The rapid growth in sales of construction machinery in 2017 has greatly improved the performance of many listed companies, and their share prices have continued to rise.

　　At the end of 2017, there were rumors in the market that the excavator of an international construction machinery brand would increase the price from January 1 this year. What is the impact of the expected price increase of construction machinery products? In the face of rising costs, what other ways do manufacturers have to deal with? What are the investment opportunities and risks in the construction machinery sector in 2018?

　　Domestic manufacturers of foreign-funded construction machinery raise prices for the first time in 5 years

　　Reporter: I saw on the Internet that the price of Komatsu models has increased since January 1. Is it possible that the ex-factory price has increased?

　　Distributor of a foreign-funded construction machinery brand in Guangdong Province: It is indeed true. All our Komatsu machines have been adjusted upwards, starting from January 1, 2018.

　　Shandong distributor of an international construction machinery brand: 20-ton machines (increased) 23,000, nearly 30,000 yuan, because this is the behavior of the manufacturer, and the market terminal also said that the price would increase.

　　Reporter: Did the ex-factory price increase, or did your dealers increase it?

　　A distributor of a foreign-funded construction machinery brand in Shandong Province: The ex-factory price has increased. Now that the competition is so fierce, how can the distributor dare to increase the price? If we increase it, other provinces will not increase it, and then customers will not be able to buy it from us.

　　Changsha, Hunan is a region with a high concentration of construction machinery companies in my country, accounting for more than 30% of the country's similar industries, and there are many listed construction machinery companies. The reporter interviewed many persons in charge of related companies, and their views on whether the relevant construction machinery products will increase in price this year are different.

　　He Qinghua, Chairman of Sunward Intelligent Equipment Co., Ltd.: We still need to observe the information of raising prices. On the whole, I think that since the current competition of our company is still fierce, it is estimated that a substantial price increase is not enough. Possibly, including foreign-funded enterprises.

　　Cheng Jijun, general manager of Sany Heavy Machinery Marketing Company: We will increase the prices of several medium and large excavators appropriately, but the impact on the entire excavator (price system) is not great. After all, we have more than 30 kinds of excavators. Different types of excavator products.

　　Shen Ke, secretary of the board of directors of Zoomlion: It should be said that a large part of the increase in the price of raw materials, we will absorb this kind of internal cost control, so for our customers, it should be said that the (price) will Within the range they can accept.

　　The person in charge of a construction machinery and equipment leasing company in Changsha, Hunan, told reporters that he has to purchase several large-scale engineering equipment every year. Due to the high production and operation management costs, the lessor is more tolerant and accepting of price increases.

　　He Guibin, Chairman of Changsha Dingchen Machinery Equipment Rental Co., Ltd.: In our industry, its main cost is not the purchase cost of the equipment, but the production, operation and management costs in the usual process, and the actual service life of a pump truck. Probably more than 10 years, 10 years, if its price increases by 10% to 15%, spread it over 10 years, the increased cost is negligible.

　　Liu Jiangbo, general manager of Hunan Shanhe Construction Machinery Sales Co., Ltd.: If the price of our mainframes rises and their (customers) profit margins increase, I think this is acceptable to them, otherwise I think that as a customer, This situation is definitely not acceptable.

　　According to statistics from the China Construction Machinery Industry Association, from January to December 2017, 25 mainframe manufacturers included in the association's statistics sold a total of 140,303 units of various excavation machinery products, a year-on-year increase of 99.5%. Among them, the sales volume of excavators in the domestic market was 130,559 units, a year-on-year increase of 107.5%. Industry insiders told reporters that as a core product in the field of construction machinery, excavators have not raised prices for many years. From the perspective of the entire industry, especially the price increase of the excavator industry is not very urgent at present, and it should not evolve into a situation of collective price increase of the whole industry.

　　Wang Jinxing, Deputy Secretary-General of China Construction Machinery Industry Association: Construction machinery was in the downturn in the past few years. In fact, it has some price cuts. In fact, it is also recovering to the previous price level/excavator has a relatively high growth rate in 2017, reaching almost the same level. One hundred percent growth. This supply-demand relationship has caused some (manufacturers) to not be able to get the goods in time, and the increase in the appropriate price may also be a driving effect.

　　The cost of raw materials and labor has risen sharply, and construction machinery manufacturers are under pressure

　　Relevant persons in charge of some large-scale construction machinery companies told reporters that the price of steel has risen by about 40-50% in the past two years; the current price of steel in the domestic market is about 5000-6000 yuan per ton, and a 20-ton excavator, The cost of steel raw materials alone is about hundreds of thousands. The price of steel continues to rise, increasing the cost pressure on machinery and equipment manufacturing companies.

　　Chen Jing, deputy general manager of Sany Heavy Industry Co., Ltd.: The cost of our raw materials has risen. For example, the current steel price is now about 4,000 yuan. In 2016, the steel price should be 2,600 and 2,700 yuan.

