This Year, Domestic Advantageous Machinery Enterprises Are Expected To Rush Out Of Tight Encirclement.

In 2007, the machinery industry maintained a good momentum of rapid growth. The industry entered a rapid development cycle.

As of October 2007, the machinery industry has maintained a growth rate of more than 18% for 58 consecutive months.

We expect that the growth rate of fixed asset investment closely related to the speed of industrial development in 2008 will remain high. In the context of global manufacturing pfer to China, the Chinese machinery industry at the early stage of heavy industrialization will develop rapidly in a longer period.

Looking for superior enterprises under multiple pressures.

Macroeconomic regulation and control, subordinated debt crisis and RMB appreciation have brought some pressure to the mechanical industry's internal and external needs. The rise of production factors such as iron and steel and energy has brought great tests to the industry. The backward technology level restricts the further development of the industry.

Only those enterprises with core technology, high added value products and high market share can effectively avoid these pressures.

Machine tool: China has become the world's largest machine tool consumer market for 4 consecutive years, but the industry's self-sufficiency rate and NC rate are low, and the development space is large.

The rapid development and collective promotion of downstream industries make the machine tool industry in a highly prosperous cycle.

The strong support of the policy also gave the industry a special advantage, which ensured the rapid development of the industry.

Construction machinery: driven by exuberant domestic demand and rapid growth in exports, the construction machinery industry grew rapidly in.2007.

In view of the increasing diversification of corporate sources of funds and the sustained high growth in the central and western regions and overseas markets, the construction machinery industry in 2008 is expected to maintain a rapid growth momentum.

There has been no change in the long-term trend of construction machinery industry.

Shipbuilding: the three main indicators of shipbuilding industry since 2006: turnover volume, completion volume and order holding volume have reached record highs.

As shipbuilding capacity is far from meeting the needs of the market, the price of new vessels is rising.

The industry is in a highly prosperous cycle.

China's main shipping companies have at least held orders for 2010, and shipbuilding industry will still maintain a high level of business before 20lO years.

For the entire machinery industry, we should give a "prudent recommendation" rating, focusing on the fast growing fine industry: machine tools, construction machinery and shipbuilding, focusing on the leading enterprises with core competitiveness in these industries.

Kunming machine tools, Anhui Heli and Chinese ships are recommended.

Data link machine tool industry development space is huge, according to the report of Gardner company, China has been the world's first machine tool consumer market for 4 consecutive years since 2002, and China's machine tool import volume ranked first in the world in 6 consecutive years.

In 2006, the growth rate of China's machine tool consumer market reached 20%, ranking first in the ten largest market.

The rapid growth of China's economy and the shift of the world's manufacturing industry to China have contributed to the Chinese giant's machine tool consumer market. It is expected that in the long run, China will remain the world's largest machine tool consumer market.

In terms of output value, in 2006, China's machine tool output value was third in the world, but its growth rate was relatively fast, reaching 37%.

Since 2003, the machine tool industry has maintained a growth rate of more than 25%, far higher than the GDP growth rate of the same period. It is also one of the fast growing sub sectors of the machinery industry.

In terms of output, in 2007 1-10, the output of metal cutting machine tools increased by 11.7% over the same period last year.

Since 2005, the growth rate of metal cutting machine tools has tended to be stable, but the number of machine tools has increased rapidly. Its growth rate has reached 34.9%.

At present, the self-sufficiency rate of China's machine tool market is still low, especially the high-end CNC machine tools are heavily dependent on imports.

In 2006, the self-supporting rate of metal cutting machine tools in China was only 44.8%, and the self-supporting rate of CNC machine tools was only about 30%, especially the high-end CNC machine tools, which seriously relied on imports.

During the "11th Five-Year" period, the development goal and key points of CNC machine tools were put forward. At the end of 11th Five-Year, the proportion of domestic CNC machine tools in the domestic demand market increased from less than 30% to more than 50%. The domestic CNC machine tools used their own functional components to reach over 60%.

In terms of NC rate, the rate of NC production of machine tools in China in 2004 and 2005 was about 13%, far lower than that of 75% in Japan, 60% in Germany and the United States.

In 2005, the numerical control rate of CNC machine tools in China was 36.3%, far lower than that of Japan's 88%, Korea's 89%, Germany and the United States 75%.

Cutting -2007 in October, the rate of NC production of machine tools in China is less than 20%.

This means that the development of China's machine tool industry, especially CNC machine tools, is huge.

As of October 2007.

The machinery industry has maintained a growth rate of more than 18% for 58 consecutive months, and the industry has entered a rapid development cycle.

