The construction machinery industry ushered in an inflection point and is expected to continue to pick up

Recently, benefiting from the superposition of new demand and updated demand, the overall sales performance of construction machinery in January and February is very bright.Truck cranes, concrete machinery products and other sales have exceeded market expectations.

Infrastructure investment continues to benefit the construction machinery industry. High-speed rail, subway and other infrastructure construction is a continuous process, lasting at least 3-4 years, at present, the domestic infrastructure vigorously promote the PPP model, urban rail transit, branch line construction and railway trunk lines, mines and other infrastructure areas demand warm, directly drive the sales of large construction machinery (large excavators) and other products.

In addition, the recent sales of construction machinery also accounted for a large share. Under normal circumstances, the life of construction machinery is 8-10 years, and it is currently 8-9 years away from the last peak period of the construction machinery industry (2007-2011), and the next 2-3 years will have a large demand for updates. Construction machinery industry before 2011 reached the peak of sales, at present, after about 6 years of industry depth adjustment, some market competitors have been out, the industry competition pattern has improved significantly, leading companies are expected to take the lead in recovery.

The renewal cycle superimposes the demand for infrastructure investment, which provides a demand basis for the current recovery of construction machinery. According to new data, the average number of hours excavators turned on in February was 88.7 hours, an increase of 85.56% year-on-year and 10.32% month-on-month. The cumulative number of operating hours in the fourth quarter of last year increased by 11.3% year-on-year, and from the trend point of view, the growth rate from January to February this year basically continued since the fourth quarter of last year. From January to February of the previous year, the equipment gradually entered the peak season from March to April, and the current number of start-ups shows that the downstream engineering volume is continuing to warm moderately.

In addition, in 2016, the market share of domestic excavator brands exceeded 50%, with the rise of domestic excavator brands, Japanese and Korean brands are declining, according to the data of industry associations, the market share of domestic leading enterprises Sany Heavy Industry increased from 12% in 2011 to 20%, and in January 2017, Sany's market share reached 22.4%. In the context of the recovery of product demand and the expansion of market share, the profitability of construction machinery enterprises is gradually improving.

From January to February, the rapid growth of excavator sales was mainly related to factors such as increased infrastructure investment, rebound in mining demand, low base last year and stock renewal demand. Judging from the recent sales of other construction machinery and equipment, the rebound in excavator sales has gradually spread to bulldozers, cranes and other varieties, and the overall demand has picked up, and according to the 2016 performance disclosure of the construction machinery sector, the profit improvement has been reflected in the demand recovery. It is expected that the recovery of construction machinery demand will continue, driving the continuation of the profitability repair of the construction machinery sector, and it is recommended to pay attention to relevant leading enterprises.