Industry investment strategy of the hottest constr

2022-09-21
  • Detail

Construction machinery: industry investment strategy in the second quarter of 2008

construction machinery: industry investment strategy in the second quarter of 2008

China Construction machinery information

Guide: the export growth rate of construction machinery may still be high in the next few years. The share of domestic construction machinery products in the global market is still very low, so the export potential is large. In addition, It is expected that the total construction expenditure of other countries in the world except China will increase at a certain rate in the next few years (year after year...

the export growth rate of construction machinery may still be high in the next few years. The share of domestic construction machinery products in the global market is still very low, so the export potential is large. In addition, it is expected that the total construction expenditure of other countries in the world except China will also increase at a certain rate in the next few years (the compound annual growth rate in is 4% and is expected to reach about 4.6% in), so the export growth rate of construction machinery is expected to remain high. Austerity, recession and rising costs are the biggest influencing factors at present. Domestic monetary tightening, foreign (mainly the United States) economic slowdown (and possible recession) and the rapid rise of domestic production costs (mainly steel costs) have become the three biggest factors that may affect the construction machinery industry

the impact of monetary tightening is limited. The growth rate of real estate and infrastructure investment in China is largely affected by the growth rate of loans. The current macro-control is very different from that in 2004 and 2005: the credit growth rate of financial institutions will not decline sharply in 2008. Therefore, this monetary tightening has a certain impact on construction machinery, but it is not significant. The rise of steel price has a small impact in the short term, but it may be positive in the long term. The sharp rise in steel prices is expected to have a certain impact on the entire industry, but the impact on listed companies is expected to be relatively small. In the long run, the rise in steel prices and other costs will gradually shift the products in the industry to the high-end, thus upgrading the entire industry

the high growth trend of domestic construction machinery industry is not expected to change. The development of construction machinery industry mainly depends on the growth of real estate and infrastructure investment. The domestic monetary tightening, the temporary slowdown of the foreign economy and the rise of various domestic production costs will not fundamentally endanger the overall steady growth trend of the domestic and foreign real estate industry and infrastructure investment. Therefore, the rapid growth trend of the domestic construction machinery industry will not change in a long period of time

maintain the "attractive" rating of the industry. Given that the domestic and foreign markets of construction machinery still have quite good growth prospects, and the impact of monetary tightening and rising steel prices on the industry is relatively limited, we maintain the "attractive" investment rating

the value of listed construction machinery companies is generally underestimated. Through pe/g valuation method, we found that the main listed companies of domestic construction machinery are undervalued at present, and we gave them investment ratings of "outperforming the market" or "super market" respectively

first, tightening, recession and cost rise are the biggest influencing factors at present

at present, domestic monetary tightening The economic slowdown (and possible recession) in foreign countries (mainly the United States) and the rapid rise of domestic production costs (mainly steel costs) have become the three biggest factors that may affect the construction machinery industry. Through analysis, we believe that: the impact of monetary tightening is limited; The economic slowdown of the United States (and then the world) may only occur in 2008, and will recover in 2009. The high growth of construction machinery exports in 2008 and subsequent years is expected to be maintained; The rise in steel prices will have a certain impact in the short term and may be positive in the long term

the development of construction machinery industry mainly depends on the growth of real estate and infrastructure investment. The domestic monetary tightening, the temporary slowdown of the foreign economy and the rise of various domestic production costs will not fundamentally endanger the overall steady growth trend of the domestic and foreign real estate industry and infrastructure investment. Therefore, the rapid growth trend of the domestic construction machinery industry will not change in a long period of time

second, the impact of monetary tightening

the main impact path of limited monetary tightening on the construction machinery industry includes sales and production (Figure 1)

among them, since construction machinery enterprises generally do not rely on the credit of financial institutions, the impact of monetary tightening on them is mainly in sales

the year-end loan balance of the financial institution = the year-end loan balance of the previous year + the new loan amount of the current year. If the new loans are positive every year, the year-end loan balance of financial institutions is increasing every year. Generally speaking, for economies with a large proportion of indirect financing, the faster the annual growth of new loans of financial institutions (or the faster the growth of year-end loan balance), the faster the economic growth

real estate development investment and infrastructure construction investment generally depend more or less on the credit of financial institutions, so their investment growth rate is affected by the loan growth rate of financial institutions to a certain extent

in China, nearly 40% of the new RMB loans of financial institutions each year in recent years have been invested in real estate and infrastructure (Figure 2). Therefore, the growth rate of real estate and infrastructure investment in China is largely affected by the growth rate of loans

in 2004 and 2005, although the government did not implement the tightening monetary policy, its severe administrative intervention (issued the "opinions on stopping blind investment in the steel, electrolytic aluminum and cement industry", and formed inspection teams to go to various places for inspection; high-profile treatment of Jiangsu "railway based project", etc.) led to a significant reduction in new loans of financial institutions in the past two years (Figure 3), and the growth rate of total annual loans fell sharply (Figure 4)

the sharp decline in loan growth has significantly reduced the growth rate of available credit funds for real estate development and various infrastructure construction (figures 5 and 6), and the investment growth rate has been affected to a certain extent

after the real estate and infrastructure investment are affected, the sales of construction machinery will inevitably be affected (Figure 7)

the current macro-control is very different from that in 2004 and 2005: the credit growth rate of financial institutions may not decline sharply in 2008. The core of macro-control in 2008 is monetary tightening, and the key point of monetary tightening policy is that the total amount of new loans of financial institutions should not exceed the total amount of new loans in 2007 (3.63 trillion yuan in 2007). According to the current demand for credit funds in various industries and the capital adequacy of financial institutions, the total amount of new loans in 2008 is likely to be the same as that in 2007. According to this calculation, the growth rate of credit balance of financial institutions in 2008 may be 13.8%, which will not be significantly lower than the growth rate in 2007 (16.1%). In other words, it is unlikely that there will be a sharp decline in the amount of credit in 2004 and 2005 (Figure 8). Therefore, this monetary tightening has an impact on construction machinery, but the impact is small

