In 2024, leading domestic manufacturers have achieved rapid growth in the African region. Combined with the proactive overseas development intention of domestic manufacturers and the market expansion trend driven by mining and urbanization in Africa, Soochow believes that the African Construction Machinery market is likely to become one of the core driving forces for domestic manufacturers to achieve performance growth in the coming years.
According to Zhituo Finance APP, Soochow Securities has released a Research Report stating that in 2024, China's export of Construction Machinery to Africa is expected to reach 17.9 billion RMB, a year-on-year increase of 50%. In terms of proportion, Africa's share of China's Construction Machinery export value has reached a new high, accounting for 17% of the export value in 2024. Domestic leading manufacturers achieved rapid growth in the African region in 2024. Combined with domestic manufacturers' proactive overseas expansion intentions and the expansion trend of the market driven by Africa's mining and urbanization, Soochow Securities believes that the African Construction Machinery market is likely to become one of the core driving forces for domestic manufacturers' performance growth in the coming years. Recommended are Sany Heavy Industry (600031.SH), ZOOMLION (000157.SZ), Guangxi Liugong Machinery (000528.SZ), Shantui Construction Machinery (000680.SZ), and Jiangsu Hengli Hydraulic (601100.SH).
The main viewpoints of Soochow Securities are as follows:
The trade partnership between China and Africa in Construction Machinery continues to deepen.
From 2019 to 2024, China's export of Construction Machinery to Africa (54 countries/regions of Africa publicly listed by the Chinese Ministry of Foreign Affairs) is growing rapidly, increasing from 4.78 billion yuan in 2019 to 17.88 billion yuan in 2024, with a CAGR of 30% during this period. In 2024, China's export of Construction Machinery to Africa is expected to reach 17.9 billion RMB, a year-on-year increase of 50%. In terms of proportion, Africa's share of China's Construction Machinery export value has reached a new high, accounting for 17% of the export value in 2024. Overall, Africa's share in the export structure of China's Construction Machinery is increasingly high, indicating a growing demand for China's Construction Machinery in Africa, while also reflecting the increasing competitiveness and influence of China's Construction Machinery in the African market.
Mining development and urbanization drive strong demand for medium and large Construction Machinery.
Africa holds nearly two-thirds of the world's mineral reserves and possesses ample power to promote the development of mineral resources to participate in international division of labor. The development of mining significantly promotes economic growth in Africa while advancing infrastructure construction, especially in transportation, Energy, and urbanization projects. The demand for Construction Machinery driven by mining and Infrastructure investment in Africa mainly focuses on medium and large excavators and bulldozers, which have high average prices and excellent profitability, presenting a broad market space.
The cooperation of the Belt and Road Initiative Concept is deepening, and Chinese enterprises are accelerating their investment process in Africa.
With the in-depth promotion of the Belt and Road Initiative Concept, Chinese enterprises are increasing their investment proportion in Africa, and the cooperation with African countries in the field of Infrastructure construction is becoming increasingly close, jointly promoting the industrialization process in Africa, which also lays a solid foundation for the long-term development of Chinese Construction Machinery enterprises in Africa. As China's main Construction Machinery manufacturers continue to advance their overseas channel layout and improve product strength, leading manufacturers have achieved rapid growth in Africa in recent years. It is believed that this is mainly benefited from: ① The quality of Chinese excavator products has been recognized in the international market, laying a solid foundation for promotion and sales in the African market; ② Continuous breakthroughs in Chinese mining machinery provide more possibilities for the African market, especially in the mining machinery sector; ③ Against the background of the Belt and Road Initiative Concept, Chinese enterprises have the opportunity to participate in Africa's Infrastructure construction. Looking to the future, with the continuous expansion of overseas channels for Chinese brands and the gradual validation of product strength, there are bullish prospects for the long-term market space for domestic manufacturers to export to Africa.
Investment Suggestions
In 2024, domestic leading manufacturers are expected to achieve rapid growth in Africa. Given the domestic manufacturers' positive willingness to explore overseas markets and the expansion trend driven by mining and urbanization in Africa, it is believed that the African Construction Machinery market is likely to become one of the core driving forces for domestic manufacturers to achieve performance growth in the coming years. Recommended companies include Sany Heavy Industry, ZOOMLION, Guangxi Liugong Machinery, Shantui Construction Machinery, and Jiangsu Hengli Hydraulic.
Risk Warning
Industry cycles are volatile, and the implementation of infrastructure and real estate projects is not meeting expectations, along with policies falling short of expectations, and heightened risks from geopolitical tensions.
