Machinery industry: the development direction of China's construction machinery

Current situation of the industry:

Media reports 2, the Secretary General of China Construction Machinery Industry Association revealed that the 12th Five Year Plan of the construction machinery industry has been reported to the relevant national departments and will be released in July. We believe that the release of the industry's 12th Five Year Plan will point out the direction for the development of construction machinery in the next five years, which is conducive to enhancing the market's confidence in the long-term growth space of construction machinery.

1) the industry as a whole will still achieve stable growth: at the end of the 12th Five Year Plan period, that is to say, the sales revenue of the construction machinery industry in 2015 is expected to reach 900 billion yuan, with an annual compound growth rate of 17%, of which the export volume of the industry will reach 26 billion US dollars, accounting for nearly 20% of the total. Although compared with the growth rates of 21.3% and 28.1% in 2001-2005 and 2006-2010, the growth rate of the industry has slowed down significantly during the 12th Five Year Plan period. However, we believe that after the peak growth in the past decade, the market is generally worried that the construction machinery market has become saturated and difficult to achieve growth, and the introduction of the 12th Five Year Plan will to some extent enhance the market's confidence in the long-term growth space of construction machinery.

2) the growth performance of each product will show great differences: from the 12 products counted by the industry association, the annual compound growth rate of tower crane and concrete machinery represented by concrete pump truck and concrete mixer truck is expected to reach more than 15% in the next five years, and the wheel crane, crawler crane, grader and paver are expected to achieve stability. The growth rate will reach more than 10% in the next five years, while the growth rate of roller, loader and bulldozer will be relatively low due to the substantial increase of market share and substitution effect, and the average compound growth rate will only maintain single digit growth in the next five years.

3) the research and development of core components will be promoted to a new height: the lagging development of key basic components is the bottleneck restricting the long-term competitiveness of China's construction machinery. In the past decade, the market demand has been strong, and enterprises focus on the rapid expansion of host capacity to meet the market demand. The development of key parts and basic technology has lagged behind for a long time. We believe that with the intensification of industry competition during the 12th Five Year Plan period, the research and development of core parts is expected to be promoted to a new height, and it is expected to form a situation of government leading, industry association leading, and enterprise leading joint breakthrough, so as to achieve a qualitative leap.

4) industry restructuring and M & A is expected to accelerate: we believe that with the new round of capacity expansion since 2010, overcapacity may become a key factor restricting market development in the middle and later period of the 12th Five Year Plan. In the next five years, the leading enterprises of the industry are expected to use their own advantages to expand the product chain and market layout through merger and acquisition, and to eliminate backward and low-level repeated construction by market competition mechanism, so as to significantly improve the industry concentration.