Machinery / Industrial Parts & Tools

Since 2021, domestic construction machinery products have continued to flourish in overseas markets.

On September 7, the China Construction Machinery Industry Association counted 25 excavator manufacturers. In August, sales of various types of excavators reached 18,000 units, of which 5,726 were exported, a year-on-year increase of 100%. In the first eight months of 2021, a total of 259,000 excavators of various types were sold, a year-on-year increase of 23.2%, of which 40,800 units were exported, a year-on-year increase of 102%.

The large increase in overseas sales of excavators is not an "isolated case". According to customs data, my country's construction machinery exports amounted to US$15.071 billion in the first half of 2021, a year-on-year increase of 54.9%. The export value of the month in June was US$3.156 billion, a year-on-year increase of 94.8%.

With the increase in overseas sales, construction machinery companies also performed well in the first half of the year. The financial reports of 13 listed construction machinery companies in the first half of this year showed that the industry's overall operating income and net profit attributable to the parent in the first half of the year achieved a large increase.

The revenue of many construction machinery companies rose sharply in the first half of the year

The 2021 construction machinery industry report of Lianhe Credit Rating shows that since 2020, under the background of normalization of epidemic prevention and control, countercyclical adjustments have continued to increase, infrastructure projects have been introduced, and the scale of local special bonds has increased, which has stimulated new demand in the construction machinery industry. Tighter environmental protection policies, speeding up the exit of old equipment from the market, and demand for updated equipment support the steady development of the construction machinery industry.

Perform data statistics on the performance of 13 A-share listed construction machinery companies in the first half of the year. From the perspective of operating income and net profit, Sany Heavy Industry is still in a "dominant" position, and both data are in the first place. However, in terms of year-on-year growth rate, XCMG's data is better. According to the data, XCMG's operating income increased by 51.79% year-on-year, ranking third; net profit attributable to the parent increased by 84.45% year-on-year, ranking second. Xugong Machinery stated in the semi-annual report that during the reporting period, market demand remained strong and sales revenue increased significantly.

Among the four leading companies, in addition to Xugong Machinery, Zoomlion is also worthy of attention. The data shows that Zoomlion’s operating income and net profit attributable to the parent have achieved year-on-year growth rates of 47.23% and 20.7%, respectively.

Specifically, the rapid growth of the two data of Zoomlion is due to the callback of the growth of lifting machinery products. Lifting machinery is the leading product of Zoomlion, accounting for 53.45% of the revenue in the first half of 2021. From 2017 to mid-2019, the growth rate of crane revenue reached 96.3%, 81%, and 94.75%. Although under the influence of the epidemic last year, the year-on-year growth rate slowed to 39%, but this year, the same period of the same period adjusted back to 47.84%.

Sunward and Shantui also performed well. Shanhe Intelligent's operating income increased by 57.23% year-on-year; Shantui's net profit attributable to the parent company increased by 138.6% year-on-year.

Increase investment in research and development expenses

From the perspective of research and development expenses, construction machinery companies have increased their investment in research and development this year.

Many companies mentioned in the semi-annual reports that the construction machinery industry has a pivotal position in the manufacturing sector and is an industry with international competitive advantages in my country. However, the machinery industry is highly mature, highly competitive, and the industry concentration continues to increase, and further information needs to be promoted. Upgrading in the direction of technology and intelligence.

Xugong Machinery said that the construction machinery industry is highly competitive, and the company must continue to maintain its core competitiveness in superior products and core technologies, and adjust its industrial layout in a timely manner, otherwise the company will face the risk of a decline in market share.

The data shows that the two leading companies of Sany Heavy Industry and Zoomlion increased their investment in research and development expenses in the first half of the year, with a year-on-year increase of 80.8% and 91.2% respectively. In addition, there are three companies whose R&D expenses have increased by more than 50% year-on-year, namely Anhui Heli 50.1%, Nuoli shares 54.6% and China Railway Construction Heavy Industry 75.04%.

From the perspective of the proportion of R&D investment in revenue, there are six companies that exceed 4%, namely Sany Heavy Industry 4.5%, Anhui Heli 4.17%, Hangcha Group 4.02%, China Railway Construction Heavy Industry 7.31%, Zoomlion 4.88% and Xugong Machinery 4.17%.

In its August special report on the construction machinery industry, Bohai Securities mentioned that the trillion-yuan construction machinery market is coming, supported by environmental protection policies, and mechanical equipment is facing upgrading. Among them, excavators are moving towards electrification, cranes are developing towards medium and large tower cranes, and electric forklifts are gradually replacing internal combustion forklifts.

Rising steel prices dominate costs

Xugong Machinery stated in its financial report that in recent years, affected by the global financial easing policy and market supply and demand, the prices of bulk commodities have risen sharply, and the prices of major raw materials such as steel have risen, which has brought the company the risk of rising production costs.

Data shows that the price of steel rose from 3,762 yuan/ton in May 2020 to 5,090 yuan/ton on June 11 this year, an increase of 35.3%.

With the price increase of raw materials, many construction machinery companies have adjusted the prices of their products. According to related reports, Zoomlion and Xugong Machinery raised the price of tower cranes and elevators by 1,000 yuan/ton according to the net weight of the product steel in mid-May this year; Sany increased the price of small excavators by 10% in June. Sunward Corporation raised the price of excavator products below 20T by 10% in June, and the price of 20T series products by 5%.

It is worth noting that the sales of construction machinery companies in the international market are ushering in a harvest period in overseas markets.

The financial report shows that in the first half of 2021, Sany Heavy Industry achieved international sales revenue of 12.444 billion yuan, a year-on-year increase of 94.69%. International sales revenue excluding Putzmets was 9.619 billion yuan, an increase of 135%. Among them, excavator sales were 5.036 billion yuan, a year-on-year increase of 129.04%; concrete machinery sales were 3.629 billion yuan, a year-on-year increase of 32.71%; lifting machinery sales were 2.512 billion yuan, a year-on-year increase of 182.97%.

In addition, in the first half of 2021, Sunward Intelligent's operating income in the international market increased by 44.43% year-on-year; overseas sales of excavating machinery increased by 125% year-on-year, of which the European region increased explosively to 145%.

Liugong's financial report for the first half of the year showed that overall overseas sales of complete machines increased by 73% year-on-year. Among them, the export sales of the loader business in the international market increased by 63% year-on-year; the excavator business in key overseas markets increased by more than 90% year-on-year; the overseas market sales of road rollers increased by 68% year-on-year.

Lu Ying, deputy secretary-general of the China Construction Machinery Industry Association, once publicly stated that the development of construction machinery in overseas markets is due to the relatively long industrial chain of the global construction machinery industry, the epidemic has broken the normal supply chain, and my country’s industrial chain is relatively complete. The overseas marketing and service systems are also becoming more and more perfect. On the other hand, affected by factors such as economic recovery after the epidemic in the international market, there is a strong demand for construction machinery in the international market.