Construction machinery industry: excavator sales increased by 75% year-on-year, and continued to push the leading Sany Heavy Industry

According to the data of the Construction Machinery Association, in December 2016, the domesticexcavatorsales volume was 6,910 units, a year-on-year increase of 75%, and a growth rate of more than 70% for four consecutive months; The cumulative sales volume for the year increased by 25% year-on-year. thereintoSany Heavy IndustrySales in December were 1,449 units, +104% year-on-year, and +40.61% year-on-year year-on-year.

1. Sales in the western region doubled year-on-year

According to brand analysis, the market share of domestic brands declined slightly, with a market share of 46%; Sany occupies a leading position with a market share of 21%; According to the tonnage analysis, the sales concentration of excavators is high due to the downstream mining industry, infrastructure and PPP projects, and the medium and large excavators are concentrated in 8 provinces and cities including Shanxi, Shaanxi, Inner Mongolia, Yunnan, Guizhou, Guangxi, Guangdong and Chongqing; According to the analysis of sales area, in December: sales in the west rose by 100% year-on-year, with a market share of nearly 40%, and the sales volume in the central part of the country increased by as much as 40% year-on-year in 2016 (the largest increase), and the market share in the central region increased by nearly 30%.

Second, there is room for industry growth

1. The reason for the rebound of earthmoving machinery data. The sharp rebound in the data in the past few months is due to the obvious pull of national infrastructure investment, mainly including the growth of medium and large excavation demand brought by the downstream such as roads, bridges and mining.

2. Thoughts on 2017. Excavators are expected to maintain high growth in the first half of the year, and it is expected that the demand for medium and large digging will increase significantly, and the annual growth is expected to be 20-30%, but there will be no new production capacity.

3. Views of other models. Heavy machinery and concrete machinery have grown by 10-20% in recent months, and earthmoving machinery (crane, bulldozers and loaders) to these models will take 3-6 months, and concrete machinery is expected to grow by 10-20% in 2017.

Third, the opportunity lies in clearing and transformation

The large opportunities of construction machinery depend on the company's initiative to accelerate the clearance and the transformation of the business beyond expectations, otherwise it is a thematic opportunity.

1. In 2017, it is expected that the growth rate of real estate investment will drop to between 2-3%, such as GDP growth and fixed asset investment need to maintain the bottom-line growth rate, and the growth rate of infrastructure investment will need to rise to more than 20%, and infrastructure demand will continue.

2. The industry will continue to recover in a small cycle, and it is expected that excavator sales will maintain high growth in the first half of the year, and cranes will also rebound.

3. The balance sheet of the enterprise still needs to be repaired to the balance range, so that the recovery of the industry may bring a significant improvement in profitability, and the success of the transformation will not bring drag. Recently, we have seen that Sany Heavy Industry, the industry leader, took the initiative to clear off the burden and transferred the non-performing accounts receivable with a book value of 4.7 billion yuan to the group at a price of 3.5 billion yuan to optimize the asset structure, and the proportion of receivables/revenue is expected to drop from 133% at the end of the third quarter of 2016 to less than 80%. Sany Heavy Industry will become a company with the industry's recovery performance elasticity*5655, and the company's transformation is also expected to travel lightly.

4. Maintain the previous view. In the first quarter, we are optimistic about the recovery of industry sales and the theme of the Belt and Road Initiative, and are optimistic about the companies that take the initiative to clear, the proportion of earthmoving machinery and the proportion of exports continues to increase.

FourInvestment advice

Investors who pursue relative returns can be allocated, and Sany Heavy Industry, which takes the initiative to clear, is the first to be promoted, and the rest are recommended to pay attention to Zoomlion, Liugong, Xiamen Engineering Co., Ltd., Hengli Hydraulics, etc.

Risk Warning. investment in fixed assets was lower than expected; Construction machinery enterprises to inventory and production capacity is lower than expected.