Market review: this week's market downturn, SW mechanical equipment index fell 5.76%, ranking 22nd among Shenwan's 31 primary industry categories; The CSI 300 index fell 4.19%.
Core view
Industry view: the inflection point is imminent. It is late but not absent in the peak construction season. As a typical midstream manufacturing industry, machinery is greatly affected by the linkage of upstream and downstream. The logistics caused by the epidemic is not smooth, which leads to the rise of the cost side and suppresses the release of downstream demand. With the gradual development of the policy of steady growth and the inflection point of epidemic interference, we judge that the boom of the machinery industry is expected to improve month on month from May. It is suggested to focus on CNC cutting tools, nuclear power equipment, lithium battery equipment and construction machinery.
Nuclear power sector: on April 20, Li Keqiang chaired an executive meeting of the State Council, which pointed out that nuclear power should be developed in an orderly manner on the premise of strict supervision and ensuring absolute safety; After years of preparation and comprehensive evaluation and review, three new nuclear power unit projects in Sanmen, Zhejiang, Haiyang, Shandong and Lufeng, Guangdong have been approved. The three projects approved this time are units 3 and 4 of Sanmen Nuclear Power Phase II; Haiyang nuclear power phase II units 3 and 4; Lufeng nuclear power unit 5 and 6. The construction cost of a single nuclear power unit is about 20 billion, of which equipment accounts for about 50%. According to the China nuclear energy development report (2021) issued by China Nuclear Energy Industry Association, the comprehensive localization rate of China's third-generation independent nuclear power has reached more than 88%, forming a supply capacity of 8-10 sets of nuclear power main equipment every year, and the construction capacity is the world's leading. We expect that the localization of China National Nuclear Power Co.Ltd(601985) key equipment is expected to be further accelerated under the background of global pattern changes caused by the conflict between Russia and Ukraine.
General machinery: epidemic disturbance, late but not absent in peak season. The recovery trend of general machinery in January and February was disturbed by the epidemic, and it is expected to return to the recovery channel after the epidemic. In the second quarter of last year, affected by factors such as weakening demand margin and rising cost side, the profitability of general machinery industry showed a downward trend. From January to February this year, the cost of raw materials tended to stabilize and the demand improved month on month. However, the epidemic since March has affected the construction of the upstream and downstream of the industrial chain. We believe that the terminal demand of general machinery depends on the annual capital expenditure planning and project demand of customers, which are generally planned on an annual basis. The interference of the epidemic will delay the demand, but will not be absent. In addition, driven by the strong investment in emerging industries such as new energy, the accelerated demand for equipment localization brought by the reconstruction of the global supply chain, and the demand for the improvement of automation rate brought by the epidemic, the demand for general machinery shows strong toughness.
Construction machinery: the bottom is gradually approaching, "steady growth" is expected to drive the demand recovery in the second half of the year. According to the data of excavator Association, 26 excavator manufacturers sold 77175 excavators in the first quarter, 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%. The epidemic situation and the high base in the first quarter of last year led to a large decline in the industry in the first quarter of this year. We expect that in April, the sales volume of China's excavator market will still decline by more than 50% year-on-year; From May, the sales growth of excavator in China market is expected to gradually stabilize and recover.
Lithium battery equipment: the downstream expansion continues to be high. According to the capacity planning of overseas and Chinese head battery enterprises, we expect that the new battery capacity will be about 557, 616, 464 and 663gwh from 2022 to 2025, with a year-on-year growth rate of 65%, 44%, 23% and 27%. In addition, we predict that the global installed energy storage capacity will be 297gwh by 2025, and the installed energy storage capacity in China is expected to reach 98gwh. The booming demand for energy storage equipment will continue to rise. Considering the current high prosperity of the lithium battery equipment industry, the outbreak of new orders, high subsequent performance and strong certainty, and the continuous expansion of global battery enterprises, Chinese equipment enterprises are expected to fully participate in the global capacity expansion, and the subsequent demand for lithium battery equipment is strong.
Recommended combination: recommend Zhuzhou Huarui Precision Cutting Tools.Co.Ltd(688059) , Oke Precision Cutting Tools Co.Ltd(688308) , Anhui Yingliu Electromechanical Co.Ltd(603308) , Jee Technology Co.Ltd(688162) , Jiangsu Shentong Valve Co.Ltd(002438) etc.
Risk tips: risks of macroeconomic changes; Risk of price fluctuation of raw materials; The risk that the policy and expansion of production are not as expected.
