Finance Association, October 13 (Reporter Huang Lu) Domestic sales of excavators increased by nearly 20% year on year in September. This is the sixth month in a row that domestic sales achieved positive double-digit growth; however, export sales data were “slightly cold in late autumn,” and sales in September were only basically flat year on year.

A person in the construction machinery industry chain told the Financial Federation reporter that domestic earthmoving machinery demand showed a bottoming out trend, driven by factors such as cost reduction and efficiency, and cyclical fluctuations in the industry in the first three quarters of this year were smoothed out. With the gradual implementation of equipment renewal subsidies and the acceleration of large-scale domestic infrastructure projects, the industry is expected to gradually break out of its trough. Meanwhile, in Q4 and next year, the share of overseas business in revenue will continue to increase, and will become a “stabilizer” for hedging cycles and achieving profit growth.

In September, domestic manufacturing sentiment improved, and manufacturing PMI increased 0.7 percentage points month-on-month. According to the latest statistics from the China Construction Machinery Industry Association, 15,831 excavators of various types were sold in September 2024, an increase of 10.8% over the previous year. Among them, domestic sales volume was 7,610 units, up 21.5% year on year; export volume was 8221 units, up 2.51% year on year.

(Data source: China Construction Machinery Industry Association)

Statistics show that from January to September 2024, a total of 147,381 excavators were sold, down 0.96% year on year; of these, domestic sales volume was 7,3945 units, up 8.62% year on year; 73,436 units were exported, down 9.04% year on year.

An executive of a listed company in the industry told the Financial Federation reporter that after the introduction of the large-scale equipment renewal policy, although sales of electric equipment increased, causing loader sales to bottom out and rebounded, the rise in domestic excavator sales was mainly due to an increase in demand for small-scale excavation upgrades.

Hengqiang, a strong player in the domestic construction machinery industry, noticed that Liugong (000528.SZ) has released a performance forecast for the first three quarters of 2024 and is expected to achieve net profit of 1.239 billion yuan to 1.405 billion yuan in the first three quarters of this year, an increase of 50% to 70% over the previous year. The company said that domestic construction machinery is affected by the industry cycle and national policies, demand in the earthmoving machinery sub-industry is bottoming out, and demand in other construction machinery sub-industries is still sluggish.

However, Liu Gong also said that demand in the international construction machinery market is clearly divided. Demand in most developing countries and regions is growing rapidly, but demand from developed European and American economies and individual developing countries and regions showed a downward trend during the year, leading to a decline in overall overseas construction machinery market demand.

According to statistics from the China Construction Machinery Industry Association, domestic and overseas figures for September were uneven. Domestic excavator sales increased 20% year on year, and exports only increased 2% year on year. In September of this year, the average monthly working time of major construction machinery products was 90.0 hours, an increase of 3.99% over the previous month. The monthly operating rate of major construction machinery products was 64.20%, an increase of 3.74% over the previous month. Among them, excavators 67.80%, loaders 67.90%, truck cranes 78.70%, and crawler cranes 54.70%.

Although short-term data shows characteristics of internal heat and external cooling, a relevant person from Zhonglian Heavy Industry (000157.SZ) told the Financial Federation reporter that in the long run, the growth point for major domestic construction machinery manufacturers is still an increase in export share. The logic is, firstly, for domestic brands, the overseas market has growth characteristics, and the penetration rate of overseas markets will also increase; secondly, Chinese construction machinery products are cost-effective and the delivery cycle is short; third, as domestic enterprises improve their overseas channel layout, the overall competitiveness of domestic brands will continue to improve; finally, judging from the share of major export markets, there is still a lot of room for improvement in the company's product category expansion in many countries. According to information, as of the end of June this year, Zoomlion Heavy Industries had 12 smart factories and more than 230 smart production lines around the world.

The relevant executives of Shanhe Intelligence (002097.SZ) stated bluntly at the performance meeting that the company is an enterprise in the construction machinery industry, and that its business performance is closely related to infrastructure investment and real estate development investment in the whole society. Currently, the company's construction machinery industry is facing the problem of insufficient effective demand in the domestic market. In order to promote better development, the company plans to further increase the scale of overseas business.

Q4 and can domestic demand for construction machinery continue to recover in the future? Some industry insiders believe that in the downstream construction machinery industry, which is mainly based on infrastructure, infrastructure projects that were originally suspended or terminated are expected to restart, the operating rate is expected to pick up, and the recovery in infrastructure commencement is expected to drive an increase in demand for construction machinery.

Many people in the domestic machinery industry also believe that at present, the domestic construction machinery industry is still at a steady bottom. In the future, as the construction machinery and equipment renewal cycle approaches, the promotion of a series of policies such as large-scale equipment updates, and the accelerated construction of large-scale infrastructure projects, the industry is expected to gradually break out of its trough.