Securities Times: Xiang Wenbo, President of Sany Heavy Industry: Construction machinery has at least 10 years of golden period

Source: Securities Times Author: Wen Xingming

"Many people are worried that the construction machinery industry can not continue to maintain rapid growth, in my opinion, the construction machinery industry has at least 10 years of golden period, such as Sany Heavy Industry [14.69 1.87% stock bar research report] such leading enterprises, will maintain an average annual growth rate of more than 30% in the future." Sany Heavy Industry (600031) President Xiang Wenbo said in an interview with a reporter from the Securities Times a few days ago.

Among the three giants of domestic construction machinery, Zoomlion [0.00 0.00% stock bar research report] has landed on H shares last year; Sany Heavy Industry Co., Ltd. started an H-share roadshow in Hong Kong on September 19, planning to raise about US$3.4 billion; XCMG Machinery [18.39 1.66% Shares Research Report] H-share listing is also only a "kick in the door". At present, the valuation of international construction machinery giants such as Caterpillar is about 15 times the price-earnings ratio (PE), corresponding to a revenue growth rate of about 10%, while Sany Heavy Industry and Zoomlion, after two macro-controls in 2005 and 2008, the average annual growth rate of revenue in the past 10 years is still as high as more than 50%, but the recent PE is less than 10 times, and the valuation advantage is obvious.
 

■The strong are always strong

After 10 years of rapid growth, the construction machinery industry began to transition from full competition to oligopoly competition, and the Matthew effect appeared. In the 10 years from 2000 to 2010, Sany Heavy Industry's revenue increased from 390 million yuan to 33.9 billion yuan, with an average annual compound growth rate of 56%. "The situation of rapid growth of large and small enterprises together will be gone forever, and the strong will always be strong in the future, and the weak will be weaker." China Merchants Securities [11.76 3.52% stock bar research report] machinery industry * analyst Liu Rong said.
The Matthew effect of the industry is undoubtedly revealed in the financial reports of listed companies. Unlike the general performance in 2010, the performance of construction machinery companies in the first half of 2011 began to diverge: leading enterprises continued to grow rapidly, while other companies declined.
Behind the performance differentiation is the short-term decline in the growth rate of the construction machinery industry. However, for industry leaders, the short-term decline in the industry brings more market opportunities. Leading companies can survive recession and boom cycles and sustain growth. The main road construction machinery * ST Shenggong [16.18 0.56% stock bar research report], has withdrawn from the construction machinery industry, these competitors to give up the market share, * will eventually be the industry leading companies into the bag.
 

■Welcoming the "New Golden Decade"

Sany Group, the major shareholder of Sany Heavy Industry, has also revealed its ambition in the group's five-year plan: by 2015, it will become an international enterprise with more than 200,000 global employees and sales exceeding 300 billion yuan. Five years later, the world ranking surpassed Caterpillar and jumped to the world's *5656.
Liu Rong of China Merchants Securities believes that Sany Heavy Industry sits on the global * 5655 market in China, relying on the strong support of urbanization and internationalization, and is the most promising construction machinery enterprise in China to surpass Caterpillar and the world's construction machinery throne. Li Jianjian, a researcher at Founder Securities [6.79 3.03% Stock Research Report], also said that the Matthew effect in the industry enables leading companies to use their advantages in products, technology, financing and networks to rapidly expand their market share and become bigger and stronger. "This H-share financing adds another capital platform for Sany Heavy Industry, and a large amount of financing through this platform is invested in overseas market development, which is of great significance to the company's overseas business." Li Jianjian emphasized.
In the past 10 years, the development of the construction machinery industry has mainly benefited from factors such as urbanization, high-speed rail construction, and western development. In the next 10 years, the development of the industry is still inseparable from the development of the macroeconomy, and with the deepening of industry integration, leading companies such as Sany Heavy Industry will usher in a "new golden decade".
Compared with the domestic market, the overseas market of construction machinery has a broader space. China's construction machinery market accounts for 1/3 of the world's capacity, and the overseas market accounts for 2/3. At present, Sany Heavy Industry has built a complete overseas market network, with 30 overseas subsidiaries and business covering 150 countries. In the next few years, the proportion of Sany's overseas sales revenue will gradually increase to 30%.
"Sany's future strategic positioning is the world's equipment manufacturing giant, you ask me where is the ceiling of Sany? At least 20 years later! Liang Wengen, chairman of Sany Heavy Industry, is full of confidence.