Cycle, the most magical word in the economic field, will again prevail in 2021.
The difference is that while commodities have soared driven by the cycle, the construction machinery with unlimited scenery in the past few years has stalled. There are many reasons for stall, such as soaring raw materials, weakening downstream demand, high base in 2020… Cycle factors are everywhere.
However, outside the cycle, some new changes are going on according to the existing rhythm, and future opportunities may be here.
cycle war
How beautiful the construction machinery industry will be in 2020 and how embarrassing it will be in 2021.
With the high growth momentum of the previous year, construction machinery will continue to make rapid progress in the first three months of 2021. Taking the excavator with the largest value as an example, the sales volume of excavators in China increased by 85% year-on-year from January to March. In March, the largest demand over the years, it increased by 60% year-on-year, and the sales volume reached a record 79000 units.
With the high prosperity of the industry, Sany Heavy Industry Co.Ltd(600031) , Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) , Jiangsu Hengli Hydraulic Co.Ltd(601100) and other leading enterprises doubled their performance in 2021q1, and their share prices reached new highs at the beginning of 2021.
However, the highlight moment suddenly stops. As shown in the figure below, the situation has deteriorated sharply since then. Even the performance of the stock price is more advanced, Sany Heavy Industry Co.Ltd(600031) and Jiangsu Hengli Hydraulic Co.Ltd(601100) are already weak in late January 2021.
In April 2021, the year-on-year growth rate of China’s excavator sales was only 2.52%, and in the following seven months, it continued to grow negatively, and the year-on-year sales in China fell for eight consecutive years. Moreover, this downward trend has not been alleviated in the “golden nine and silver ten”, but intensified. In November, the year-on-year growth rate of excavator sales in China was – 36.6%, the lowest in 2021, with a decline of more than 30% for two consecutive months.
The net profit attributable to the parent company of excavator leader Sany Heavy Industry Co.Ltd(600031) also increased negatively for two consecutive quarters, with a year-on-year decrease of 28.56% and 35.31% in 2021q2 and Q3 respectively. Its share price also continued to decline since February. It once fell to 21.41 yuan / share on November 19, down nearly 60% from the high point in 2021.
As Sany Heavy Industry Co.Ltd(600031) replied on the “SSE E interaction” platform, “the construction machinery industry has a strong correlation with infrastructure construction and construction investment, and the changes in macro policies and fixed asset investment growth have an impact on the needs of downstream customers”. After fully enjoying the dividend of macroeconomic stimulus under the epidemic situation of last year, construction machinery will suffer from the cycle downturn in 2021.
new changes
The last round of excavators had been in a downturn for five years (2011-2015). Will this time be different?
To answer this question, we must first look at the industry background.
In the past, although China’s economic growth was high, it was concentrated in medium and low-end industries, belonging to rough development. Real estate also has a great weight in economic development. This is the main reason why excavator sales are highly related to real estate and infrastructure investment.
However, although the changes in excavator sales since 2016 are still closely related to infrastructure + real estate investment, there has been some independence.
The reason is that in addition to the outbreak of renewal demand, after the high-level put forward the concept of high-quality development, the industry also has more new characteristics different from the past.
intelligent
In recent years, with the disappearance of demographic dividend, “machine generation” has gradually become an important trend of China’s economic development. On the one hand, it will increase the demand for construction machinery, on the other hand, the intelligence of equipment is becoming more and more important. The former brings demand increment, while the latter determines the increment and the competitiveness of enterprises.
The construction machinery industry has reached a consensus on Intellectualization and has a thorough understanding. In addition to the substitution of equipment for manpower, driverless and intelligent production have also become the development direction of construction machinery enterprises. Among them, driverless construction, which has gradually emerged in the past two years, has made greater progress in 2021.
In September 2021, the first time column reported that XCMG unmanned cluster carried out maintenance operation in Jiangsu Expressway Company Limited(600377) Suzhou section, which is the first successful application of unmanned cluster in high-speed pavement maintenance construction in the world. In October and November, Sany also realized the intelligent construction of unmanned spreader group in Hunan and Shandong respectively. Guangxi Liugong Machinery Co.Ltd(000528) driverless vibration rolling equipment also appeared in Gansu construction in August. In the same month, the global tower crane leader Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) demonstrated the 5g tower crane remote intelligent control system for the first time and completed the first hoisting.
It can be seen that the artificial intelligence, 5g, Beidou high-precision positioning and other technologies required for unmanned driving have already entered the arsenal of construction machinery enterprises.
In addition to the changes on the demand side, the supply side is mainly reflected in the application of artificial intelligence, 5g, industrial Internet and other technologies in the production field, which will significantly improve production efficiency, save costs and enhance competitiveness.
