Machinery Industry: Sales Of High Growth Steel Prices Have An Impact

Key points of investment

Industry sales maintained high growth in the first quarter.

In the first quarter, domestic fixed asset investment growth rate was 25.9%, and continued to operate at a high level.

Affected by this, domestic sales of construction machinery industry continued to grow rapidly.

In addition, the export of the industry has also maintained a rapid growth trend.

From the main listed companies in the industry, the total sales revenue of the main listed companies in the first quarter increased by 58.3%, and the growth rate was improving.

Gross profit margin declined slightly in the first quarter.

Mainly affected by the rapid rise in steel prices in the early period, the gross profit margin of the industry in the first quarter declined slightly.

From the main listed companies, the average gross profit margin in the first quarter was 23.2%, down 1 percentage points from the same period.

Industry sales are expected to continue to grow.

In the next 3 quarters, domestic fixed asset investment growth is expected to remain above 25%, and domestic sales growth of construction machinery industry is still likely to remain high.

In addition, because the global market in addition to China is huge, the proportion of domestic products is still very low, and the cost performance of domestic products is relatively high. Therefore, the export growth rate of domestic products is expected to continue to remain high.

Gross margins may also drop slightly.

Domestic construction machinery enterprises usually purchase steel products 1-3 months in advance.

Therefore, the products sold by the industry in May 1-3 may be purchased in February September, 07 in February. The rapid rise in steel prices in 1-3 may not be fully reflected in the gross profit margin of the first quarter.

In the next few quarters, the average gross margin level of the industry may also drop slightly.

Maintain the industry's "attractive" rating.

There is no change in the industry's high growth expectations. The rise in steel prices will not significantly affect the profitability of the industry.

The industry is expected to maintain a high level of prosperity in the longer term.

Therefore, we maintain the industry's "attractive" rating.

Company recommendation: Shan push shares (16.28, -0.42, -2.51%, bar) (000680), Xiamen Industrial shares (12.10, -0.15, -1.22%, bar) (600815), Liugong (29, -1.16, -3.85%, bar) (000528), ZOOMLION (42.18,0.00,0.00%, bar) (000157), Anhui Heli (20.07, -0.49, -2.38%, bar) (600761), Chang Linzhu shares (9.23, -0.09, -0.97%, bar) (600710) and Sany (-0.97%, bar) (600710).

In a recent report issued by the China Iron and Steel Association, it is estimated that, on the one hand, domestic demand is strong, foreign steel stocks are low, and the cost is rising. Steel prices are still rising upward pressure; on the other hand, global economic growth is slowing down, and steel prices have downward momentum.

Overall, steel supply may be slightly tighter at home and abroad in the next six months or a year, and domestic steel prices will remain at a high level.

Domestic construction machinery enterprises usually purchase steel products 1-3 months in advance.

Therefore, the products sold by the industry in May 1-3 may be purchased in February September, 07 in February. The rapid rise in steel prices in 1-3 may not be fully reflected in the gross profit margin of the first quarter.

In the next few quarters, the average gross margin level of the industry may also drop slightly.

Industry sales revenue will continue to grow rapidly.

Although tighter monetary policy has been implemented this year, we expect that the credit growth rate of financial institutions may not drop substantially this year.

It is estimated that domestic fixed asset investment growth will remain above 25%.

Therefore, the domestic sales growth rate of construction machinery industry is expected to remain high.

In addition, because the global market in addition to China is huge, the proportion of domestic products is still very low, and the cost performance of domestic products is relatively high. Therefore, the export growth rate of domestic products is expected to continue to remain high.

Performance analysis of A shares in construction machinery sector in 08 April

Industry index and Shanghai and Shenzhen 300 (3981.273, -29.61, -0.74%, bar) index basically runs simultaneously.

In April, the construction machinery index basically kept pace with the Shanghai and Shenzhen 300 index and kept running at the same time (Fig. 5).

The construction machinery sector was affected by the market, and it fell sharply in the early stage.

It is estimated that the construction machinery sector index may continue to rise in May.