According to the Zhitao Finance APP, Donghai Securities released a research report stating that with the implementation of large-scale equipment renewal policies and real estate financial policies, domestic demand is gradually recovering; overseas, domestic companies are laying out overseas pre-sale and after-sale networks, establishing local production capacity, entering a period of accelerated globalization, and market penetration is gradually improving, effectively smoothing domestic and foreign cycles. It is recommended to pay attention to leading enterprises with deep overseas layouts, high brand recognition, complete product matrices, efficient cost management, and strong R&D capabilities.

Event: The China Construction Machinery Industry Association released statistics on the sales of excavators and loaders for major enterprises in December 2024.

The main points from Donghai Securities are as follows:

Excavators: In December 2024, the sales of various types of excavators reached 19,369 units, a year-on-year increase of 16%, with 9,312 units sold domestically, an increase of 22.1%; and 10,057 units exported, an increase of 10.8%. A total of 201,131 excavators were sold in 2024, a year-on-year increase of 3.13%, with domestic sales reaching 100,543 units, an increase of 11.7%; and 100,588 units exported, a year-on-year decrease of 4.24%. In December 2024, 9 electric excavators were sold.

Loaders: In December 2024, sales of various types of loaders reached 9,410 units, a year-on-year decrease of 0.08%. Of these, 4,501 units were sold domestically, a decrease of 19.6%; and 4,909 units were exported, an increase of 28.5%. A total of 108,209 loaders were sold in 2024, a year-on-year increase of 4.14%, including 53,883 units exported, up 13.8%. In December 2024, 854 electric loaders were sold.

The total sales of excavators reached 200,000 units.

In the domestic market, the sales of excavators in December 2024 increased by 22.1% year-on-year, with continuous expansion in domestic sales growth. According to the National Bureau of Statistics, as of November 2024, domestic infrastructure fixed investment continued to gain momentum, with a year-on-year increase of 9.39%; among which, fixed investment in the mining and water conservancy management industries increased by 10.30% and 40.90% year-on-year, continuously boosting downstream demand; at the same time, local governments promoted the implementation of large-scale subsidies for the elimination of old equipment, stimulating downstream replacement demand, leading to a steady recovery in domestic excavator sales. From the perspective of domestic working conditions, in December, the operating hours of Komatsu excavators were 108 hours, an increase of 17.6 hours year-on-year, indicating a recovery in downstream working conditions, approaching the level at the end of 2021.

In the overseas market, excavator exports in December 2024 increased by 10.85% year-on-year, marking five consecutive months of growth in monthly export sales. Meanwhile, on December 19, the Federal Reserve announced a further interest rate cut of 25 basis points, entering a rate-cutting cycle overseas, which is expected to drive a recovery in investments related to overseas real estate and infrastructure industries, leading to gradual improvement in the export market. From the overall data perspective, in 2024, the total annual sales volume of excavators in China increased by 3.13% year-on-year, with cumulative sales exceeding 0.2 million units, meeting expectations.

The export of loaders continues to grow, with a clear trend towards electrification.

In December 2024, the total monthly sales of loaders decreased by 0.08%, while overseas sales increased by 28.5%, indicating continued growth in overseas exports. The total annual sales of electric loaders in 2024 reached 11,220 units, achieving an electrification penetration rate of 10.37% for the year. As the downstream application fields of electric loaders gradually expand and their economic efficiency gains market recognition, supported by government policies, the trend of loader electrification is becoming evident.

Large-scale hydropower projects have been approved, with railway infrastructure continuing for 25 years.

According to Xinhua News on December 25, the hydropower project downstream of the Yarlung Tsangpo River has been approved, and the electricity generation of the new hydropower project will be more than three times that of the Three Gorges Project, with total infrastructure investment expected to exceed one trillion yuan, significantly boosting domestic construction machinery demand; additionally, on January 2, the China National Railway Group held a work meeting proposing that by 2025, it will fully complete the national railway investment task, promote national key projects with high quality, strive to complete infrastructure investment of 590 billion yuan, and put into operation new lines of 2,600 kilometers to ensure the demand for domestic railway infrastructure construction in 2025.

Recommendations: Focus on leading enterprises with deep overseas layouts, high brand recognition, a comprehensive product matrix, efficient cost management, and strong research and development capabilities.

Companies such as Sany Heavy Industry (600031.SH), XCMG Construction Machinery (000452.SZ), ZOOMLION (01157,000157.SZ), Guangxi Liugong Machinery (000528.SZ), Shantui Construction Machinery (000680.SZ), and Jiangsu Hengli Hydraulic (601100.SH).

Risk warning: fluctuations in raw material prices risk; fluctuations in Exchange Rates risk; international trade risk; policy underperformance risk.