According to Caixin, March 10 (Reporter Huang Lu) What signals are reflected behind the nearly doubling of domestic excavator sales in February?

Recently, sales data for excavators and loaders in February was released, showing that the domestic sales data for excavators significantly exceeded exports. Has the 'sunshine' in the Construction Machinery industry returned? In this regard, people related to the mainframe manufacturers remained relatively 'calm'. Personnel from the securities department of mainframe manufacturers, including XCMG Construction Machinery, told Caixin reporters that the previous February had the Spring Festival factor, leading to a low base. From the domestic sales data for excavators in the last two months, the industry has already moved out of last year's trough, with a year-on-year growth rate exceeding 20%, which is within a reasonable range, especially considering the last year's period was the worst stage.

Regarding the changes in orders and sales expectations in the first half of this year, relevant personnel from several mainframe manufacturers indicated that as the startup rate of infrastructure projects increases across various regions, the demand for excavators and other earthmoving Construction Machinery in water conservancy, roads, and other infrastructure projects is rising. Some upstream supporting manufacturers have also reported that since the beginning of the year, the production of medium and large hydraulic cylinders has increased compared to last year. As the industry enters the peak sales season from March to May, it is expected that this growth trend will continue, which has become a consensus in the industry.

(Data Source: China Construction Machinery Industry Association)

According to the latest statistics from the China Construction Machinery Industry Association for major excavator manufacturers, 19,270 excavators were sold in February this year, a year-on-year increase of 52.8%, of which 11,640 were for domestic sales, nearly doubling year-on-year. From January to February this year, a total of 31,782 excavators were sold, a year-on-year increase of 27.2%, with 17,045 for domestic sales, a year-on-year increase of 51.4%, and 14,737 for exports, a year-on-year increase of 7.37%.

Historically, project construction in January and February is greatly affected by the Spring Festival holiday, but on February 3 this year, Sany Heavy Industry held a commencement ceremony. Due to differences in the timing of the Spring Festival this year compared to last year, and the low base in February of last year, the growth rate of excavators in February this year appears relatively high. This viewpoint has been expressed by personnel from more than one mainframe manufacturer to Caixin reporters.

(Compiled based on the association's public data: Sales data for excavators in China from January to February over the past six years)

Industry insiders mentioned to the reporter from Financial News that China is gradually replacing Japan and other countries to become the largest importer of used Construction Machinery in emerging markets such as Southeast Asia, South America, and Africa. This has somewhat alleviated the supply-demand relationship in the domestic leasing market (especially for large excavators), further stimulating the purchasing demand for new machines in the domestic market this year.

Wen Zhigang, an expert in Construction Machinery leasing and Operation management, expressed a similar view to the reporter from Financial News. He believes that the growth in exports of used large excavators has stimulated domestic demand. Additionally, with infrastructure and mining industry investments expected to accelerate this year, driven by large-scale equipment updates and information from various channels about the production data from domestic supporting manufacturers, it is expected that excavator sales from March to June this year will see a rapid year-on-year increase. Optimistically, domestic excavator sales growth this year is expected to exceed 35%, with annual domestic sales possibly exceeding 0.14 million units.

The reporter from Financial News noted that several Brokerage Institutions' research reports indicate that the latest production performance of upstream supporting manufacturer Jiangsu Hengli Hydraulic has exceeded expectations, further confirming the high prosperity level of the industry.

Regarding the production situation of hydraulic valves and oil cylinders for large excavators in March, Jiangsu Hengli Hydraulic informed the reporter from Financial News that there is indeed growth compared to the same period last year, but did not disclose the specific extent.

The sales situation of excavators serves as a leading indicator of the prosperity of the Construction Machinery industry. According to the construction cycle, it has a certain transmission effect on the sales of subsequent products such as cranes, concrete machinery, and aerial work platforms. From the performance in the secondary market, companies like XCMG Construction Machinery (000425.SZ), Jiangsu Hengli Hydraulic (601100.SH), Sany Heavy Industry (600031.SH), and Guangxi Liugong Machinery (000528.SZ) have all hit or approached new highs since last year.

As a major player in the industry, XCMG Construction Machinery has been the first to express its viewpoint, believing that under the impetus of new special government bonds and long-term government bond projects, the domestic industry will gradually enter an upward cycle. "From a long-term perspective, since March last year, domestic excavator sales data has begun to turn positive. The debt repayment cycle and the renewal cycle are driving together, and the current point may be the starting point of a new cycle," one industry insider told the reporter from Financial News.