The growth rate of the construction machinery industry has gradually decreased. There is still room for development.

For the construction machinery sector, the current market concerns are mainly two: in the long term, China's fixed asset investment slows down, which is bound to affect the growth of the entire construction machinery sector; short-term, construction machinery listed companies due to accounts receivable and financial costs Faster growth and hidden risks.

"In fact, the market does not understand this industry. Construction machinery sector, especially companies that have formed an oligopoly, there is no shortage of space for future development." The investment director of a top five fund company told reporters. He felt that Caterpillar could be used as a comparative example to study domestic construction machinery listed companies.

In terms of this year, although the construction machinery sector as a whole has fallen sharply, brokers have also been more cautious, but the over-expected growth of concrete machinery has also brought some unexpected expectations for the market.

There is still room for development

“As far as the domestic market is concerned, the total market value of construction machinery is only RMB 196.5 billion, and the total sales revenue of machinery giant Caterpillar in 2011 reached USD 60.1 billion.” said the director of listed investment.

The continuous high growth in fixed asset investment in the past decade has contributed to the construction machinery industry, and the stimulus of RMB 4 trillion has brought this industry to the top. Market participants generally questioned that if there is no strong incentive, construction machinery may not be beautiful. This is indeed a matter of concern, but pessimism may be amplified indefinitely when the entire market is depressed.

However, the global machinery giant Caterpillar is very optimistic about China and is actively building factories in China. The company believes that China’s urbanization has determined that by 2025, China still needs to build more infrastructure such as roads and airports. Although Caterpillar is currently facing greater inventory pressure, it has won in China as one of the company's eight strategic plans between 2011 and 2015.

In the 2012 Construction Machinery Strategy Report, Essence Securities predicts that by the end of the “Twelfth Five-Year Plan” period, the sales volume of China's construction machinery industry will reach 900 billion yuan, with an average annual growth rate of approximately 17%. Compared with the average growth rate of 27.5% in the past five years and the average growth rate of 23.8% in the past 10 years, in the future, as the overall size of the industry continues to expand, the growth rate will gradually decline, and the industry will enter a stage of steady growth in the medium to long term.

In addition, the oligopoly of domestic construction machinery is becoming more and more obvious. For example, in the total market capitalization of RMB 199.6 billion, the market value of Sany Heavy Industry and Zoomlion's two companies reached RMB 138.7 billion, accounting for 70% of the market.

It is worth mentioning that as Sany Heavy Industry, Zoomlion and other companies go international, product quality and brand awareness are also constantly improving, and many domestic market shares have been recaptured. For example, data from Gao Hua Securities shows that in all major construction machinery categories, excavators are the only market still dominated by foreign brands, but in recent years, with local manufacturers rapidly catching up, products and distributors as a whole Development has promoted the share of local manufacturers from 23% in 2006 to 40% in 2011.

In the short term, the major concern for construction machinery is the high cash pressure. Haitong Securities Research believes that due to the increase in leverage overdraft sales in the previous period, accounts receivable had a rapid growth from 2010 to 2011. The average operating cash flow of the domestic construction machinery industry has been negative since 2011, resulting in tight cash flow in the industry. . The ratio of industry accounts receivable to operating income has surpassed the historically high level of financial distress in 2005 and the financial crisis at the end of 2008.

Rapid growth of concrete machinery

Although this year, although the net profit of major listed companies in the construction machinery sector has fallen by an average of 25% or more, Zoomlion has increased by 21.5% year-on-year. Among them, the contribution of concrete machinery profits is huge.

In the first half of the year, the concrete machinery market was strong and the excavator market was weak. Revenue from concrete machinery, which accounted for 58% of Zoomlion’s revenue, soared 52%, supporting the growth of Zoomlion’s performance.

The concrete machinery mainly includes concrete pump trucks, concrete pumps (pulling pumps, on-board pumps), concrete mixing stations, concrete mixer trucks, and distribution poles. It is widely used and applied in the mid and late stages of engineering construction, and is subject to new construction in the short term. The effect of the slowdown is small. According to the 2011 data, the proportion of pump trucks and mixers in the sector is relatively large, accounting for 57% of the total.

Industrial Securities believes that in 2012, the sales of pump trucks and mixers (domestic + exports) will have a high probability of being the same as in 2011, and even achieve positive growth. Gao Hua Securities also judged that the construction machinery equipment industry is expected to recover slowly from the low base in the second half of last year.

Haitong Securities has different opinions. In the “industry growth rate is slowing gradually, the warming must wait for policy” mentioned that concrete machinery in the first half of the year in the mix of commercial and mixed, long vehicles to replace the short car, the demand sinks to the third and fourth tier cities Under the influence of three factors, the growth in the second half of the year lacks new momentum. Therefore, it is expected that the growth rate will also slow down and it is expected to maintain a slight increase during the whole year.

At present, the domestic concrete industry has formed a duopoly pattern. Sany Heavy Industry and Zoomlion have occupied more than 90% of concrete pump trucks. UBS Securities believes that excavator sales will not materially improve in the second half of 2012, and concrete machinery will be high. Although it will further penetrate into third-tier cities, there is limited space for penetration.

Caterpillar has already stopped its excavator capacity expansion plan in China. Looking forward to the second half of this year, Caterpillar plans to continue to adopt moderate and prudent production reduction and destocking strategies in the Chinese construction machinery market, and it is expected that inventory will be gradually reduced to an appropriate level during the year. However, Caterpillar also responded to the sudden reversal of the Chinese construction machinery industry. Caterpillar estimated in the semi-annual report that the steady growth measures of the Chinese government are expected to accelerate the growth of the construction machinery industry in late 2012 and 2013.

In the long run, Industrial Securities expects that the average annual compound sales growth of pump trucks and mixer trucks in the domestic market from 2012 to 2015 will be approximately 6% and 8%, respectively, and the gross profit margin level of the industry can still be maintained. Domestic sales The growth rate of revenue will be basically the same as sales growth. In addition, with the strengthening of the international competitiveness of local concrete machinery products (especially pump trucks and mixer trucks), the expansion of overseas production bases, sales and service networks of leading companies, and the continuing tide of overseas acquisitions, export sales and income are expected to grow steadily. .