Haitong International: Excavator sales continued to grow in September, and strong fiscal policies are expected to drive marginal improvement in demand

The Zhitong Finance App learned that Haitong International released a research report saying that with the effectiveness of policies and the improvement of the market environment, the growth rate of domestic excavator sales is expected to continue to pick up. Furthermore, despite the serious and complex international situation, with China's overall advantages in construction machinery technology, products and services, export value is expected to remain at a high level. Overall, in 2024, the industry has both opportunities and challenges, and the opportunities outweigh the risks. Recommended attention: Sany Heavy Industries (600031.SH), Zoomlion Heavy Industries (000157.SZ), Xugong Machinery (000425.SZ), Hengli Hydraulic (601100.SH), Zhejiang Dingli (603338.SH).

Haitong International's main views are as follows:

Domestic excavator sales increased year-on-year in September 2024, and the year-on-year decline in foreign sales narrowed. In September 2024, major excavator manufacturers sold a total of 15,831 units of various excavation machinery products, an increase of 10.8% over the previous year. Among them, sales volume in the domestic market was 7,610 units, up 21.5% year on year; export sales volume was 8221 units, down 2.51% year on year. From January to September 2024, major excavator manufacturers sold a total of 147,381 units of various excavation machinery products, a year-on-year decrease of 0.96%. Among them, the domestic market sales volume was 7,3,945 units, up 8.62% year on year; export sales volume was 7,3,436 units, down 9.04% year on year.

By structure, domestic sales accounted for 48.07% in a single month in September. Domestic sales accounted for 48.07% of total sales volume in September 2024, and export sales accounted for 51.93% of total sales volume. From January to September 2024, domestic sales accounted for 50.17% of total sales, and export sales accounted for 49.83%.

In August 2024, the number of hours started at Komatsu China increased 3.3 pct year on year and 5.4 pct month on month. The number of hours Komatsu excavators started in August 2024 was 93 hours, up 3.3 pct year on year and 5.4 pct month on month.

The utilization rate of Pangyuan rental tower cranes increased 1.6% year on year and 0.2% month on month. In September 2024, the utilization rate of Pangyuan leased tower cranes was 55%, up 1.6% year on year and 0.2% month on month.

A series of policies are expected to be introduced one after another, and demand for excavators is expected to improve marginally. On October 12, Minister of Finance Lan Foan pointed out that it is proposed to increase large-scale debt limits to replace hidden debts of local governments at once, step up efforts to support local efforts to resolve debt risks, and that the relevant policies will be explained in detail to the public after following legal procedures. It should be emphasized that this policy, which is about to be implemented, is one of the most powerful measures introduced in recent years to support debt. Furthermore, in the real estate sector, tools such as local government special bonds, special funds, and tax policies are used in combination to support the stabilization of the real estate market. Vice Minister of Finance Liao Min pointed out that in the next step, the Ministry of Finance has the following three main considerations, including allowing special bonds to be used for land reserves; supporting the acquisition of stock housing to optimize the supply of affordable housing; and optimizing and improving relevant tax policies in a timely manner. We believe that with the gradual implementation of follow-up policies, the commencement of construction in the infrastructure and real estate sector is expected to be repaired marginally, driving a marginal improvement in excavator demand.

We believe that with the effectiveness of the policy and the improvement of the market environment, the growth rate of domestic excavator sales is expected to continue to pick up. Furthermore, despite the serious and complex international situation, with China's overall advantages in construction machinery technology, products and services, export value is expected to remain at a high level. Overall, in 2024, the industry has both opportunities and challenges, and the opportunities outweigh the risks. Recommended attention: Sany Heavy Industries, Zoomlion Heavy Industries, Xugong Machinery, Hengli Hydraulic, Zhejiang Dingli.

Risk warning: the risk of macroeconomic and market demand fluctuations, increased market competition, etc., and a decline in overseas demand.