But entering the 2008, the machinery industry is facing multiple pressures. The macroeconomic regulation and control, the subordinated debt crisis and the appreciation of the renminbi have brought some pressure to the industry's internal and external needs. The rise of the production factors such as steel and energy has brought great challenges to the industry. Only those enterprises with high gross margin, high added value products and high market share can effectively avoid these pressures.

The slowdown in the US and global economy triggered by the subprime debt crisis has a certain impact on the demand for machinery exports.

The negative impact of subordinated debt spreads from the financial sector to the real economy, spreading from the United States to the whole world.

Global economic growth forecasts are generally down: the US government has cut its growth forecast for 2008 by 0.4%.

IMF's growth forecast for the world economy, developed countries and developing countries decreased by 0.4%, 0.6% and 0.2% respectively in 2008.

Domestic macro-control is expected to be strong.

Tight monetary policy has an impact on both ends of supply and demand in the institutional sector.

In addition, the appreciation of the renminbi has affected the price of machinery export products, and the export oriented machinery enterprises have lost larger exchange rates.

Steel and other factors of production prices affect the performance of the machinery industry.

Because of raw materials, energy, labor costs, freight costs and other production needs continue to rise.

The cost of machinery manufacturing is also rising rapidly.

January 2008.

The factory price of industrial products rose 6.1% compared to the same period last year.

The purchase price of raw materials, fuel and power increased by 8.9%.

Black metal smelting and calendering processing prices rose 17.3% year-on-year.

Among them, the average type of steel prices rose by 17.3%.

Ordinary medium steel products rose 28.6%., and ordinary small steel increased by 26.7%.

Wire rod rose 25%, medium and heavy plate increased 16.6%.

Non ferrous metal smelting and calendering processing industry.

Prices rose 4.7% over the same period.

In January, the total consumer price (CPI) level rose by 7.1% over the same period.

The continuous rise of CPI reflecting the price of living data will bring some pressure to the wage level.

It has been affected by the rise of 65% of the international iron ore benchmark price in the new year and the low level of domestic steel stock.

Domestic steel prices showed explosive growth.

The successive rise in the cost of shipping has further pushed up the price of steel.

In February 25th, Baosteel introduced the two quarter price policy of common carbon steel.

The main products are hot rolled and cold rolled up 800 yuan, tons.

The withering ranges were 21% and 17% respectively, and the thickness of heavy plate, hot-dip galvanized sheet and electrician board were increased by 800 yuan, tons, 1000 yuan / ton and 600 yuan / ton respectively, with an increase of 10%-20%.

Most of the raw materials of mechanical products are iron and steel, and the sharp rise in steel prices will inevitably bring greater cost pressure and negative impact to the machinery industry.

Suppose steel prices rise by 15%.

Under the condition that the price of products and the three charges of enterprises remain unchanged, the static effects of gross profit and net profit of mechanical manufacturing companies are as follows (excluding non recurring gains and losses): gross profit margin change (percentage point) = (1 original gross profit rate) * steel ratio in the cost * steel iron gain; net profit change (percentage) = (1 one income tax rate) x (1 original gross profit rate) * steel proportion in cost.

From this we can see that gross profit margin, net interest rate and we should focus on enterprises with high gross margin and high added value products.

The profit margin of the main business reflects the added value of the core products of the enterprise. We choose the company with high profit margin as the focus.

After comparing the third quarter main business profit margins of the various sub sectors of the machinery industry, we found that the profit margins and added value of sub sectors such as shipbuilding, mechanical foundation parts, metallurgical mining equipment, construction machinery and machine tool tools were higher than those of other industries. These industries were also the sub sectors that grew faster in 2007.

For enterprises with a higher market share and a certain competitive advantage, they can pfer production by raising the price of products. The pressure of cost increase will completely offset the increase of cost and even increase the profits of enterprises.

Moreover, often these enterprises themselves have higher gross margins.

In the machine tool industry.

Enterprises with high precision and heavy-duty machine tool products are less affected.

Take the steel price rise of 15% as an example, such as Kunming machine tool and Qinchuan development. Net profit is reduced by about 5 - 6%; and the Shenyang machine tool with more common machine tools is more affected.

Net profit was reduced by about 10%.

But according to our understanding, Shenyang machine tool has the intention to raise the product price.

For the shipbuilding industry, steel accounts for about 30% of its cost. The impact of steel price rise on its net profit is about 8%.

In the construction machinery industry, the products with high technical content and high gross profit rate.

Such as concrete pump trucks, large tonnage truck cranes, rotary drilling rig, large and medium-sized hydraulic excavators and bulldozers are less affected.