Event: according to the data of China Construction Machinery Industry Association, in December 2021, the sales volume of excavator industry was 24038 units, with a year-on-year growth rate of – 23.8%, including 15000 units in China, with a year-on-year growth rate of – 43.5%; The export sales volume was 8615 units, a year-on-year increase of + 104.6%. From the single month growth rate in the fourth quarter, from October to December, the sales growth rate was – 30.6%, – 36.6%, – 23.8% respectively, and the decline narrowed in December. Throughout the year, the sales volume of excavators exceeded 340000 units in 2021, a year-on-year increase of + 4.6%. Quarterly, Q1-Q4 sales grew by 85%, – 4.8%, – 16% and – 30.4% respectively.
Core view: the annual growth rate of the excavator industry in 2021 was 4.6%, which was in line with expectations. Due to the pressure on the demand side and the cost side, the quarterly differentiation was obvious. Looking forward to 2022, we believe that under the background of the main tone of the central economic conference, infrastructure construction will be carried out moderately in advance, and the downstream investment side is expected to improve marginally. The construction machinery sector is currently at the bottom of the fundamentals. Under the influence of policy catalysis and the base of “high before low” in 2021, the sales growth in 2022 is expected to pick up quarter by quarter, The valuation of leading enterprises is low, there is no doubt about their competitiveness, and they have medium and long-term allocation value.
The annual performance in 2021 was in line with expectations, with obvious quarterly differentiation: the sales of excavators in 2021 exceeded 340000 units, a year-on-year increase of + 4.6% (in line with the expectation of 0-10% at the beginning of the year). Quarterly, the sales growth of Q1-Q4 is 85%, – 4.8%, – 16%, – 30.4% respectively. It is high before and low after, with large fluctuation. The main reasons we judge are: ① under the influence of the epidemic situation in 2020, the base number in the first quarter is low, which is caused by the base number; ② In 2021, the cost side and demand side are under pressure. From the cost side, the increase of raw materials and freight costs is large, which not only affects the profits of the manufacturing industry, but also affects the downstream commencement. Especially under the background of the sharp increase in the price of steel, the commencement of engineering projects with a high proportion of steel is delayed, affecting the equipment procurement. From the demand side, the cumulative growth rate of fixed asset investment in 2021 showed a trend of high before and low after. Infrastructure investment decreased from 35% in February to – 0.17% in November, and real estate investment decreased from 38% in February to 6% in November. The rhythm of special bond issuance was also lower than expected, affecting the commencement of downstream engineering projects and customers’ enthusiasm for purchasing machines.
The export performance in 2021 is bright, and it is expected that the high double-digit growth will continue in 2022: in 2021, 68427 excavators will be exported, with a year-on-year increase of 97%. On the one hand, overseas has entered the stage of demand recovery after the epidemic. On the other hand, the international layout of domestic brands is becoming more and more mature, the global competitiveness of products is enhanced, and the layout of overseas channels is improved. According to the official wechat of Sany group, Sany Heavy Industry Co.Ltd(600031) the sales volume of excavators exceeded 100000 in 2021, of which the international sales exceeded 22000, with a year-on-year increase of about 120%, surpassing the industry. From 2016 to 2021, the compound growth rate of the export of the excavator industry was 55%. Looking forward to 2022, we expect that the export will continue to increase by two digits, the proportion of post export sales is expected to exceed 30%, and the market structure of construction machinery will be further optimized.
It is expected that the overall performance in 2022 will be “low before high”, and the growth rate will improve quarter by quarter: looking forward to 2022, under the four scenarios of – 20% (pessimistic), – 10% (neutral pessimistic), 0% (neutral) and 5% (cautiously optimistic) of the growth rate of the excavator industry, according to the proportion of each quarter in the past decade, the growth rate of the industry in 22 years will be “low before high”. Assuming that the growth rate of the industry in 2022 is 0%, The growth rate in the single quarter is expected to be positive in Q2.
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, build a deeper moat driven by innovation, and have medium and long-term configuration value. Short term catalysts include: ① the demand side is urged by the steady growth policy to form physical workload; ② Cost side raw materials and freight are expected to achieve profitable repair; In the medium and long term, pattern optimization and export. It is recommended to pay attention to the undervalued faucets Sany Heavy Industry Co.Ltd(600031) , Jiangsu Hengli Hydraulic Co.Ltd(601100) , Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) , 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.
