Focus this week: Wuhan Jingce Electronic Group Co.Ltd(300567) , Sany Heavy Industry Co.Ltd(600031) , Wpg (Shanghai) Smart Water Public Co.Ltd(603956) , Warom Technology Incorporated Company(603855)
Core view of this week: since the beginning of the year, the pressure for steady growth has increased, and the intensity of infrastructure investment is expected to increase. We believe that relatively weak public utilities construction is expected to become a hot spot for investment, including "double carbon" related nuclear energy, hydrogen energy, water network and smart water construction, oil and gas pipeline network construction, which will bring equipment investment demand.
This week's theme: Excavator review and Prospect
Review of excavators in 2021: 1) sales volume: in 2021, the sales volume of excavators reached 343000 units (YoY + 4.6%), of which 274400 units (yoy-6.3%) were sold in China and 68400 units (YoY + 97.0%) were exported. The Chinese market began to show a certain fatigue from the second quarter, the year-on-year growth rate of sales began to turn negative, and the export sales increased rapidly due to the recovery of overseas economy, the slow recovery of overseas excavator peers and the improvement of the recognition of Chinese excavator; 2) Price: ① from the perspective of second-hand excavator index, it shows a downward trend, but there are two waves of slight rebound from February to March and October. Among them, due to the resumption of work and production from February to March, the downstream demand enters the peak season, and the agents raise the price of excavators slightly; In October, the demand for the commencement of new projects represented by people's livelihood projects was still releasing, and the outbreak of small excavators, especially the rainstorm in Henan and Shanxi, affected the subsequent reconstruction. The demand was fully released, but the subsequent infrastructure and real estate demand continued to weaken, and the second-hand excavator index continued to enter the downward channel; ② In June, due to the rising cost of raw materials, excavator manufacturers raised prices by 5% - 10%; 3) Operating hours: ① the monthly operating hours of Komatsu China excavator: the cumulative utilization hours of the whole year are 1227 hours, 12.4 hours less than that in 2020. Quarterly, Q1 is 136.6 hours more, which is related to the low base of the impact of the 2020q1 epidemic. In q2-q4, the operating hours are 42.2 hours, 52.9 hours and 53.7 hours less than that in the same period of last year, respectively, Q4 operating hours show a marginal stabilization trend; ② Operating hours of CCTV financial excavator: vertically, the marginal stabilization trend of Q4 operating hours is clear; 4) Real estate and infrastructure investment: in 2021, both the newly started area of real estate and the amount of infrastructure investment showed a year-on-year downward trend. At the beginning of the year, due to the low base of the epidemic, the cumulative year-on-year growth rate began to decrease month by month, the newly started area of real estate decreased by 11.4%, and the investment in infrastructure construction decreased by 0.2% in November, In December, the cumulative capital construction force increased slightly by 0.2% year-on-year, which had a great negative impact on the sales of excavators.
Outlook for 2022: with the recent acceleration of infrastructure construction, China's excavator market is expected to pick up
1) the construction situation has improved since the beginning of the year. According to the China Securities News, from January 4 to 6 alone, major projects around the country started in batches, and the total investment of major projects has been announced to exceed 3 trillion yuan; 2) At the end of 2021, the Ministry of Finance issued to all localities in advance the new special debt limit of 1.46 trillion yuan in 2022, and the issuance time of new special debt was significantly advanced. The above two situations indicate that the acceleration of infrastructure construction in the first quarter of 2022 is expected to drive the recovery of China's excavator industry.
Outlook for 2022: overseas market is expected to continue to break through
In 2021, the export sales volume of China's Excavator reached 68400 units, with a year-on-year increase of 97.0%. On the one hand, the epidemic affected the production of overseas excavator peers, on the other hand, China's excavator has been increasingly recognized by overseas customers. In 2020, Sany Heavy Industry Co.Ltd(600031) overseas excavator sales exceeded 10000 units, the excavator share in major markets such as North America, Europe and India increased significantly, the Southeast Asian market made a collective breakthrough, and the market share in some countries has risen to the first; In 2021, overseas sales exceeded 22000 units. However, compared with international excavator enterprises such as Komatsu group, the proportion of overseas business of Sany Heavy Industry Co.Ltd(600031) is still low. Xiang Wenbo, President of Sany Heavy Industry Co.Ltd(600031) stressed to accelerate the expansion of overseas markets at the ceremony to celebrate that the sales of hydraulic excavators in 2020 ranked first in the world at the end of May 2021. He said that he had been committed to expanding markets in Asia and central and South America, and would begin to expand markets in North America and Europe in the future. At present, Chinese Excavator enterprises have entered the stage of rapid expansion of overseas market.
Risk tips: 1) there is a great risk of decline in the Chinese market; 2) Risk of continuous weakening of overseas demand; 3) Increased market competition leads to the risk of declining profitability.
