Construction machinery industry in the first half of the economic degree continues to be depressed, even the industry leader is inevitable.
On the evening of August 30, the "big three" of domestic construction machinery also disclosed the 2022 semi-annual report, in which Sany Heavy Industry (600031.SH) achieved revenue of 400.72 billion yuan, a year-on-year decrease of 40.63%, net profit attributable to the parent of 2.634 billion yuan, a year-on-year decrease of 73.85%; Xugong Machinery (000425.SZ) achieved a revenue of 38.204 billion yuan, down 28.23% year on year, and net profit attributable to its parent was 2.321 billion yuan, down 38.98% year on year; Zoomlion (000157.SZ) achieved a revenue of 21.299 billion yuan, down 49.82% year on year, and a net profit of 1.716 billion yuan, down 64.62% year on year.
As for the reasons for the decline in performance, various enterprises said that the first half of the year was mainly affected by the decline in construction and real estate projects and the impact of the pandemic. However, it also said that the rigid demand for Chinese construction machinery in the overseas market is increasing, and the export sales of the construction machinery industry continue to maintain a high growth.
At the same time, excavator industry sales also ended 14 months of decline in July this year, with the gradual release of domestic demand for steady growth, industry insiders expect that the downward pressure on construction machinery is expected to ease in the second half of the year.
Performance in the first half of the collective decline
Statistics from the China Construction Machinery Industry Association show that 12 key construction machinery products got off to a good start in January-February this year, with a year-on-year growth of 3.87 percent in January, 16.3 percent in January-February and a year-on-year decline of 19.6 percent in March. In April, it was down 30.5% from a year earlier; The decline continued in May, down 18.5 percent year on year; The decline narrowed sharply in June, down 7.16 per cent year on year and up 7.78 per cent month on month, reversing negative growth in April and May.
The sales characteristics of the industry are basically reflected in the earnings data of the enterprise.
Sany Heavy Industry, for example, posted 20.278 billion yuan in revenue in the first quarter and 19.794 billion yuan in the second. Net income attributable to its parent was 1.59 billion yuan in the first quarter and 1.044 billion yuan in the second. Xugong Machinery's revenue in the first quarter of this year was 20.34 billion yuan, compared with 18.17 billion yuan in the second quarter. Net income attributable to its parent was 1.405 billion yuan in the first quarter, compared with 916 million yuan in the second quarter. Zoomlion's revenue was 10.012 billion yuan in the first quarter and 11.287 billion yuan in the second quarter. Net income attributable to its parent was RMB906 million in the first quarter and RMB810 million in the second.
Thus, the construction machinery "big three" performance in the first half of this year was mainly dragged down by the second quarter of the data. Among them, although Zoomlion in the second quarter of this year revenue growth, but the net profit attributable to the mother is still down.
On the reason for the decline, Sany explained that "the domestic construction machinery industry is in a downward adjustment period. Combined with the impact of factors such as the slowdown of macroeconomic growth, the repeated COVID-19 epidemic, and the insufficient effective construction operation rate, the market demand for construction machinery decreased in the first half of the year, and the operating revenue decreased significantly."
Zoomlion also said, "In the first half of the year, due to the decline in construction and real estate projects and the impact of the pandemic, the domestic sales of the construction machinery industry fell significantly."
A source from Xugong Machinery also expressed a similar view to 21st Century Business Herald.
While performance has come under pressure, gross margins at Sany and Zoomlion have also fallen in the first half of this year.
Among them, Sany's comprehensive gross margin was 22.48%, 5.91 percentage points less than last year; Zoomlion's "construction machinery" gross margin was 20.66 per cent, down 4.07 percentage points from last year.
It is worth noting that Xugong Machinery's consolidated gross margin bucked the trend and increased by 0.45 percentage points from last year to 16.25% in the first half.
The 21st Century Business Herald noted that the improvement in Xugong Machinery's gross profit margin may come from "forklift machinery" and "other business", which increased by 3.69 percentage points and 1.28 percentage points respectively from last year.
Minsheng Securities construction machinery analyst Li Zhe believes that Xugong machinery gross margin improvement "is not easy under the background of greater downward pressure in the industry, and 2022Q2 gross margin year-on-year is increased by 2.24 PCT".
Overseas sales beat expectations
Although the performance of the domestic market is affected by the downturn, but the three big construction machinery exports are bucking the trend of growth.
According to the semi-annual report of Sany Heavy Industry, the international sales revenue of the company reached 16.534 billion yuan, up 32.87% year on year, including the international sales revenue of 13.488 billion yuan excluding Putzmeister, up 40.2%; International revenue accounted for 41.3% of revenue.
Guo Qianqian, chief machinery industry analyst of Anxin Securities, believes that the overseas share of Sany excavator is close to 8%, 1.3 PCT higher than that in 2021. Under the support of localized research and development and production, the channel layout is perfect, and the global competitiveness continues to strengthen.
The semi-annual report of Xugong Machinery shows that the company's main products and main regions have increased significantly, and the self-run export has increased by 157.28% year-on-year. "Overseas enterprises have accumulated strong synergies, and their revenue grew by 71.8 percent."
