Securities Times: The construction machinery industry is expected to benefit from the deepening of the adjustment of leading enterprises

Source: Securities Times Reporter: Xing Yun
 

The industry adjustment of the construction machinery industry began last year, which has made the differentiation of the enterprise camp increasingly obvious. Liugong (000528) and Shantui (000680) both issued pre-reduction announcements; According to CICC's forecast, leading enterprises such as Sany Heavy Industry (600031) and Zoomlion (000157) are expected to achieve 10%~15% growth, completing the annual forecast.

The good news is that in the second half of the "steady growth" policy dividend, infrastructure recovery, real estate new construction willingness to increase, construction machinery sector is expected to bottom out. "It is expected that by the third quarter of this year, about August and September, there will be a certain recovery in demand." Li Kunlong, a high-ranking investment analyst in the construction machinery industry of Fortune Lyon, believes that in the process of industry adjustment and recovery, leading enterprises such as Sany will benefit.

Performance is polarized

In the first half of the year, it is a foregone conclusion that most construction machinery companies will have a hard time. According to the data of China Construction Machinery Information Network, in the first quarter, the cumulative operating income of 9 listed companies in the national construction machinery industry was 45.2 billion yuan, a year-on-year decrease of 12.7%, a new low since 2009. However, at the same time as the reshuffle, the performance of construction machinery enterprises is also differentiated. According to CICC's survey data, benefiting from the start of affordable housing and the sinking of channels, Sany Heavy Industry was still able to achieve a positive growth of 20% in the first half of the year, and was a beneficiary of *5655. The excavator business is similar, the relative market share of Sany heavy industry excavators was 12.2% at the end of last year, 16% in the first quarter of this year, and increased to 18% in the first half of this year.

The cash flow situation of some leading companies is also relatively optimistic. Taking Sany Heavy Industry as an example, its *5656 quarter net cash flow from operating activities was an outflow of 4.3 billion yuan, which is a seasonal factor, from the statements disclosed by Sany Heavy Industry 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. In the first quarter of 2012, the balance of receivables of Sany Heavy Industry was 20.502 billion yuan, and the turnover rate of receivables in the first quarter was 0.898 times, which was at the leading level in the industry.

　　The market bottomed out

Despite the poor trend of the industry in the first half of the year, various phenomena reveal that the market has passed the most difficult period.

"From the situation I have in June, many companies have seen month-on-month growth." Su Zimeng, secretary-general of China Construction Machinery Industry Association, revealed. Market monitoring shows that the industry's main product excavator sales in May were 10,870 units, a year-on-year decrease of 24%, compared with the previous April decline of about 40% has been significantly narrowed, key enterprises Sany Heavy Industry, Liugong and other May sales growth has turned positive.

In addition, monetary policy is gradually easing. On 5 July, the central bank announced a rate cut from 6 July, less than a month after the last cut on 8 June. It is estimated that a 0.31% reduction in the loan interest rate will make the net profit of listed companies in 2012 increase by 1.12% year-on-year. At the same time, the reduction of financing costs will reduce the cost of customer purchases, which is conducive to the release of potential demand in the industry.

GDP in the second quarter increased by 7.6% year-on-year, the first time in 12 quarters to "break 8", the follow-up policy tone should be "8", in addition to the CPI rose 2.2% year-on-year in June, leaving room for the introduction of the follow-up "steady growth" economic stimulus policy.

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. Galaxy Securities even expects that as one of the industry's most profitable products in 2012Concrete pump truckSales growth is expected to reach 20%. Su Zimeng believes that overall, China's construction machinery market will grow steadily this year, and the increase of 12% is more reasonable.

The enterprise is strong and strong

Li Kunlong said that in the current period of fierce competition in the industry, 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. CIC Securities believes 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.

Taking concrete machinery as an example, commercial concrete is promoted to prefecture-level cities, sales channels are sinking, and the industry entry barriers are higher. With the increase in the number of customer entrants in downstream mixing plants and the demand for new equipment in new stations, leading manufacturing enterprises have a strong position in the industrial chain.

In the case of a slowdown in domestic investment, foreign markets are a place of "salvation" for enterprises. Su Zimeng revealed that this year's export growth will be better than the previous two years, reaching more than 30%. It is worth mentioning that the export of all products of Sany Heavy Industry in the first half of the year even increased by 130% year-on-year. In terms of export strategy, Sany, XCMG, Liugong and Zoomlion have all implemented cross-border acquisitions. Through mergers and acquisitions, the export proportion of leading companies in the industry will reach 30%~40% in the future.