Analysis: Construction Machinery Enterprises Enter 100 Billion Sales Target

The competition for China's construction machinery companies to enter the sales target of one hundred billion has already begun. Five companies have set a sales target of 100 billion yuan, and the other 11 targets totaled 600 billion yuan.

In 2010, the growth momentum of the construction machinery industry was very strong. For a time, Sany Heavy Industry, Shandong Heavy Industry, Xugong Group, Zoomlion, and Liugong Group all expressed that they would achieve sales revenue of more than RMB 100 billion in the end of the “Twelfth Five Year Plan” period. The cumulative sales of 11 other large group companies will reach 600 billion yuan.

The competition for China's construction machinery companies to enter the sales target of one hundred billion has already begun.

Three external factors affecting the future According to the statistics of the China Construction Machinery Industry Association, as of the end of November 2010, the growth rate of the construction machinery industry's revenue was close to 50%, and the annual income was stable at over 400 billion yuan. This is exactly what the giants have put forward. "The billion group" is the emboldened position. As for the future development trend of the industry, we will combine three external factors to analyze.

The first is the encouragement and promotion of the country’s macroeconomic policies.

China's construction machinery industry will certainly have a merger and reorganization process in the future. This is not only consistent with foreign precedents, it is precisely the same direction as the state encourages.

The "12th Five-Year Plan" of the construction machinery industry encourages industry restructuring and mergers and acquisitions. It requires "the use of market competition mechanisms to eliminate backwardness, control of land use for low-level redundant construction projects and approval of engineering construction projects" and proposes to the end of the "Twelfth Five-Year Plan" period. The scale of sales of top 100 engineering machinery companies must reach 85% or more of the whole industry, and train "carrier-known international companies." In fact, construction machinery companies are actively conducting acquisitions and mergers and acquisitions. For example, Sany Heavy Industry has also achieved product diversification during the merger and acquisition process. In addition to the field of construction machinery, it is also entering the new energy field.

The second key factor is the real estate control policy. Since April 2010, real estate control policies have been introduced one after another. At present, there is a big gap between the expected results and the policy. If the policy stops next year, real estate investment will rebound and it will be good news for the construction machinery industry.

If the policy continues next year, it will have a great impact on the construction machinery industry. Who will make up for the loss of real estate investment?

In 2011, the scale of housing construction for affordable housing projects in China will reach 10 million units, an increase of 70% compared to 2010. This means that the investment in affordable housing projects in 2011 will exceed 1 trillion yuan, accounting for 20% of the national real estate investment scale. . If 10 million units can be implemented, it can make up for the fluctuation of real estate investment and reduce the impact of real estate control policies on the construction machinery industry.

The third external factor is the development soil provided by infrastructure construction.

China's infrastructure is still in a period of investment growth, and infrastructure construction provides fertile ground for the construction machinery industry. Water conservancy and hydropower: After the major floods in 2010, the safety and water storage capacity of the small and medium-sized water conservancy facilities in the middle and western regions of China will be demonstrated. In the next two years, the investment in fixed assets of China's water conservancy facilities will increase by about 30%. The rate of growth; highways: China's total mileage of the highway only accounts for 1.75% of the total mileage of the country's roads, so the future development of the highway is relatively broad; railway: According to the "Twelfth Five-Year Plan", the size of railway investment in fixed assets will be five years It has reached about three trillion yuan, and it has maintained an annual average of about 600 billion.

These investments will continue to maintain a certain degree of investment intensity in China's infrastructure construction. Since the development of the construction machinery industry is highly related to the investment in fixed assets, it can be predicted that the construction machinery industry will continue to maintain rapid growth in the future.

The hidden hundreds of billions of slogans also contain major hidden dangers.

Since the company aims at a target of 100 billion yuan, it must expand production capacity, increase investment in fixed assets, and increase personnel. However, all these decisions are based on the development of economic blowouts and the rapid development of the industry in recent years. Will the industry maintain a tremendous growth rate in the coming years? not necessarily.

The current monetary policy is basically set to be stable, and credit will inevitably be controlled in 2011 (since credit growth in 2010 far exceeded expectations). Moreover, the country’s 4 trillion investment is also coming to an end. If investment of such intensity cannot be maintained in 2011, the demand for downstream infrastructure will be reduced, and the entire industry will most likely have excess capacity. The direct consequence is that the industry has entered the era of low-price competition. .

The technical bottleneck can not be neglected: The localization of key components is lagging behind, and most of hydraulic components and transmission systems need to be imported from abroad. As production capacity expands, it will become more dependent on imported parts and components. The long lead time and insufficient supply of foreign parts suppliers will become another factor that restricts the development of the industry.

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