On October 13th, Financial Associated Press (Reporter: Huang Lu) reported that in September, the domestic sales of excavators increased by nearly 20% year-on-year, achieving double-digit positive growth for the sixth consecutive month in domestic sales; however, the external sales data were slightly cold in late autumn, with September sales basically flat year-on-year.

Industry insiders in the construction machinery industry chain told the Financial Associated Press that domestic earthmoving machinery demand is showing a bottoming out and recovery trend, driven by factors such as cost reduction and efficiency improvement, smoothing the cyclical fluctuations in the industry in the first three quarters of this year. With the gradual implementation of equipment renewal subsidies and the accelerated construction of large-scale domestic infrastructure projects, the industry is expected to gradually emerge from the downturn. In Q4 and the next year, the proportion of overseas business in revenue will continue to increase, becoming a 'stabilizer' for hedging cycles and achieving profit growth.

In September, the improvement in China's manufacturing industry sentiment led to a month-on-month increase of 0.7 percentage points in the manufacturing PMI. According to the latest statistics from the China Construction Machinery Industry Association, in September 2024, sales of various excavators reached 15,831 units, a year-on-year increase of 10.8%. Among them, domestic sales were 7,610 units, a year-on-year increase of 21.5%; exports were 8,221 units, a year-on-year increase of 2.51%.

(Data Source: China Construction Machinery Industry Association)

Statistical data shows that from January to September 2024, a total of 147,381 excavators were sold, a decrease of 0.96% year-on-year; among them, domestic sales were 73,945 units, an 8.62% year-on-year increase; exports were 73,436 units, a decrease of 9.04% year-on-year.

An executive of a listed company in the industry told the Financial Associated Press that after the introduction of large-scale equipment renewal policies, although the sales of electric equipment increased, leading to a rebound in loader sales, the main reason for the increase in domestic sales of excavators is still due to the demand for small excavator renewal.

In China's construction machinery industry, the strong get stronger. The Financial Associated Press noted that Guangxi Liugong Machinery (000528.SZ) has announced its performance forecast for the first three quarters of 2024, expecting to achieve a net income of 1.239 billion yuan to 1.405 billion yuan, a year-on-year growth of 50% to 70%. The company stated that the domestic construction machinery industry is affected by industry cycles and national policies, with the earthmoving machinery sub-industry demand showing a trend of bottoming out and recovery, while demand in other sub-industries of construction machinery remains depressed.

However, Guangxi Liugong Machinery also indicated that the international construction machinery market shows a clear differentiation in demand, with most developing countries and regions experiencing fast demand growth. But the demand in developed economies such as Europe and the United States, as well as certain developing countries and regions, has shown a downward trend this year, leading to an overall decline in overseas construction machinery market demand.

The statistics from the China Construction Machinery Industry Association show that the domestic and overseas data in September are mixed. The domestic excavator sales volume increased by 20% year-on-year, while exports only increased by 2% year-on-year. In September this year, the average monthly working hours of major construction machinery products was 90.0 hours, an increase of 3.99% compared to the previous month. The monthly starting rate of major construction machinery products was 64.20%, an increase of 3.74% compared to the previous month. Specifically, excavators were at 67.80%, loaders at 67.90%, truck cranes at 78.70%, and crawler cranes at 54.70%.

Although the short-term data shows internal heat and external cold characteristics, Zoomlion (000157.SZ) related personnel told Caijing reporters that in the long run, the growth point for major domestic construction machinery manufacturers still lies in increasing export market share. The logic behind this is that, first, for Chinese brands, overseas markets have growth characteristics, and the overseas market penetration rate will also increase; second, Chinese construction machinery products have high cost performance and short delivery cycles; third, as domestic companies' overseas distribution channels become increasingly perfect, the overall competitiveness of Chinese brands will continue to improve; finally, looking at the proportion of major export markets, the company still has great room for product category expansion in many countries. It is understood that by the end of June this year, Zoomlion has 12 intelligent factories worldwide, with over 230 intelligent production lines already in operation.

At the earnings conference, Sunward Intelligent Equipment (002097.SZ) executives frankly stated that the company belongs to the construction machinery industry, and its business performance is closely related to overall infrastructure investments and real estate development investments in the entire society. Currently, the construction machinery industry to which the company belongs faces insufficient effective domestic demand. To promote better development, the company plans to further increase the scale of its overseas business.

Can the domestic demand for construction machinery continue its recovery momentum in the fourth quarter and beyond? Some industry insiders believe that for the downstream construction machinery industry primarily focused on infrastructure, with the increase in debt-for-equity swaps, suspended or terminated infrastructure projects are expected to restart, and the starting rate is expected to rise. The warming up of infrastructure construction is expected to drive demand growth for construction machinery.

Several domestic machinery industry experts also believe that the domestic construction machinery industry is still in a stable bottoming-out phase. In the future, as the construction machinery equipment renewal cycle approaches, driven by a series of policies such as large-scale equipment updates, and the accelerated construction of large infrastructure projects, the industry is expected to gradually emerge from the downturn.