certain hedging role in the downward cycle of the industry. A head company in Hunan also told reporters that "it is expected that the construction machinery industry as a whole will decline slightly in 2022, but exports will maintain a substantial growth, which will offset the downward pressure of some Chinese markets. If the situation is good, it will remain flat".
According to the ranking data of global construction machinery enterprises in yellow table 2021, among the top ten enterprises, caterpillar of the United States and Komatsu of Japan occupy the top two on the list, and Chinese enterprises XCMG, Sany Heavy Industry Co.Ltd(600031) and Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) jointly enter the top five on the list, ranking third, fourth and fifth. The three enterprises have increased by 1, 1 and 5 respectively compared with the ranking in 2020, The market share of the three enterprises increased from 14.0% in 2020 to 21.3% this year, an increase of 7.3pct, and the gap with the top two cities gradually decreased.
In the communication with many construction machinery enterprises, except that overseas export is the "bonus item" in 2022, electrification has become the next outlet in the eyes of many companies. At present, XCMG, Sany, Zoomlion, etc. have released a number of motorized products to increase the layout of electrification.
Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) the relevant person in charge told the financial associated press that by 2025, the company will realize the full series of new energy products, and the product energy consumption will be 20% lower than that in 2020. During the 14th Five Year Plan period, the proportion of motorized products will increase year by year. Industry insiders predict that by 2025, the penetration rate of electric construction machinery will reach 25%.
(Financial Associated Press)
