Key investment points
The year-on-year sales volume of excavators in February was - 13.5%, which was better than expected, and the export remained strong
In February 2022, the sales volume of excavator industry was 24483 units, with a year-on-year increase of - 13.5%, higher than the previous CME expectation of - 22%. Among them, China sold 17052 units, a year-on-year increase of - 30.5%; 7431 units were exported, with a year-on-year increase of + 97.7%. Exports maintained a strong growth trend, and the proportion of sales volume in the total sales volume jumped to 30.4%, with a year-on-year increase of + 17.1pct. Considering the recovery of overseas markets and the improvement of the global competitiveness of domestic brands, we expect the high growth momentum of subsequent exports to be sufficient to effectively smooth the cyclical fluctuations of the Chinese market.
In terms of sales volume structure in China, the sales volume of small excavation (18.5t) / medium excavation (18.5-28.5t) / large excavation (> 28.5t) in February was 11515 / 4000 / 1537 units respectively, with a year-on-year ratio of - 20.8% / - 46.1% / - 41.1% respectively, accounting for 67.5% / 23.5% / 9.0% of the total sales volume, with a year-on-year ratio of + 8.9 / - 5.8 / - 3.1pct. The recovery trend of small excavation is good, and the recovery of medium and large excavation related to infrastructure, real estate and mining is relatively slow.
The issuance of special bonds was accelerated, and attention was paid to the opportunities of the construction machinery sector under the background of steady growth
On March 5, the government work report of the State Council pointed out that the annual economic growth target is about 5.5%. We should put steady growth in a more prominent position and moderately advance infrastructure investment. In 2022, it is planned to increase the amount of special bonds of local governments by 3.65 trillion yuan, and the amount of new special bonds has been issued in advance by 1.46 trillion yuan. The total amount of the two funds exceeds 5 trillion yuan, effectively stimulating investment in infrastructure and other aspects. This year, the issuance pace of special bonds has been significantly ahead and accelerated. According to China Securities News, in the first two months of 2022, a total of 877.5 billion yuan of new local government special bonds were issued across the country, accounting for more than 60% of the "early approval" quota. However, the issuance of new special bonds in 2021 began in March. We expect that the new special bonds will be mainly issued in the first half of this year.
Pay attention to the electric wave of the industry in the next five years, and the rhythm is expected to exceed market expectations
Electrification can reduce the life cycle cost of construction machinery, transfer the value in the operation stage to the manufacturing end, and improve the technical level of equipment and software, which is conducive to the expansion of market scale and profit margin of the industry. Based on the advantages of saving operating costs and policy support (e.g. no on the road for excessive emissions, no traffic restrictions for green cards, tax exemption, etc.), the electrification penetration rate of construction machinery products represented by concrete mixer, muck truck, excavator and loader is expected to achieve leapfrog development in the future.
Investment advice
Recommend [ Sany Heavy Industry Co.Ltd(600031) ] one of the most globally competitive high-end manufacturing leaders in China, and look forward to the opportunities in the process of globalization. [ Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) ] crane + concrete machinery is the leader in the post cycle, and the emerging strategic business contributes to a new growth pole. [ Xcmg Construction Machinery Co.Ltd(000425) ] truck crane leader, the mixed reform is expected to significantly release the performance flexibility. [ Jiangsu Hengli Hydraulic Co.Ltd(601100) ] domestic hydraulic parts are scarce, and the pump valve + non-standard discharge force passes through the cycle.
Risk warning: the investment in infrastructure and real estate is lower than the market expectation; Industry competition intensifies; Global trade disputes
