Affected by various factors such as the epidemic and rising raw materials, the sales of excavators fell sharply in April. Although the year-on-year decline was narrowing, the month-on-month decline was relatively large.

According to the statistics of 26 excavator manufacturers by China Construction Machinery Industry Association, in April 2022, 24,534 excavators of various types were sold, a year-on-year decrease of 47.3%; of which 16,032 were domestic, a year-on-year decrease of 61%; and 8,502 were exported, a year-on-year increase of 55.2%. .

It is expected in the industry that if the epidemic situation is gradually brought under control and the stagnant projects are started in an orderly manner, and the base for the same period in 2021 is relatively low, it is expected that the growth rate of excavator sales in the third quarter of 2022 is expected to turn positive. With the continuous development of infrastructure investment, it will provide stable growth momentum for the construction machinery industry.

Pandemic drags down demand

As a typical investment-dependent and cyclical industry, China's mining machinery industry faces many uncertainties such as cyclical adjustments in the market, the impact of the epidemic, intensified competition, rising prices of raw materials and bulk commodities, escalating emissions, and complex international trade relations.

Judging from the latest data, the year-on-year decline in excavator sales in April narrowed, and the year-on-year decline in sales of various types of excavators by 26 excavator manufacturers narrowed by 5.8 percentage points from the previous month; among them, the year-on-year decline in domestic sales narrowed by 2.6 percentage points. . Judging from the domestic excavator sales data in a single month, the domestic excavator sales in April still ranked second in monthly sales since 2022, but it was under the double pressure of a month-on-month decline in domestic and foreign sales, of which domestic sales fell by 39.6% month-on-month. , exports fell by 19.3% month-on-month.

Ge Xin, an analyst at Lange Steel Research Center, told Seedao.com that, driven by the continued increase in the policy of stabilizing growth and the accelerated implementation, major construction projects in many places started to start in succession in April, especially in the central and southwestern, and northeastern parts of the country. The regions are relatively concentrated. According to incomplete statistics, the planned investment in key projects in April still maintained rapid growth year-on-year. However, due to the repeated epidemics in many places and the impact of limited logistics and transportation, the phenomenon of insufficient effective construction was more obvious, thus dragging down the sales of construction machinery.

In terms of types, the sales volume of small digging machines in the domestic market in April was 10,696 units, a year-on-year decrease of 57%, and the decline was 2.7 percentage points lower than that of the previous month; the sales volume of medium-sized digging machines was 3,534 units, a year-on-year decrease of 69.8%, and the decline rate was 2.2% narrower than that of the previous month. 1,802 units were sold, a year-on-year decrease of 59.9%, a decrease of 2.6 percentage points from the previous month.

Under the influence of the continuous rebound of the current round of the epidemic, the demand side has been suppressed. The downstream applications of excavators are concentrated in infrastructure, real estate, mining, rural areas and urbanization. Among them, infrastructure and real estate are the two major application areas of excavators.

Ge Xin said that generally speaking, large excavators are used in mining and large-scale infrastructure projects, medium-sized excavators are used in real estate, infrastructure and other engineering projects, and small excavators are mainly used in rural construction, housing reconstruction, municipal projects and other projects. Judging from the single-month breakdown data, the continuous recovery of the municipal construction field represented by domestic small excavators in April was forced to be interrupted, while the recovery process of the infrastructure and real estate fields represented by medium and large excavators was significantly weaker than expected.

Soochow Securities believes that considering the rapid growth of exports and the decline in the base during the same period, it is expected that the year-on-year growth rate of the industry in the third quarter of 2022 is expected to turn positive. Since the beginning of 2022, more than 60 cities have reduced the eligibility requirements for house purchases, reduced the down payment ratio, and relaxed loan requirements. , reducing mortgage interest rates and other means to stabilize real estate. The construction machinery sector has experienced many corrections in the early stage, and the two major downstream margins of infrastructure and real estate have improved, and the valuation has room for repair.

Ge Xin analyzed Seedao.com. At present, the construction machinery industry is under the pressure of double decline in domestic and foreign sales, and under the squeeze of high raw material costs, the profit level of listed construction machinery companies in the first quarter of 2022 has been significantly impacted. The release of steel demand for manufacturing of related construction machinery enterprises in the later period is restricted. However, with the continuous enhancement of infrastructure investment, it will provide stable growth momentum for the construction machinery industry.

Infrastructure investment is expected to grow rapidly

Since 2022, due to the continuous increase in the policy of stabilizing growth at the national level, infrastructure investment has played a "ballast stone" role in stabilizing economic growth. The uncertainty and instability of my country's economic operating environment has risen, and in the face of the complex and ever-changing economic downward pressure, the recovery of infrastructure investment has not been as strong as expected.

Following the 11th meeting of the Central Finance and Economics Committee on April 26, which emphasized "comprehensively strengthening infrastructure construction", the Politburo meeting of the CPC Central Committee held on April 29 once again released a positive signal: fully expand domestic demand and play the key to effective investment Strengthen the protection of land, energy use, environmental impact assessment, etc., and comprehensively strengthen infrastructure construction.

The two major conferences have continuously emphasized and demanded, releasing infrastructure investment as the "ballast stone" of economic growth, carrying a clear signal of expanding domestic demand, promoting circulation, and stabilizing growth. This also means that, as an important starting point for stimulating investment in the next step, the start and construction of infrastructure investment projects in various regions will enter an accelerated period.

In recent times, major projects have been intensively started and landed. The Ministry of Water Resources recently held a special dispatch meeting to promote the construction of major water conservancy projects in 2022, emphasizing that the construction of major water conservancy projects will be accelerated to ensure that more than 30 new projects will be started in 2022. According to the Ministry of Water Resources, about 800 billion yuan of investment in water conservancy projects will be completed in 2022. It will focus on advancing the preliminary work of 55 major water conservancy projects, implement more than 1,700 dangerous reservoirs for reinforcement, and implement the continued construction and modernization of about 570 large and medium-sized irrigation areas.

At the same time, the issuance of special bonds accelerated to provide financial guarantee for infrastructure investment. In the first four months of 2022, local governments have issued about 1.35 trillion yuan of new special bonds, an increase of about 1.12 trillion yuan over the same period in 2021. In the field of investment, it is also more inclined to the field of infrastructure. In April 2022, the funds raised from local bonds will be mainly used for other special infrastructure projects. Compared with the same period in 2021, the proportion of other special infrastructure has increased significantly, and it is expected to maintain a higher proportion in the future.

Zhu Haibin, chief economist of JPMorgan Chase China, told Seedao.com that recently, many central high-level meetings have emphasized the need to focus on major infrastructure projects to ensure that the economy in 2022 is still within the expected target range. This means that whether it is traditional infrastructure projects such as farmland water conservancy, or new infrastructure projects related to the transformation of economic structure such as information and technology, financial investment will be increased. The growth rate of infrastructure investment in 2022 will be raised from 2% to 3% at the beginning of the year to 8% to 10%.

Cheng Shi, chief economist of ICBC International, also believes that despite the slow implementation of some infrastructure projects due to the epidemic, it is difficult for actual infrastructure investment to recover in the short term, but he remains optimistic about the growth rate of infrastructure investment. If the epidemic is further controlled, the implementation of infrastructure projects will gradually accelerate, and the order volume of subsequent infrastructure enterprises may increase significantly from May to June. In 2022, the growth rate of infrastructure construction is expected to achieve an average growth level of 7.5%. Editor / Xu Shengpeng