Four departments issued a notice to implement the equipment update loan financial discount policy.

If the loan issued by the bank to the operating entity meets the reimbursement conditions for re-loans, the central government will give a 1 percentage point interest subsidy on the principal of the bank loans to the operating entity. The interest subsidy will start from the date of the related loan funds being transferred to the supplier's account, and the subsidy period shall not exceed 2 years.

Recently, the Shanghai Municipal Government issued a notice on "Several Measures to Further Promote Industrial Cost Reduction and Efficiency Improvement and Promote New Industrialization." The notice pointed out that a maximum of 50 million yuan of support will be given to demonstration projects such as digital supply chain and digital green collaboration. Support companies to deploy intelligent equipment, and encourage the newly established enterprises to build intelligent factories, digital workshops, and production lines.

Zheng Zhajie, director of the National Development and Reform Commission, previously said that as high-quality development is further promoted, the demand for equipment updates will continue to expand. The initial estimate is a huge market with an annual scale of more than 5 trillion yuan.

Experts believe that the implementation of equipment update loan financial discount policy will help to exert the role of financial funds to leverage investment and consumption, and promote large-scale equipment updates.

Guolian Securities released a research report that with the release of the 'Proposal for Promoting Large-Scale Equipment Update and Consumer Goods Replacement Action Plan,' various departments and local governments have issued detailed plans in recent weeks, creating continuous catalytic opportunities for the corresponding themes.

The team compares the will of various industries to update equipment from the perspectives of capacity utilization, demand, and inventory levels in 2016, as well as the demand for upstream equipment manufacturing. The downstream update drives the upstream equipment. It is recommended to pay attention to the equipment manufacturing of petrochemicals, textiles, and thermal power.

Guolian Securities predicts that the sales of excavators in China in 2024-2026 will be 180,000/200,000/250,000 units respectively, and the sales of excavators in China in 2024 may be in a weak recovery state.

Construction machinery related companies:

Zoomlion (01157), Lonking (03339), First Tractor (00038), Sinotruk (03808), Sany Int'l (00631), Zhengzhou Coal Mining Machinery Group (00564), Weichai Power (02338), Sinotruk (03808), etc.

Related companies for mining system equipment update:

Zhengzhou Coal Mining Machinery Group (00564): The upgrading of the coal mining machinery industry and the transformation towards digital and intelligent production are still in progress. In 2023, the business income of the coal machinery business reached 18.854 billion yuan, a year-on-year increase of 12.51%, achieving a net income of 3.052 billion yuan attributable to the parent, a year-on-year increase of 21.48%. The company's coal machine business is the R&D, design, production, sales, and service of coal mining comprehensive excavation equipment and its components, and coal mining intelligent mining control system. It provides first-class safe, efficient, and intelligent coal mining technology, complete equipment solutions, and services for global coal customers. The company is the absolute leader in the coal machine hydraulic support industry and is in a leading position in the industry in terms of intelligent coal mining.

Sany Int'l (00631): In 2023, the mining equipment business of Sany International achieved an operating income of 11.8 billion yuan, a year-on-year increase of 19%. The company has always adhered to research and development leadership, and increased investment in fields such as smart mines, intelligent ports, unmanned driving, robots, new industrial equipment, and oil and gas equipment. In 2023, the company's research and development expenses were 1.682 billion yuan, a year-on-year increase of 95.5%.