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Grasping Structural Opportunities In The Construction Machinery Industry Jul 02, 2018

  Since March, sales of construction machinery represented by excavators have continued to exceed market expectations. We believe that the annual sales of the excavator will also exceed the expected probability. The market share of domestic brands is expected to continue to increase, and the results brought about by the transformation of business ideas will gradually emerge.

  From January to May of 2018, cumulative sales of excavators reached 105,900 units, an increase of 60.18% year-on-year. We expect sales in June to be more likely than expected, and full-year sales are also expected to be higher than market expectations of 20% at the beginning of the year. We believe that the net profit of construction machinery manufacturers is expected to increase substantially in 2018 for three reasons. First, the industry’s sales volume has grown steadily, and product prices have remained stable overall. Second, cost pressures have eased, and the company’s gross profit margins have stabilized. Third, the cost has been properly controlled, and the company’s net margin is expected to increase. Fourth, asset impairment is expected to decrease substantially. In 2017, the manufacturers actively deal with historical bad debts, and 2018 young players went into battle. At the same time, domestic manufacturers have stricter control over credit sales, which is conducive to the continued healthy development of the industry.

  Combined with the growth of the construction machinery market and industry research in the first five months of this year, we expect the performance of the engineering machinery sector to continue to shine especially ultra rock splitter, DTH drill etc. laying the foundation for high-year profit growth. Judging from the historical valuation of domestic and foreign engineering machinery leaders, we believe that there are still structural investment opportunities in the industry this year. It is recommended to pay attention to domestic digging machine brands and crane leading enterprises with higher market share.