Securities Daily: There is no timetable for H-share IPO, Sany Heavy Industry responds that financial health is not bad money

Source: Securities Daily Reporter: He Jun

According to media reports, Sany Heavy Industry's IPO promotion activities in Hong Kong, which were originally scheduled to start on July 16, were canceled for some reason.

According to this, on July 17, the "Securities Daily" called the relevant person in charge of Sany Heavy Industry, and the person said: "The so-called promotion in Hong Kong on July 16 is a rumor. Sany currently does not have a specific timetable for listing in Hong Kong. The preparations for listing in Hong Kong have been made, but the current market environment is not good, and we need to wait for a time window. The company will issue an announcement to publicize the relevant process. ”

"In the first half of this year, the construction machinery industry ushered in a short adjustment period, leading enterprises like Sany Heavy Industry are making some internal adjustments to get through the pain of the industry, Sany Heavy Industry has repeatedly postponed the pace of H-share listing, indicating that its cash flow can be carried out, not as bad as the outside world imagined." An industry researcher who did not want to be named told reporters.

He Dongdong, vice president of Sany Heavy Industry, said in an interview with the Securities Daily that Sany's situation is not only not as bad as the outside world thinks, but also relatively optimistic. In the first half of the year, Sany continued to be the leader in the concrete machinery market, and the excavator business situation is similar, from January to June this year, the market share of Sany excavators increased from 12% at the end of last year to 18%, further distancing itself from competitors.

Sany Heavy Industry said that it was operating healthily

Sany's re-IPO in Hong Kong was accompanied by continued doubts about its cash flow. Statistics show that this year's construction machinery and equipment leading enterprises cash flow is generally not optimistic, the top 8 construction machinery listed companies in the first quarter of the total accounts receivable of 58.374 billion yuan, an increase of 41.5% over the end of 2011. The total net cash flow from operating activities decreased from 9.652 billion yuan in 2010 to a net outflow of 2.814 billion yuan last year, far lower than the net profit of 23.012 billion yuan.

However, in He Dongdong's view, Sany's cash flow situation is a bit unnecessary. He explained that the company's net cash flow from operating activities in the first quarter was an outflow of 4.3 billion yuan, which is a seasonal factor, from the statements disclosed by Sany in 2010 and 2011, the first quarter is a period of poor operating cash flow, and will gradually improve in the second quarter, such as the net operating cash flow in the first quarter of 2011 was -3.405 billion yuan, and the second quarter was 3.608 billion yuan. Considering that the scale of operation of enterprises varies greatly, the index of accounts receivable turnover ratio can more accurately reflect the situation of enterprises than the relative value of accounts receivable.

It is understood that in the first quarter of 2012, the balance of accounts receivable of Sany was 20.502 billion yuan, and the turnover rate of accounts receivable was 0.89 times, which was much higher than that of Zoomlion (0.33 times), XCMG (0.65 times) and other enterprises in the same industry, and was at the leading level in the industry.

Contrary to the doubts of the outside world, the recent survey data of CICC shows that unlike most construction machinery companies with negative growth, leading enterprises such as Sany Heavy Industry have shown positive growth. The data shows that although the industry as a whole has declined by nearly 20% since the beginning of this year, Sany still maintains good growth compared with other companies. In the first quarter, Sany's revenue was 14.678 billion yuan, a year-on-year increase of 4.93%, and it continued to maintain good growth in the second quarter. From January to June, the development momentum of pumping was good, and the supply of long boom pump trucks was in short supply; The share of excavators increased from 12.2% last year to 18% this year, and exports increased by 120%;craneThe share increased from 14% last year to 21%, and exports increased by more than 60%. From January to June, the export of all products of Sany increased by 130% year-on-year. Internationally, after the completion of Sany's acquisition of Putzmeister, its business grew by more than 10%.

