Construction machinery industry strategy topic 1: wind or banner? Indian construction machinery accessories, cat bucket tool
In this paper, “wind” refers to the policy aspect of steady growth, “heart” refers to the stock price fluctuation of construction machinery, and “flag” refers to the fundamental change of construction machinery. By analyzing the changes of policy, historical stock price performance and industrial fundamentals, we try to find the relationship between the three. Since March, the wind of steady growth policy has gradually warmed up, and several times in history, the steady growth policy has shown correlation with the stock price of construction machinery; In 2022, the demand of construction machinery industry is also expected to see marginal improvement. Indian construction machinery accessories, cat bucket tool
The “wind” of steady growth policy has come.
1) The steady growth policy is expected to continue. The central economic work conference proposed that the economic work in 2022 should be stable and seek progress while maintaining stability, pointing out the direction for steady industrial growth. In order to implement the decisions and arrangements of the CPC Central Committee and the State Council and give full play to the role of macroeconomic “ballast”, the national development and Reform Commission and the Ministry of industry and information technology jointly issued several policies to promote the steady growth of industrial economy with relevant parties recently, so as to maximize the policy effect, effectively promote the steady operation of industrial economy and strive to stabilize the overall macroeconomic situation. Recently, the interest rate spread of China US 10-year Treasury bonds has been upside down, which may further give birth to the introduction of stable growth policies.
2) The countercyclical regulation of infrastructure investment continues to highlight. On April 7, China Railway announced the operation data of the first quarter of 2022. The newly signed capital construction contract amount of China Railway in the first quarter reached 543.45 billion yuan, an increase of 94.1% year-on-year. The newly signed capital construction contract amount in the first quarter reached the highest level in the same period in history. From January to February, the growth rate of infrastructure fixed asset investment increased by 8.6% year-on-year, and the growth rate gradually picked up. From January to February, the amount of special bonds issued by local governments reached 971.9 billion yuan, a year-on-year increase of 452.8%; The issuance progress of local government special bonds is significantly faster than that in previous years, and the commencement of large-scale projects is expected to speed up. Indian construction machinery accessories, cat bucket tool
3) The real estate regulation policy ushered in marginal relaxation. Since the beginning of the year, the real estate regulation and control policies have continued to be loose. Starting from supporting the reasonable demand for house purchase and expanding the profits of land market projects, we have improved the downward trend of weak supply and demand in the real estate market. From January to February, the completed investment in real estate development increased by 3.7% year-on-year, the new construction area decreased by 12.2% year-on-year, and the new construction area continued to grow negatively. As an important downstream field of the construction machinery industry, the marginal relaxation of the real estate policy is expected to further drive the demand recovery of the construction machinery industry.
How to move the “heart” of the share price of construction machinery
1) Several stable growth policies in history have driven the share price of construction machinery sector to rise. Looking back over the past decade, China has roughly experienced five rounds of steady growth in 2008-2009, 2012, 2014-2015, 2018-2019 and 2020.
Taking Sany Heavy Industry as an example, the highest rise and fall of Sany’s share price in the above five periods were 89.5%, 22.3%, 118.0%, 60.3% and 148.2% respectively, and the range rise and fall were 49.3%, – 13.9%, – 24.2%, 52.7% and 146.9% respectively.
It can be found that the steady growth policy has played a certain role in boosting the share price of the construction machinery sector.
2) Construction machinery can still capture a better investment window in the downward cycle. We focus on analyzing the stock price performance of Sany Heavy Industry in the downward cycle of construction machinery industry from 2012 to 2016, which may have reference significance for investment at this stage:
Historically, the steady growth policy has played a positive catalytic effect on the share price of Sany Heavy Industry, and better investment opportunities can still be captured in the downward cycle. We believe that the performance inflection point, order inflection point and order expected inflection point are the key to judge the stock price performance of the construction machinery sector; The expected change of orders may lead to the early response of stock price, and the performance may become a lagging indicator in the downward cycle.
3) This round of sharp correction in the share price of construction machinery sector has fully reflected the pessimistic expectation of the industry. Since 2021, the share prices of Sany, Zoomlion, XCMG, Hengli and other construction machinery enterprises have been significantly adjusted, with declines of 61.9%, 55.1%, 33.0% and 62.0% respectively since the last share price peak. Since the second quarter of 2021, the year-on-year sales data of construction machinery products such as excavators, truck cranes and pump trucks have continued to decline. The market generally believes that the construction machinery industry has ushered in a peak / downward cycle after a five-year upward cycle, and the stock price also reflects this pessimistic expectation. If the industry demand is expected to improve marginally in 2022, we have reason to expect the stock price to stabilize and rebound. Indian construction machinery accessories, cat bucket tool
Post time: Apr-15-2022