II. The export growth rate of domestic construction machinery may remain high in 2008

in recent years, the export of domestic construction machinery industry has increased rapidly, with an annual compound growth rate of 64% (Figure 9)

at present, the export destinations of domestic construction machinery products have reached 198 countries or regions, of which the United States has the largest market share, accounting for about 12%, followed by Japan, accounting for about 10% (Figure 10)

in 2008, the global economy is expected to slow down, but it is expected that the growth rate of domestic construction machinery exports in 2008 and subsequent years will remain at a high level, for the following reasons: (1) at present, domestic construction machinery products account for a small share of the total market capacity of other markets in the world except China, and the export potential is still great; (2) The global economy in 2008 may be the lowest moose period in the next few years, and it is expected to start to recover in 2009

at present, the share of domestic construction machinery products in the global market is still very low. In 2006, the total capacity of other global markets except China was about 142.4 billion US dollars, about 8 times that of China (Figure 11)

among them, China's exports are about US $5billion, accounting for only 3.5% of the total capacity of other markets. Therefore, the export potential of China's construction machinery products is great

2008 may be the lowest period of the global economy. The world bank predicts that the growth rate of the global economy will fall to 3.3% in 2008 from 3.6% in 2007, but will rise to 3.6% in 2009 (Table 1). The Federal Reserve recently predicted that the U.S. economic growth rate in 2008 was 1.0%-2.2%, lower than that in 2007, but will rise to 1.8%-3.2% in 2009 (Table 2)

according to the statistics of global insight, a famous consulting company famous for its accurate prediction, the annual compound growth rate of global construction expenditure (real estate investment + infrastructure investment) was 4%. The growth of global construction expenditure has driven the global sales of construction machinery. According to the statistics of British construction machinery consulting company, the global sales of construction machinery increased from about US $85billion to about US $160billion in, with a compound annual growth rate of about 13.5%

in 2008, the global economic growth may slow down. Global insight predicts that the growth rate of construction expenditure in major countries in the world will decline slightly in 2008 (Figure 12), and the growth rate of global total construction expenditure will also decline in 2008. However, the annual growth rate of global construction expenditure in will rebound strongly (Table 3)

global insight predicts that the compound annual growth rate of global construction expenditure will reach 5.7% from (Figure 13)

therefore, we predict that the export growth rate of domestic construction machinery will remain high in 2009 and subsequent years. Will the export growth rate decline in 2008? We don't expect a decline. Although the growth rate of global construction expenditure except China is expected to decline in 2008, which may lead to the decline of the global construction machinery market capacity except China (and thus the decline of China's exports under the condition of unchanged share), the share of domestic construction machinery products in the global market except China and abroad is still very small, and the share is expected to increase year by year due to high cost performance factors, The increase in share may make up for the decline in exports caused by the decline in capacity (Figure 14)

III. steel price rise: there is a small impact in the short term, but it may be good in the long term.

the main raw materials of construction machinery are steel (all kinds of medium and thick plates, thin plates, etc.). Although the share of steel cost varies among various products, the cost of steel basically accounts for the main part. Taking the 16 ton loader produced by Xiamen Industrial Group as an example, steel accounts for 60% of its production cost (Figure 15). According to the statistics of the Construction Machinery Industry Association, steel accounts for an average of about 70% of the production costs of the whole industry

from the perspective of a single product, the rise in steel price has a great impact on product profitability. Taking the 16 ton loader produced by Xiamen Industrial Group as an example, the gross profit rate of this product in 2006 was about 12%. If the gross profit was taken into account, the proportion of steel cost in the price of a loader would drop to about 52% (Figure 16). Assuming that the selling price and other costs other than steel remain unchanged, if the steel price increases by 5%, the gross profit margin will decrease by 3% (by a quarter, Figure 17); If the steel price rises by 10%, the gross profit margin will decrease by 6% (by half, Figure 18)

but for an enterprise, the lower the gross profit margin of the product, the greater the impact of the rise in steel price on the gross profit margin; The higher the gross profit rate, the smaller the impact. If an enterprise has a larger production capacity and larger production and sales volume (such as leading enterprises), it can reduce various costs in a single product by increasing production and sales volume, so as to partially or completely absorb the rise in steel prices

In 2007, the average gross profit margin of the whole construction machinery industry was about 16%; In the first three quarters of 2007, the average gross profit margin of major listed companies in the industry was 22.7%. At the same time, currently, the listed companies in the industry are the leading enterprises in various sub sectors of the industry, which have greater scale advantages. Therefore, the sharp rise in steel prices is expected to have a certain impact on the entire industry, but the impact on listed companies is expected to be relatively small

listed company

Copyright © 2011 JIN SHI