Glonghui, May 23, 丨According to the report, demand for mainland construction machinery stocks in the mainland market was still weak in the first half of the year. Channel inventory removal and construction activity slowed down, mainly due to real estate construction. Although infrastructure funding is gradually improving, it is still tight. The bank expects that the weak demand situation may continue until the second half of this year, but the year-on-year decline may narrow. Overseas markets are still the driving force behind the growth of mainland construction machinery stocks. The market share continues to increase, and the penetration rate of new markets continues to increase. In terms of road equipment stocks, the bank believes that the recovery in rail traffic and railway investment in the first four months of this year both exceeded expectations, reflecting increased vehicle utilization and accelerated railway construction. The bank expects that railway equipment from 2023 to 2025 will show structural growth from the bottom of the trough. It is expected to deliver a total of about 580 EMUs, an increase of about 20% compared to about 480 units from 2020 to 2022, which is beneficial to CRRC (1766.HK) and Jidai Electric (3898.HK). The bank adjusted the target price of construction machinery stocks (see separate table) and favoured Zhonglian Heavy Industries (1157.HK), Sinotruk (3808.HK) and Shidai Electric.