Event: according to the data of China Construction Machinery Industry Association, in March 2022, the sales volume of excavator industry was 37085 units, a year-on-year decrease of 53.1%; Among them, 26556 units in China, a year-on-year decrease of 63.6%; 10529 sets were exported, with a year-on-year increase of 73.5%. From January to March 2022, the cumulative sales volume of excavators was 77175, a year-on-year decrease of 39.2%; Including 51886 sets in China, a year-on-year decrease of 54.3%; 25289 sets were exported, with a year-on-year increase of 88.6%.
Core view: the sales volume of the industry in March was slightly lower than expected (CME expected growth rate of - 49%), and there was great pressure in the first quarter. On the one hand, it was a high base in the first quarter of 2021; on the other hand, the commencement of projects in some areas was delayed due to the impact of the epidemic in the first quarter of 2022. From the perspective of the whole year of 2022, the steady growth policy is implemented in an orderly manner, and there are plenty of terminal projects to be started. It is expected to usher in the peak season of construction in the second quarter. At the same time, with the gradual easing of the pressure on the high base, the growth performance of the industry is expected to rebound in a "V" shape. The valuation of leading enterprises has also fallen back to a historically low level, with medium and long-term absolute income allocation value.
The impact of the epidemic was superimposed on the high base, which was under pressure in the first quarter, and the export performance was brilliant: in March, the growth rate of excavator sales fell by 53.1% year-on-year, slightly lower than expected (CME had expected the growth rate to be about - 49%), mainly due to the delay of project commencement caused by the epidemic in many places since late March; In the first quarter of 2022, the year-on-year growth rate of excavator sales was - 39.2%. Affected by the high base in the same period last year, the overall pressure in the first quarter was great. In terms of tonnage, from January to March 2022, the sales volume of large / medium / small excavation in China was 5246 / 11881 / 34759 units respectively, with a year-on-year growth rate of - 57% / - 64% / - 49% respectively. The growth rate of small excavation decreased relatively little, mainly because the demand of medium and large excavation was suppressed due to the delayed commencement of infrastructure projects. In terms of market, from January to March 2022, the domestic sales / exports were 5.225000 units respectively, with a year-on-year growth rate of - 54.3% / 88.6% respectively. The export continued the high growth trend in the second half of 2021, and the performance was still bright. Thanks to the accelerated international layout of domestic head main engine manufacturers, from the supply of channels and accessories to the continuous introduction of targeted new products, the comprehensive competitiveness of state-owned brands in overseas markets continued to increase. From 2016 to 2021, the compound growth rate of export sales reached 56.3%. We expect that the annual export growth rate of the industry in 2022 is still expected to exceed 55%.
The steady growth policy has been implemented in an orderly manner, and there are plenty of projects to be started in the downstream. It is expected to usher in the peak construction season in the second quarter: from the current construction rate, according to the data on Komatsu's official website, the construction hours of excavators in China from January to February were 70.4 and 47.9 hours respectively, with a year-on-year increase of - 35.8% and + 9.1% respectively. The construction rate returned to positive in February, showing a warming trend. From the perspective of forward-looking indicators on the investment side, the cumulative completion of capital construction and real estate investment from January to February were 8.61% and 3.7% respectively year-on-year. Compared with the whole year of 2021, the cumulative growth rates of the two were 0.21% and 4.4% respectively, and the intensity of capital construction investment was significantly enhanced; According to the Q1 operation data announcement of China Railway Group Limited(601390) 2022, the newly signed capital construction contract amount of the company in the first quarter was 542.4 billion yuan, with a year-on-year increase of 94%, mainly railway, highway and municipal engineering. It is further verified from the side that the capital construction projects are accelerating under the active promotion of the steady growth policy. In terms of special debt, according to the 2022 government work report, it is planned to arrange a new special debt quota of 3.65 trillion yuan for local governments throughout the year, and 1.46 trillion yuan has been issued in advance by the end of 2021; According to the requirements of the executive meeting of the State Council on March 29, the quota issued in advance last year is planned to be completed by the end of May and the quota issued this year by the end of September. From January to February, a total of 877.5 billion new special bonds have been issued, accounting for 24% of the annual quota. Under the pressure of steady growth, the issuance of special bonds is significantly ahead of this year. On the whole, there are plenty of projects to be started in the downstream. After the epidemic situation is controlled, it is expected to usher in the peak construction season and stimulate the recovery of equipment demand.
It is expected that the overall performance in 2022 will be "low before high", and the single month sales growth is expected to return to a positive inflection point at the end of the second quarter: looking forward to 2022, under the four scenarios of - 20% (pessimistic), - 10% (neutral pessimistic), 0% (neutral) and 5% (cautious optimistic) of the growth rate of the excavator industry, according to the proportion of sales in the past five months, the growth rate of the industry in 2022 will be "low before high". Under the neutral pessimistic expectation, assuming that the growth rate of the industry in 2022 is - 10%, the annual sales volume is expected to be 308500 units, and the monthly growth rate is expected to change from negative to positive in August.
Investment suggestion: the construction machinery sector is at the bottom of the fundamentals. The leading companies have passed the tests of the upward and downward periods of the industry. In the current downward stage of the industry, they actively layout digitization and international transformation and upgrading, rely on innovation to create a deeper moat, and have medium and long-term configuration value. It is suggested to pay attention to the undervalued leaders Sany Heavy Industry Co.Ltd(600031) , Jiangsu Hengli Hydraulic Co.Ltd(601100) , Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) , Xcmg Construction Machinery Co.Ltd(000425) , Zhejiang Dingli Machinery Co.Ltd(603338) , etc.
Risk warning: infrastructure investment is less than expected; The implementation of the policy is less than expected; The intensification of market competition leads to the decline of profitability; Overseas market expansion was blocked, resulting in exports falling short of expectations.