　　He Qinghua, Chairman of Sunward Intelligent Equipment Co., Ltd.: For our engineering equipment field, steel is a bulk material, so the rise in steel may account for a considerable proportion.

　　In addition to rising prices of upstream steel and other raw materials, labor costs are also rising. With the recovery of the industry in 2017, the demand for technical personnel related to construction machinery is also increasing. With the increase in the employment gap, companies are robbing people, and labor costs are correspondingly increased.

　　Long Jucai, general manager of the Marketing Headquarters of Sunward Intelligent Equipment Co., Ltd.: In the past, after the human resources department sent out the recruitment information, there may be dozens or more application information within a day. Now we often hang up for a long time. People have come.

　　Wei Tianjun, Manager of Operation Department of Zoomlion Concrete Machinery Company: If we compare 2017 with 2016, the income of our high-strength steel welders will increase by about 50%.

　　The continuous strong downstream demand has caused the core components of construction machinery products such as hydraulic pumps, hydraulic valves, motors and other products to be in short supply. This has become an important factor restricting the production capacity of enterprises. At the same time, the prices of recent upstream spare parts have also shown The upward trend.

　　Shen Ke, Secretary of the Board of Directors of Zoomlion: In 2017, our steel prices increased by nearly 40%, including the increase in labor costs. These factors are also affecting our upstream suppliers, so the prices of parts and components we buy from him are also increasing. On the rise.

　　He Qinghua, Chairman of Sunward Intelligent Equipment Co., Ltd.: Most of the high-end engines and hydraulic components are still imported, and now (up) are about 10%.

　　As reflected by the main engine manufacturers, the reporter learned from upstream parts manufacturers that the production costs of upstream parts companies have also increased substantially in the past two years, and some companies currently have plans to raise prices in 2018.

　　Chen Dengmin, general manager of XCMG Hydraulics Co., Ltd.: Although the price of the entire raw material market increased in 2017, the price increase was about 5% compared with 2016. This will bring great economic pressure to the enterprise. We expect that in 2018, we will zero The price of components is expected to increase to around 8% to 12%.

　　Relevant business leaders responded to the strong market demand. In the traditional off-season ordering at the end of the year and the beginning of the year, there were even orders in a single month that exceeded those in 2011 and 2012 when the industry was the hottest.

　　Wei Tianjun, Manager of Operation Department of Zoomlion Concrete Machinery Co., Ltd.: In previous years, this charge was done at the end of the Spring Festival, and it was done ahead of schedule. This phenomenon is not seen in previous years.

　　Chen Jing, Deputy General Manager of Sany Heavy Industry Co., Ltd.: In the fourth quarter of the previous year, we may have been doing some replenishment of production inventory for the next year, but the supply in the fourth quarter of (2017) was still in short supply. Production still can't keep up with the pace of customer demand

　　Some brokerage industry analysts believe that categories with a high proportion of steel costs may follow up with price increases, and most construction machinery varieties do not need to increase prices, because the growth rate of sales is sufficient to cover the negative impact of rising steel costs. The overall profitability is still showing an upward trend.

　　Lv Juan, Chief Analyst of Founder Securities Machinery Industry: It is quite unexpected, because in the construction machinery industry for so many years, there is little logic to increase prices. Basically, we maintain this price through continuous new product models every year. Rarely mention the price of the product

　　Liu Rong, chief analyst of China Merchants Securities Machinery Industry: After five years of in-depth industry adjustments, many small and medium-sized enterprises have withdrawn from this industry, including dealers, so the concentration has increased significantly. Take excavators as an example, in 2011 With foreign brands as the leading brand in 2009, the share of domestic brands is now increasing substantially.

　　Product intelligent upgrade, enterprise nuggets post-market services

　　Chen Jing, deputy general manager of Sany Heavy Industries Co., Ltd.: We have achieved several effects in smart manufacturing. First, we achieved a significant increase in per capita output value to 60%. The other is that our management expenses were greatly reduced to 50%, and manufacturing costs were greatly reduced. To 40%, our gross profit margin increased by 3 or 4 percentage points in 2017.

　　Shen Ke, Secretary of the Board of Directors of Zoomlion: Our 4.0 products are based on a modular design and generalized designs. If the proportion of modularization and generalization is increasing, it will be our design cost. Will decrease. Our previous product may (profit margin) is 26%, around 27%, our current (4.0) products are all above 30%

　　According to industry insiders, in the construction machinery industry, new machine sales are often referred to as the "pre-market", while after-sales and value-added services are referred to as the "post-market." In the current rapid development of big data Internet of Things technology, aftermarket services are also undergoing corresponding upgrades

　　Reporter Yao Jiahao: Behind me is an IoT industrial cloud platform for construction machinery. Then through this industrial cloud platform, we can understand that this construction machinery company is currently in a nationwide real-time operation of construction machinery. , You can see that there are currently more than 45,000 machines working online, so we can also understand the working conditions of a certain machine. I now choose a concrete pump truck that is working in Hefei, Anhui Province. Through the cloud platform of the Internet industry, you can see its real-time working conditions, such as the current engine speed and its oil pump. The speed of the hydraulic oil temperature. So once this machine malfunctions during operation, its information will be reported to the customer’s mobile client as soon as possible. He can understand it at the first time, and our engineers can also use this object. The networked industrial cloud platform enables remote diagnosis and even maintenance. This is the value-added service provided by our construction machinery companies in the Industry 4.0 era.

