Institutions: Engineering Machinery's Overseas Market Share Rising, Domestic Replacement Cycle Gradually Initiating

According to CCTV News, reporters learned from the China Machinery Industry Federation that the machinery industry in China had a good start in production and investment in the first two months of this year. From January to February, the value added of the five major sectors involved in the machinery industry maintained a growth trend year-on-year. Among them, general equipment manufacturing grew by 8.9%, specialized equipment manufacturing by 8.8%, automobile manufacturing by 3.4%, electrical machinery and equipment manufacturing by 8.7%, and instrument and meter manufacturing by 7.8%.

CICC Securities believes that the export of construction machinery is currently showing a strong momentum, with overall growth significantly enhanced. The industry’s export structure is undergoing positive changes, with growth drivers shifting from traditional markets to emerging markets such as Africa and Latin America, where demand is rapidly increasing. This helps the industry explore more diversified market spaces and reduce dependence on a single region. Overseas markets have become a key force supporting the industry’s cyclical development. The sustained demand and structural optimization trend provide important support for the industry’s overall prosperity and revenue growth.

Zheshang Securities believes that the overseas market share of construction machinery is increasing, and the domestic renewal cycle is gradually starting. 1) Exports: The growth in exports is mainly benefited by the increase in overseas market share, as well as infrastructure and real estate demand driven by industrialization and urbanization in emerging markets such as Asia, Africa, and Latin America, along with the prosperity of mining industry demand. 2) Domestic demand: The upward cycle of domestic excavators benefiting from demand in agriculture, forestry, and municipal projects, as well as continuous breakthroughs by domestic main engine manufacturers in the mining machinery field and large and ultra-large excavator demand driven by water conservancy needs, along with the gradual start of domestic renewal demand. 3) Renewal: The domestic renewal cycle is gradually starting, and the cycle is expected to bottom out and move upward. The last bottom of the excavator cycle was in 2015; based on an 8-10 year renewal cycle, it is expected that the domestic renewal cycle will gradually enter an upward phase by 2026.