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It is estimated that excavator sales in May will increase by 60%-70% compared with the same period of last year: According to our latest communication with industrialists, it is estimated that domestic sales of excavators will be about 17,000 units in May, plus about 1,500 units of exports, which represents an increase of about 60%-70% year-on-year. Since the end of the peak season, starting from mid-May The shipments tended to decline, but considering the low base in the off-season months of June and August, it is estimated that the year-on-year increase will remain at a relatively high level. From this, the sales of excavators will exceed 100,000 units in the first five months of this year, which will be large throughout the year. The probability will exceed 180,000 units, setting a record high.
The start of work in May maintained a high level and steel stocks continued to decline: According to our ongoing communication with industrialists, the start of the project in May maintained a high level, and the number of estimated hours of operation was basically the same as last year, and there was no significant drop. According to Wind's major urban steel stock data, it was last week (May 25). Inventories were 113.327 million tons, down 6.41% from the previous week (down from last week's inventory by 4.66%), and steel stocks declined further.
The leading quality of construction machinery has been significantly improved and its performance is expected to exceed expectations: Since 2016, the operating quality of the construction machinery industry has continued to improve. Take Sany Heavy Industry as an example, the net cash flow from operating activities of the company in 2017 reached 8.6 billion, which is the best in history. The operating quality and benefits of other leading companies have also improved significantly. Liabilities declined sharply. In the current context of macroeconomic deleveraging, a healthy cash flow guarantees that companies can gain momentum for sustainable development, while sales of main products of construction machinery continue to exceed expectations, and it is expected that leading company performance will exceed expectations.
Investment Advice: Considering that the fundamentals in the second quarter exceeded expectations, and that factors such as the recent addition of MSCI may push up the leading share price of construction machinery, we continue to strongly recommend the construction machinery sector.
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