Dongwu Securities: The boom in the forklift industry is bottoming out, and demand is expected to recover after domestic policies are promoted and overseas channel inventories are digested

The Zhitong Finance App learned that Dongwu Securities released a research report saying that in the short term, the domestic boom in the forklift industry is at its bottom, and the annual sales volume of 700,000 units is basically a demand for stock renewal; overseas dealer inventory is in the digestion period, and the growth rate of new orders in the industry has declined for more than 1 year (2022 - 2023). Q2 leaders Toyota and Kaiao have rebounded about 9% month-on-month in orders, reflecting inventory digestion and marginal improvement in new orders. In the second half of the year, domestic raw material prices remained low and fluctuated, and overseas revenue grew, and the share was passively increasing, and the profit margins of forklift companies are expected to maintain a high level. Domestic double leaders Anhui Heli (600761.SH) and Hangcha Group (603298.SH) have complete product matrices, leading advantages in channel construction and lithium electrification processes, and have strong growth certainty. Continued attention is recommended.

The main views of Dongwu Securities are as follows:

Domestic and export sales of forklifts in September were -5.3%/+28.5%, respectively, and domestic demand continued to be under pressure

In September 2024, the total sales volume of the forklift industry was 106,000 units, up 6.1% year on year. Its sales volume in China was 63,000 units, down 5.3% year on year, and export sales volume was 43,000 units, up 28.5% year on year. Affected by the decline in downstream manufacturing sentiment and the gradual digestion of demand for cars, the domestic sales growth rate continued to be under pressure: the PMI in September was 49.8%, up 0.7 pct from month to month; the logistics industry sentiment index was 52.4%, up 0.9 pct from month to month, remaining within the boom range; the warehousing index was 49.8%, down 0.4 pct from month to month. Since the end of September, the countercyclical adjustment of macroeconomic policies has intensified, and monetary policy and fiscal policies have been implemented one after another. The prosperity of the forklift industry and the progress of electrification transformation are directly linked to macroeconomic activity and the prosperity of the manufacturing and logistics industries. It is recommended to pay attention to subsequent domestic demand recovery trends.

Benefiting from lithium battery products going overseas, the sector's performance growth rate was steady in the first half of 2024

The performance of the forklift sector maintained steady growth in the first half of 2024. On the revenue side, due to the decline in domestic manufacturing sentiment, demand for large vehicles declined, and the growth rate slowed. The profit side benefited from overseas business with high gross margins and an increase in the share of trams, and the growth rate was significantly stronger than revenue. In the first half of 2024, the forklift sector achieved revenue of 21 billion yuan, an increase of 4% over the previous year, and a net profit of 2.1 billion yuan to mother, an increase of 23% over the previous year. In the first half of 2024, the gross sales margin of the sector was 21.5%, up 1.6 pct year on year, and the net sales margin was 10.3%, up 1.5 pct year on year. Overseas businesses with high gross margins (the domestic and overseas gross margin difference between companies is about 6-9pct), the share of electric vehicles increased, the price of raw materials such as steel declined year on year, and the profitability of the forklift sector continued to increase.

The economy is at its bottom, and demand can be expected to recover after domestic policies are promoted and overseas channel inventories are digested

Demand in the forklift industry stems from (1) the increase in the scale of investment in manufacturing and logistics, increased demand for handling tools, (2) increased labor costs, increased requirements for work efficiency in factories, warehouses, etc., and the trend of machines replacing humans. Global forklift sales CAGR from 2014 to 2023 was 7%, and domestic/overseas was 13%/4%, respectively. In the short term, the domestic boom in the industry is at its bottom, and the annual sales volume of 700,000 units is basically a demand for stock renewal; overseas dealer inventory is in the digestion period, and the growth rate of new orders in the industry has declined for more than 1 year (2023-2023). Q2 leaders Toyota and Kaiao have rebounded about 9% month-on-month, reflecting inventory digestion and marginal improvement in new orders. In the second half of the year, domestic raw material prices remained low and fluctuated, and overseas revenue grew, and the share was passively increasing, and the profit margins of forklift companies are expected to maintain a high level. In the medium to long term, there is still room to increase the lithium electrification rate at home and abroad, helping to optimize the structure and go overseas. In 2023, the domestic and overseas lithium electrification rates (lithium-electric counterbalance forklifts account for the total proportion of forklifts) were 19%/13%, respectively, and there is plenty of room for improvement. The market is more concerned about US risks. It is estimated that the US market accounts for about 12% and 18% of global sales volume and scale respectively, and demand for electric cars is weaker than the core market Europe. The double leading US accounts for less than 10% of revenue, and the actual impact is manageable. Furthermore, as the age of forklifts sold overseas began in 2021, aftermarket services will relay new machine sales to create new growth points.

Risk Alerts

The competitive pattern of the industry has deteriorated, geopolitical conflicts, and raw material prices fluctuate.