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Construction Machinery Industry: Profit Flexibility Years Reconstruction of Competitive Landscape

Construction Machinery Industry: Profit Flexibility Years Reconstruction of Competitive Landscape

[Abstract]:
Our Judgment on the Whole Year's Demand for the Digging Machine Industry: Steady Growth Maintain the growth rate of 10%~20% of the annual sales of the excavator industry. The premise of this judgment

Our Judgment on the Whole Year's Demand for the Digging Machine Industry: Steady Growth

Maintain the growth rate of 10%~20% of the annual sales of the excavator industry. The premise of this judgment is that the growth rate of infrastructure investment in 2018 is between 14% and 15%, and that of real estate investment is between 3.5% and 4.5%. This is consistent with our conclusions on dealer grassroots research. The year's excavation industry is expected to show steady growth. From the trend point of view, it is expected that the growth rate in the first half of the year will be faster than the growth rate in the second half of the year.

2018 is expected to become a profitable year for construction machinery.

We believe that the construction machinery revenue will grow steadily this year, the pressure on the cost side will ease, the gross profit margin will remain stable, and the asset burden will be basically cleared up last year. Overall, we believe that this year is expected to become a big year for the profitability of construction machinery.

Restructuring the industry competition structure, bringing structural investment opportunities, highlighting Liugong

We expect that the 2018 meeting will be a year for the industry to reshuffle, and the market share of domestic manufacturers will further increase. In the new round of competition, the sales growth of some outstanding manufacturers is expected to outperform the industry. We continue to recommend Liugong, which has the highest performance elasticity in 2018 and the lowest valuation (2018/yoy150% of net profit in 2018, and 11.9x in PE). Plunging is a good buying opportunity.

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