　　Wu Liang, Internet Product Manager of Zoomlion: For example, its daily work conditions, what alarms it has, where it is located every day, and when does it need maintenance? These are all things we need to analyze.

　　Through the relevant data of the Internet of Things platform, companies can also understand the operating conditions of downstream customers' operating rates, operating hours and other equipment operations in a timely manner, and then perform corresponding analysis and predictions on the macroeconomic operating situation, customer operating conditions and future market trends

　　Chen Jing, deputy general manager of Sany Heavy Industry Co., Ltd.: We can judge the status of infrastructure construction in real time through the daily operation of the excavator. Then I can also judge how the market will be next year. The drop in costs brought about by technology far exceeds the increase in labor costs that we have seen in the traditional sense. I think this is also a good situation for China's intelligent manufacturing in the future.

　　Shen Ke, Secretary of the Board of Directors of Zoomlion: Now the post-service market accounts for about 20%, and this proportion will gradually increase in the future, because with the steady increase in our equipment inventory, the follow-up service market will also become larger and larger.

　　Analyst: 2018 construction machinery or steady growth in demand puts cache risks

　　Among the listed companies related to A-share construction machinery, in the first three quarters of 2017, SANY's net profit reached 1.803 billion, an increase of 932.56% year-on-year, and the net profit of Zoomlion reached 1.282 billion, an increase of 259.84% year-on-year. Sunward Intelligent's net profit Reach 114 million, a year-on-year increase of 231.52%.

　　Major listed construction machinery companies have seen significant improvements in their performance in 2017. For the market growth in 2018, industry insiders have also expressed relatively optimistic expectations.

　　Chen Jing, deputy general manager of Sany Heavy Industries Co., Ltd.: The scale of the overall national infrastructure construction, we looked at some relevant data, there should be a growth rate of about 15% in 2018, and it should be a relatively high growth rate. This is an. The second is that many of our equipment is already at a peak of upgrading. Our industry is about 8 to 10 years, and the equipment is a cycle of upgrading.

　　He Qinghua, Chairman of Sunward Intelligent Equipment Co., Ltd.: To be honest, if the equipment doubles every year, it is definitely abnormal, and there will be problems. So I estimate that this year (2018), there may be a relatively high growth in the first half of the year, and at least the growth rate in the second half of the year will be relatively low.

　　Wang Jinxing, Deputy Secretary-General of the China Construction Machinery Industry Association: Our industry association’s overall expectation for 2018 is about 10%. This growth should be relatively stable, unlike some companies that say high growth should be Is a relatively stable development

　　According to analysts in the construction machinery industry, price increases indicate that the supply-demand relationship continues to improve. Construction machinery is expected to continue to grow in 2018. This round of recovery is most beneficial to leading domestic mainframe and core component manufacturers. Under the premise of stable growth of the industry in the future, the leading manufacturers will be strong.

　　Liu Rong, Chief Analyst of China Merchants Securities Machinery Industry: Especially the hydraulic parts mentioned earlier that there is a shortage of the entire global supply of hydraulic parts. Coupled with the hydraulic parts digging in small excavations by leading companies, a breakthrough will be formed in the development and production of mixing valves. , Then we think this is the biggest opportunity. In addition, we are also more optimistic about some leading companies whose competitiveness is improving.

　　Lv Juan, Chief Analyst of Founder Securities Machinery Industry: The growth rate of net profit of leading construction machinery companies will continue to maintain a high growth in 2018. From the perspective of performance growth, we continue to be optimistic about an investment opportunity for leading construction machinery companies. The growth rate of sales, sales volume has entered a state of steady growth in 2018.

　　Brokerage analysts remind investors that in 2018, the construction machinery industry also has the risk that production costs will continue to rise, downstream demand will slow down, and overseas market development will be less than expected.

　　Liu Rong, chief analyst of China Merchants Securities Machinery Industry: On the one hand, there is the risk of market fluctuations. On the other hand, the stock price will also fluctuate in response to national macro-control policies.

　　Lv Juan, chief analyst of Founder Securities' machinery industry: If there is a sharp downward fluctuation in the macro economy, this is a risk point for investment in the construction machinery industry. Of course, we believe that the possibility of such a risk point is still very slim.