Construction Machinery: Twelfth Five-Year Plan Reported Long Bullish Rally

After the "12th Five-Year Plan" of engineering machinery reported that there was a correction from the broader market in April, the construction machinery sector significantly underperformed the broader market. The leader of the sector, Sany Heavy Industry [18.112.49% shares], Zoomlion [15.340.59% shares], The biggest declines in this period were more than 20%. XCMG [24.402.52% shares] and Liugong [22.204.37% shares] fell by 30%. Although the valuation of the sector is already at a low level, the slowdown in the growth rate of construction machinery in the short term is still difficult to reverse, and the overall sector is still at the bottom of the shock.

Recently, it is reported that the "12th Five-Year Plan" of the construction machinery industry has been reported to the relevant national departments before the "May 1st" this year, and is expected to be released in July. It is expected that the sales revenue of the construction machinery industry will reach 900 billion yuan during the 12th Five-Year Plan period, with an average annual growth rate of 17%, and the target for export value will be set at 26 billion US dollars. Affected by this news, the construction machinery sector has a strong trend and drives the overall strength of the machinery sector. From the influence of the policy and the current market trend, it is expected that the construction machinery sector will still have room for rebound.

Sales continued to decline in normal terms In May, sales of domestic construction machinery fell, among which sales of excavators experienced negative growth for the first time year-on-year, down 10% year-on-year, bulldozer sales fell 34% year-on-year, and loader sales rose slightly by 2% year-on-year. The second quarter is the traditional sales season of construction machinery. This year, the phenomenon of the peak season of construction machinery industry is very evident. The main reasons for this are the credit crunch and over-marketing in the first quarter of this year. As for the credit tightening policy, it is expected that the country will not relax in the short term, but the overall situation of credit in the second half of the year should be better than the first half, which is conducive to the sales of construction machinery.

From the perspective of the whole year, it is expected that the growth rate of the industry in 2011 will remain at more than 20%. Compared with the high growth of the industry in 2010, the slowdown in the growth rate of construction machinery industry this year is a foregone conclusion, but its slowdown is limited. Although the sales figures of the industry continued to decline in April and May, from January to May of this year, the cumulative sales of excavators increased by 36% year-on-year, and the total sales volume of bulldozers increased by 21% year-on-year. The cumulative sales volume of loaders increased by 21% year-on-year, and the growth rate was limited.

The construction of social security housing has a certain pulling action. China's Ministry of Housing and Urban-Rural Development requires that all 10 million sets of affordable housing projects this year must be fully started before the end of November. The pre-construction projects for the construction of affordable housing are generally infrastructure projects. The loaders are suitable for working in gravel plants and have a large demand. However, due to the large amount of loaders, and most of the demand is for equipment renewal needs, the overall view of the protection housing The impact on the loader is not great. Large excavators are suitable for earthwork operations and there are certain demands, but they are mainly produced by foreign companies and will not cause major sales of domestic OEMs. The main stage of housing construction is to pull concrete machinery.

It is expected that after entering the peak season of construction machinery demand in September, due to the double stacking of other solid investment project start-ups and the protection of housing starts, the demand for construction machinery may increase. However, due to the substantial increase in the number of construction machinery in 2010 and the first half of 2011, it is expected that the probability of growth in demand will be smaller in June and July. In general, the construction of affordable housing has a certain pulling effect on the sales volume of construction machinery and will directly affect the demand for concrete machinery, large excavators and loaders. The order of benefits from large to small is concrete machinery, large excavators, and loaders. .

Construction Machinery Investment Opportunities From the perspective of market trends, the overall growth ability of the construction machinery sector remains strong. Since 2006, it has achieved a high return of 1260%. However, the cyclical nature of the short-term industry is very obvious, and is greatly affected by macroeconomic changes. . Therefore, in terms of short-term investment opportunities, it is recommended to focus on investment opportunities brought about by good news stimulus. In the medium and long term, it still has good investment value. Individual stocks are advised to pay attention to Sany Heavy Industry, Liugong, Xugong Machinery, Shantui Shares [19.167.40 % Shares], XGMA shares [15.350.85% shares] and so on.