In September, Sany piling machine Beijing factory was selected into the new list of “lighthouse factories” in the global manufacturing field of the world economic forum, becoming the first certified “lighthouse factory” in the global heavy industry. In April, Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) launched the management consulting project of “facing the future and leading for 30 years”, and worked with Accenture to build a “lighthouse factory” and an intelligent manufacturing sample of high-end equipment. Xcmg Construction Machinery Co.Ltd(000425) has 19 Jiangsu demonstration intelligent workshops and 2 Jiangsu intelligent factories. It is the only enterprise in the industry that systematically reaches level 4 of intelligent manufacturing capability maturity.
new energy
The “double carbon” goal has driven the A-share new energy vehicle sector all the way north, which has not only created “ningwang”, but also spawned more companies with a market value of 100 billion.
The layout of construction machinery enterprises in the field of new energy has also lasted for many days. Electrification has already become the development strategy of major enterprises. Industrial vehicles represented by forklifts have even achieved the reverse exceeding of the proportion of electrification.
As of 2021h1, Sany Heavy Industry Co.Ltd(600031) has launched 26 electric products, and its electric mixer, dump truck, tractor and other products have been promoted and tried in more than 20 cities. The first intelligent power exchange station of Sany group was officially unveiled in November, and the power exchange task can be completed automatically in less than 5 minutes. Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) disclosed in the semi annual report that nearly 30 new energy products have been developed, of which 16 products have been offline. Guangxi Liugong Machinery Co.Ltd(000528) electric loaders and concrete equipment were also delivered in batches in July.
In the field of hydrogen energy, Anhui Heli Co.Ltd(600761) and Czech hydrogen technology released China’s first 4-5-ton hydrogen fuel cell forklift. Cummins (China) also landed the hydrogen energy China headquarters in Shanghai Lingang Holdings Co.Ltd(600848) .
internationalization
While China’s excavator sales have fallen for eight consecutive years, China’s Excavator export data are very bright.
According to the data of China Construction Machinery Industry Association, from January to November 2021, the sales volume of excavators in China was 258900 units, a year-on-year decrease of 2.49%; However, 59800 units were exported, a year-on-year increase of 95.9%.
Coincidentally, in the first 11 months, China’s loader sales increased by only 2.19% year-on-year, and the export sales increased by 43.9% year-on-year. The proportion of export sales increased significantly.
The competitiveness of China’s construction machinery enterprises is not only reflected in the large scale, but also significantly stronger from the perspective of strength. In 2021, Chinese construction machinery enterprises do have many “show muscle” operations.
In October, the global tower crane leader Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) held the offline ceremony of the world’s largest rotary tower crane; In November, the concrete pump truck became the third Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) product to win the single national manufacturing champion after tower crane and crawler crane. The excavator company, agricultural machinery company and olan air conditioner under Guangxi Liugong Machinery Co.Ltd(000528) group have been newly selected as national specialized and new enterprises.
Crane is an important place for the three giants to show their muscles. In March, Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) broke the record of China’s largest tonnage crane exported overseas; Sany Heavy Industry Co.Ltd(600031) will refresh the record of the world’s largest tonnage crane; Xca130e, an all terrain crane independently developed by XCMG, has obtained the first EU wvta certificate for out of gauge vehicles from local enterprises.
With the support of product strength, Sany Heavy Industry Co.Ltd(600031) the overseas sales of excavators exceeded 20000 in November, and the average growth rate of sales in Britain, Canada, Italy and other European and American developed countries exceeded 500%. The export volume of XCMG wheel crane in the first July increased by 51% year-on-year, and the export to the high-end markets in Europe, America and Australia increased by more than 150% year-on-year. Guangxi Liugong Machinery Co.Ltd(000528) in the first three quarters, the overall overseas sales also increased by 70% year-on-year, and the overall sales in Europe even reached a year-on-year growth rate of 120%.
In addition, local enterprises have made great breakthroughs in the field of shield machines. China railway equipment exported to Europe, and the super large diameter (12.2m) earth pressure balance shield machine successfully passed the online acceptance; CCCC Tianhe independently developed and exported China’s first ultra large diameter shield machine overseas, and completed the Bangladesh project in October, breaking the monopoly of developed countries on the overseas ultra large diameter shield market.
new chapter
In fact, no matter what new changes, it is difficult for construction machinery to jump out of the “claw” of the cycle. It’s just that the length of the cycle and the size affected by the cycle are different.
In the current environment, the vision of Chinese construction machinery enterprises is not limited to China, but more actively participate in overseas competition; It is not limited to the middle and low-end market, but constantly “show muscle” in high-end products, which is reflected in the fact that the sales growth in developed countries is much higher than the export growth; It is not limited to sales, but develops towards a smarter and more environmentally friendly route. Technologies such as artificial intelligence, 5g and industrial Internet have been applied. Power battery enterprises such as Contemporary Amperex Technology Co.Limited(300750) , Byd Company Limited(002594) are also expanding to the construction machinery industry.
However, it can also be seen that in the process of intelligence, new energy and internationalization, leading enterprises are more aggressive and Matthew effect is more obvious. This also forces other enterprises to have a stronger sense of crisis, which is reflected in the overall listing of Guangxi Liugong Machinery Co.Ltd(000528) group.
In a sense, the future of construction machinery enterprises is not only equipment manufacturers, but also system integrators.
(source: talent magazine)
