Recently, enterprises in the construction machinery industry have successively released their semi-annual reports. Many enterprises have continued the industry recovery trend of last year, and their operating revenues have achieved relatively large increases. However, due to the continuous tightening of domestic real estate market regulation, the rising prices of bulk commodities such as steel, and the intensification of homogeneous competition, the construction machinery industry is facing a mix of positive and negative factors. Industry insiders judge that as the growth rate of social financing declines month-on-month and the slow issuance of local government special bonds leads to a decrease in project demand, and the price increase of steel has caused some construction projects to adopt a wait-and-see attitude or be postponed, all of which will become unfavorable factors for the industry.
The revenues of many construction machinery enterprises increased significantly in the first half of the year.
The semi-annual report of SANY Heavy Industry shows that in the first half of the year, SANY Heavy Industry achieved an operating revenue of 67.128 billion yuan, a year-on-year increase of 36.47%. The net profit attributable to shareholders of the listed company was 10.074 billion yuan, a year-on-year increase of 17.16%. The net cash flow generated from operating activities was 9.788 billion yuan, a year-on-year increase of 35.75%.
The semi-annual report shows that in the first half of the year, SANY Heavy Industry's sales revenue from excavating machinery was 26.007 billion yuan, a year-on-year increase of 39.46%, and the sales revenue from concrete machinery was 17.7 billion yuan, a year-on-year increase of 31.05%.
After SANY Heavy Industry announced its semi-annual performance, Essence Securities released a research report, maintaining the "Buy - A" rating for SANY Heavy Industry and predicting that the net profits in 2021 and 2022 would be 19.42 billion yuan and 22.17 billion yuan respectively.
The research report of TF Securities stated that it maintained the "Buy" rating for SANY Heavy Industry. The main reasons included: the company announced its semi-annual report, and its performance was slightly lower than expected; the cost side was lower than expected, affecting the gross profit margin level; and risk control was strengthened during the industry's decline period.
The semi-annual report of XCMG shows that in the first half of 2021, XCMG achieved an operating revenue of 53.234 billion yuan, a year-on-year increase of 51.80%. The net profit attributable to shareholders of the listed company was 38.03 billion yuan, a year-on-year increase of 84.46%. The basic earnings per share was 0.4794 yuan.
The research report of Everbright Securities stated that the net operating cash flow of XCMG was 3.75 billion yuan, a year-on-year increase of 648.6%. The company's active adjustment of the sales model has achieved results, and its collection ability has been improved. "The gross profit margin of new businesses is relatively high, which is conducive to enhancing profitability and core competitiveness. The affiliated transactions have decreased, and the operational independence and the coordinated development ability of various business segments have been improved."
Zoomlion released its interim performance report, which showed that during the reporting period, the company achieved an operating revenue of 42.449 billion yuan, a year-on-year increase of 47.25%. The net profit attributable to the parent company was 4.850 billion yuan, a year-on-year increase of 20.7%.
Sunward Intelligent disclosed that in the first half of the year, it achieved an operating revenue of 6.887 billion yuan, a year-on-year increase of 57.24%, and a net profit attributable to the parent company of 532 million yuan, a year-on-year increase of 33.36%.
The decline in the excavator operating index makes the overseas market a breakthrough point.
Excavators are the leading products in the construction machinery industry, and the excavator operating index is a barometer of the economy. Data from China International Capital Corporation (CICC) shows that in July, the CICC Excavator Utilization Index (CEUI) was 96.5 hours, a year-on-year decrease of 15.8%, marking the fourth consecutive month of double-digit year-on-year decline. CICC predicts that the downward trend of the excavator utilization index will continue in August, but the decline is expected to narrow in the fourth quarter of this year.
It's not just the excavator operating index that has declined. The sales volume of excavators, which had been rising rapidly since last year, has also declined, and the decline in domestic excavator sales is greater than that in the international market.
Based on the statistics of 25 excavator manufacturing enterprises by the China Construction Machinery Industry Association, in July 2021, these enterprises sold 17,345 excavators of various types, a year-on-year decrease of 9.24%. Among them, 12,329 were sold domestically, a year-on-year decrease of 24.1%.
Industry analysis indicates that the decline in excavator sales is due, on the one hand, to the relatively high base in the same period last year. On the other hand, it is affected by many factors such as the month-on-month decline in the growth rate of social financing, the slow issuance of local government special bonds leading to a decrease in project demand, and the price increase of steel causing some construction projects to adopt a wait-and-see attitude or be postponed.
The fluctuation of raw material prices has always been a major challenge faced by the construction machinery industry. The semi-annual report of SANY Heavy Industry shows that the costs of the company's raw materials and parts may be affected by various factors, such as market supply and demand, changes in suppliers, the availability of substitute materials, changes in the production status of suppliers, and natural disasters.
XCMG stated that the competition in the construction machinery industry is relatively fierce. The company must continuously maintain its core competitiveness in advantageous products and core technologies and adjust the industrial layout in a timely manner. Otherwise, it risks a decline in market share.
In the overseas market, construction machinery enterprises generally have made significant progress, which may become the key breakthrough point for these enterprises in the next step. According to the data of the China Construction Machinery Industry Association, in July, the exports of excavators by 25 enterprises reached 5,016 units, a year-on-year increase of 75.6%. In the first seven months, the exports of excavators reached 35,149 units, a year-on-year increase of 102%.
Xiang Wenbo, a director of SANY Group and president of SANY Heavy Industry, said that SANY Group has established a localized distribution system in more than 100 countries around the world and has more than 300 high-quality overseas agents.
The semi-annual report of SANY Heavy Industry shows that SANY Heavy Industry has achieved rapid sales growth in major global markets and overseas business divisions such as SANY America, SANY India, and SANY Europe. In the Asia-Pacific and Australia region, the sales were 5.667 billion yuan, an increase of 120.05%. In the European region, it was 3.751 billion yuan, an increase of 46.85%. In the Americas region, it was 1.961 billion yuan, an increase of 173%. In the Africa region, it was 1.065 billion yuan, an increase of 99.72%.
However, it is also generally believed in the industry that compared with the domestic market, the international market accounts for a relatively small proportion in the overall business of construction machinery enterprises. How the development of the overseas market will affect their performance remains to be further observed.
