Domestic sales of excavators have been growing for two consecutive months, which is expected to boost confidence in the industry's development to a certain extent. The growth rate of export sales fluctuates downward or is affected by a high base over the same period and demand differentiation in overseas markets.
The Zhitong Finance App learned that Orient Securities released a research report saying that according to statistics from the China Construction Machinery Industry Association, the country sold 1,8822 excavators of various types in April 2024, an increase of 0.27% over the previous year, slightly higher than CME's previous expectations. The positive growth in domestic sales of excavators for two consecutive months is expected to boost confidence in the development of the industry to a certain extent. The growth rate of export sales fluctuated downward or was affected by a high base during the same period and demand differentiation in overseas markets. Currently, the boom in the construction machinery industry is still bottoming out. As the industry recovers, leading companies are expected to enhance their competitiveness with perfect business layout and steady business quality, and industry concentration is expected to further increase. Domestic demand in the construction machinery industry is expected to increase slightly in 2024 from 2023; at the same time, exports are expected to narrow the decline under the global layout of domestic enterprises.
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The main views of Orient Securities are as follows:
Domestic sales of excavators accelerated in April, and export growth continued to weaken
According to statistics from the China Construction Machinery Industry Association, sales of 18,822 excavators of various types were sold nationwide in April 2024, up 0.27% year on year, slightly higher than CME's previous expectations. By market, domestic sales in April were 10,782 units, up 13.34% year on year, and domestic sales growth rate expanded, exceeding CME's previous expectations; export sales volume was 8040 units, down 13.17% year on year, accounting for 42.7% of export sales. From January to April 2024, the country sold 69,000 excavators, down 9.8% year on year; it sold 37,000 units in China, down 2.9% year on year; exported 32,000 units, down 16.7% year on year, accounting for 45.9% of total export sales. Orient Securities judged that the positive growth in domestic sales of excavators for two consecutive months is expected to boost confidence in the development of the industry to a certain extent. The growth rate of export sales fluctuated downward or was affected by a high base and demand differentiation in overseas markets during the same period.
Start-end data increased month-on-month but is still at a historically low level, and downstream demand remains stable
Judging from equipment startup data, the number of hours Komatsu China excavators started in April was 97.0 hours, down 3.2% year on year, up 5% month on month; in April, Pangyuan leased tower crane utilization rate was 51.9%, -4.8/+5.6 pct year on month, respectively. The absolute values of the two major construction end data are still at a low level over the years. Orient Securities believes that the reason may be that demand for real estate has not yet been transmitted to the construction end, and the pace of construction recovery remains to be seen.
Judging from the downstream boom, downstream demand remained relatively stable, infrastructure investment continued to grow well, and real estate investment and construction continued to decline: from January to March 2024, the cumulative amount of completed infrastructure investment increased 8.75% year on year; the cumulative amount of completed real estate development investment fell 9.5% year on year, and the cumulative total area of new housing construction fell 27.8% year on year. Orient Securities believes that the current real estate industry is still dominated by “securing buildings” and “removing inventory,” and that it will take some time for real estate demand recovery to be transmitted from the policy side to the sales side.
The combination of real estate stimulus policies and large-scale equipment upgrades is expected to drive a marginal improvement in domestic demand
On August 31 of last year, the People's Bank of China and the State Financial Supervision and Administration issued the “Notice on Matters Relating to Lowering Interest Rates on First Home Loans in Stock”. Since October, many cities such as Beijing and Shanghai have optimized “home approval and loan approval” policies and relaxed policies such as first home certification and credit.
In April, the Ministry of Housing, Urban-Rural Development issued the “Notice on the Implementation Plan for Promoting the Renewal of Construction and Municipal Infrastructure Equipment”, which requires the renewal and elimination of construction machinery and equipment that has been in use for more than 10 years, is highly polluting, has high energy consumption, severe aging and wear, and is technologically backward. On April 30, the Political Bureau of the CPC Central Committee held a meeting to emphasize “Coordinating research on policies and measures to absorb existing real estate and optimize incremental housing, and urgently construct a new model for real estate development to promote high-quality real estate development.” On May 9, Hangzhou and Xi'an announced the complete lifting of housing purchase restrictions.
In addition to this, more than 160 cities have introduced policies including easing provident fund loan policies, housing purchase subsidies, lifting the lower interest rate limit for commercial loans for the first home, and financing support for “white list” projects. Orient Securities believes that the introduction of a series of real estate support policies is expected to boost domestic market demand and drive the recovery of the upstream construction machinery industry; policies related to equipment upgrading are expected to accelerate the transformation and upgrading of construction machinery, reduce the scale of existing equipment, stimulate new machine sales, and drive an increase in domestic demand.
Risk warning: Large-scale equipment upgrades have fallen short of expectations, the growth rate of infrastructure and real estate investment is lower than expected, and raw material prices have risen.