The construction machinery sector underperformed the market in August. Construction machinery fell -6.22% in August, while the Shanghai Composite Index fell -5.46%, and the Shanghai and Shenzhen 300 Index fell -4.81%. The construction machinery sector performed weaker than the broader market. At present, the overall PE of the construction machinery sector is about 15-16 times, and the overall PB is about 3.2 times.
Related company stock trends
Xugong Machinery 20.92+0.291.41% Shantui Stock 13.34+0.141.06% Liugong 17.10+0.140.83% Sany 15.50+0.090.58% Zoomlion 10.10+0.010.10% near the historical average. Although the valuation of the construction machinery sector is relatively reasonable, the market's concerns about the decline in demand have seriously affected the performance of the construction machinery sector.
The downward trend in the growth rate of fixed asset investment is relatively obvious. From January to July, the cumulative investment in fixed assets was 15.2 trillion yuan, a year-on-year increase of 25.4%, and the cumulative completed investment in fixed assets was 6.1 trillion yuan, a year-on-year growth rate of 33.2%. However, the cumulative investment in fixed assets and the cumulative completed investment in new fixed assets from January to June grew at 27% and 38.4% year-on-year, respectively. The growth rate of fixed asset investment has declined significantly.
The construction of affordable housing has hedged against the decline in investment in some commercial housing. However, due to the black swan incident of the railway series, the growth rate of railway investment has dropped significantly.
Construction machinery sales continued to decline in July. In July, sales of excavators were 7,665 units, a year-on-year decrease of 14.49%, and sales of loaders were 16,167 units, a year-on-year increase of 2.17%, and a decrease of 15.97% from the previous month.
2,828 cranes, a year-on-year decrease of 19.66%, and 761 bulldozer sales, a year-on-year decrease of 20.81%. On the whole, the growth rate of construction machinery continues to narrow, and the decline is expanding.
There is no sign of improvement in the export market for the time being.
The market further concentrates on domestic superior brands. Sany Heavy Industry continues to increase its market share in the excavator market by grabbing the share of Japanese and Korean brands. The market share of Liugong, Xiagong, Lonking and Lingong has increased to 66.89% in the loader market. Shantui's monopoly position in the bulldozer industry continues to increase. The market share reached 64.5%, an increase of 6 percentage points year-on-year. The market share of XCMG and Sany in the crane field has increased, and Zoomlion’s short-term market share has been affected due to the adjustment of Puyuan. The market concentration of construction machinery is further concentrated on dominant brands.
Investment advice: Although the valuation of construction machinery will gradually enter historical lows, we still need to wait patiently for the improvement of downstream demand. We still recommend paying attention to the leading companies with brand advantages: Sany Heavy Industry, Xugong Machinery, Zoomlion, and Liugong.