Zoomlion semi-annual report shows that the company's export income increased 40.45% year on year. "The localization development strategy in Indonesia, the United Arab Emirates, Saudi Arabia, Vietnam and other key countries has achieved remarkable results, and the sales performance has increased by more than 100% year-on-year."
It is interesting that the construction machinery "big three" in the semi-annual report all happen to mention the industry status or market share of each product.
For example, Sany said in its semi-annual report, "The company's market share of ultra-large excavators was No. 1, increasing by 11 percentage points to nearly 30 percent; ... The market share of stirring truck exceeded 29%, up 7 percentage points from the previous year, and the market share of on-board pump exceeded 48%, up 4 percentage points from the previous year. ... The market share of truck crane increased significantly and exceeded 32%, among which the market share of truck crane over 220 tons exceeded 35%, which was significantly increased compared with the previous year, ranking the first in the domestic industry; ... The market share of pavers exceeded 30%, ranking the first in the country, and the market share of roller and milling machine has increased significantly."
According to the semi-annual report of Xugong Machinery, "the share of Xugong Heavy has increased by 3.1 percentage points... Xugong crawler crane share increased by 8.1 percentage points; ... Loader carry to the domestic industry first. Pile machinery continues to hold the first position in the industry... The share of roller exceeded 42%, paver exceeded 47%, grader occupied half of the country, milling machine broke 38%, further open the safe distance."
According to the semi-annual report of Zoomlion, the market share of concrete machinery long boom pump truck, on-board pump and mixing plant still ranks the first in the industry, and the market share of mixing truck rises to the second in the industry. "The market share of engineering crane keeps leading the industry, the sales volume of all-ground crane ranks the first in the industry, and the world's largest tonnage all-ground crane ZAT24000H has achieved batch delivery. The sales scale of construction lifting machinery ranks first in the world..."
To this, a broker construction machinery industry researcher told reporter in the 21st century economy, its learned in the research, the host manufacturer sales for the main evaluation index of dealers is, "namely, share, and share the city is directly linked to the valuation of listed companies, so rather than sell products do not make money, also want to do the sales go up, Then the secondary market will give a high valuation and the market value of listed companies will increase."
However, from the perspective of the secondary market, the share prices of the construction machinery "big three" fell sharply compared with the highs of last year, for example, Sany Heavy Industry on February 18, 2021, the highest share price of Zoomlion on March 2, 2021, the highest share price of 15.85 yuan, Xugong Machinery on April 21, 2021, the highest share price of 8.23 yuan, As of Aug 31, 2022, Sany's share price was 15.75 yuan, Zoomlion's 5.77 yuan and Xugong Machinery's 5.21 yuan.
July turning point could signal industry recovery
Construction machinery giant performance collective decline, the agents, dealers of the day more difficult.
"There is no way, the industry boom is too low, the first half of the real estate, infrastructure construction are relatively few, the product can not sell." Jiangsu nanjing some construction machinery agent li yong (a pseudonym) told reporters, the 21st century economic report now downstream customer price is very low, the industry was badly "volume", "down payment, price, quality and after-sales customer than we all know now, and then bargain, you don't sell, some sell, lead to everywhere in the first half of the" price war ", the profit space is more and more small, Sometimes we are losing money and Shouting, only to shipment a few more units, can get more rebate points from manufacturers."
Li Yong bluntly, especially in the second quarter, the "price war" of excavators has been from small excavators to medium and large excavators, "if there is no return point of the main engine factory, we are estimated to close down. I wonder if it will pick up in the second half."
Liu Liang (pseudonym), a construction machinery dealer in Hefei, Anhui province, also told 21st Century Business Herald that excavator sales are closely related to the situation of infrastructure projects, and that fewer construction projects started in the first half of this year have affected sales. "The second half of the year is mainly about running volume. Only by completing sales can we keep the dealership and then get various rebate incentives."
That may also be a major reason why net profit for the big Three fell much faster than revenue in the first half of this year.
"Now we just have to wait for the industry to recover, and at least the July data is optimistic." "Liu said.
According to public information, the excavator industry sold 17,939 units in July 2022, up 3.4% year on year. Among them, the sales volume in the domestic market was 9,250, down 24.9% year on year; The export sales volume was 8,689, with a year-on-year growth of 72.8%, accounting for 48% of the total sales volume. The cumulative sales volume of excavator industry from January to July 2022 was 161,033 units, down 33.2% year on year. Among them, 100,374 units were sold in the domestic market, down 51.3% year on year; The export sales volume was 60,659, with a year-on-year growth of 72.3%, accounting for 38% of the total sales volume.
Undeniably, in July this year, excavator industry sales ended at least 14 months of decline, year-on-year growth is an industry inflection point. And in the second half of this year, domestic rush demand is expected to be concentrated release, superimposed export growth continues to be strong, the fundamentals of the construction machinery industry or will gradually pick up.
Lil 'g in research report pointed out that this year the overall macroeconomic pressure, steady growth in the second half of the demand is strong, and construction as an important gripper steady growth is expected to achieve faster growth, the real estate investment growth is still not optimistic, but the national policy level for palm, engineering machinery in the steady growth of demand, driven by the second half of the downward pressure is expected to ease."