"The data we monitored showed that from the fourth quarter of last year to the second quarter of this year, more than 100 agent brands left the market, which shows that industry consolidation is accelerating, and some companies will be gradually eliminated." Li Kunlong, a high-ranking investment analyst in the construction machinery industry of Fortune Lyon, said that at a time when the industry is very competitive, companies that can maintain a certain gross profit margin must be companies with very good cost control. In the process of market consolidation during the industry adjustment period, large-scale enterprises will benefit from it.

Obviously, in the short period of pain in the construction machinery industry, the industry pattern is further differentiated, Sany and other leaders are staging the story of the strong, and most construction machinery companies are becoming more difficult.

The labor pain of the industry has catalyzed the intensification of the reshuffle

A few days ago, the National Development and Reform Commission Industry Coordination Department organized a symposium on the economic situation of the construction machinery industry, the association and enterprises generally reflected that the production and sales of the main products of construction machinery from January to May this year have declined significantly, and the operating costs have risen, financial expenses have surged, profits have declined significantly, and business difficulties are prominent.

This meeting also sent another message, in this short period of industry pain, the gap between the market share and performance of construction machinery enterprises has further widened.

CICC recently released the construction machinery investment strategy report in the second half of 2012, which also proves that industry differentiation is forming. According to CICC's forecast, the semi-annual report performance of construction machinery companies will continue to differentiate, and leading enterprises such as Sany Heavy Industry and Zoomlion are expected to achieve 10%-15% growth in the first half of the year, steadily completing the annual expectations; The performance of Liugong and Sunward Intelligence will continue to decline, and there is a possibility that the annual performance will be lowered. The research report of China Investment Securities also pointed out that in the long run, the market share will continue to concentrate on leading enterprises such as Sany Heavy Industry, and the advantages of leading enterprises will become more and more obvious.

Differentiation within the industry has also led to an acceleration of the industry reshuffle. Qingke data show that in the first half of 2012, the Chinese market completed 422 mergers and acquisitions, the machinery manufacturing industry in the first place, completed 50 mergers and acquisitions, accounting for 11.8%. Since the beginning of this year, mergers and acquisitions of China's construction machinery giants have followed: Weichai Group acquired Ferretti, Sany Heavy Industry acquired Putzmeister of Germany, Liugong acquired Poland's HSW, and XCMG Group acquired Shi Weiying. On the one hand, the valuation of the target company has fallen due to the European debt crisis; On the other hand, it also reflects the desire of China's construction machinery industry for core technology and the demand of overseas markets.

The construction machinery industry has been improving for a long time

Despite the poor overall performance of the construction machinery industry in the first half of the year, there are various signs that the construction machinery and equipment market has passed the most difficult period. "Judging from the situation in June that I have mastered, many enterprises have seen a month-on-month increase," Su Zimeng, secretary-general of the China Construction Machinery Industry Association, revealed a few days ago.

CICC reported that construction machinery will slowly bottom out in the second half of the year. Driven by policies, infrastructure investment is expected to achieve a recovery growth of 15%, thereby driving a steady recovery in demand for construction machinery. With the resumption of a number of major infrastructure projects such as railways and water conservancy, the demand for major products will gradually improve in the second half of the year. Market monitoring shows that the industry's main product excavator sales in May were 10,870 units, a year-on-year increase of -24%, compared with the previous 40% decline in April, there is a significant narrowing, Sany Heavy Industry, Liugong and other May sales growth has turned positive.

Su Zimeng said that overall, this year's Chinese construction machinery market will grow steadily, 12% of the increase is more reasonable, and this year's export growth will be better than the previous two years, reaching more than 30%.

"Aftermarket revenue (parts and accessories and service income) is also an important source of income for the construction machinery market in the future. Judging from the comparative data at home and abroad, the proportion of domestic construction machinery company's aftermarket revenue to total operating income is usually between 3% and 10%, but the data of overseas companies is usually 20%-30%. In the next five years, the construction machinery industry will change from 'reconstruction and light maintenance' (emphasis on construction and light maintenance) to 'emphasis on maintenance', which can relatively support the development space of the industry in the next 20 years. Li Kunlong thinks.