Excavator sales in China rose 25.8% in December 2019 from a year earlier, up 4.8 percentage points from November. A total of 235,693 excavators were sold in 2019, up 15.9 percent year on year. The agency believes that under the multiple factors such as the steady growth of infrastructure investment, the coming of industry replacement cycle and the opening of export increment market under the background of One Belt And One Road strategy, the prosperity of construction machinery sector is expected to continue in 2020, and the peak of excavator stock renewal will occur in 2021.

Excavator sales in China rose 25.8 per cent in December from a year earlier, up 4.8 per cent from November. A total of 235,693 excavators were sold in 2019, up 15.9 percent year on year and a record high set last year. The agency believes that under the multiple factors such as the steady growth of infrastructure investment, the coming of industry replacement cycle and the opening of export increment market under the background of One Belt And One Road strategy, the prosperity of construction machinery sector is expected to continue in 2020, and the peak of excavator stock renewal will occur in 2021.

According to statistics released by the China association of construction machinery industry on Friday, the 25 excavator manufacturers included in the survey sold 20,155 excavators in December 2019, up 25.8% year on year. Among them, 17,238 were in China, up 20.7% year on year; Exports were 2,917, up 66.8% year on year.

Driven by downstream investment, China's excavator market has been booming since 2017. In 2018, 203,420 mining machinery products were sold, up 45.0% year on year. It also surpassed the 176,352 units sold in 2011, a record high.

In 2019, the government will benefit from the further implementation of policies to boost domestic demand and strengthen the weak links in infrastructure and environmental governance. Bb0 ” To the depth of development, the construction machinery industry continues to present a stable to good good development trend.

Starting from June 2009 to now, founder securities (8.270, -0.15, -1.78%) (rights protection) divides the cycle change of excavator industry into three stages:

(1) Jun. 2009 - Apr. 2011, the first round of upward cycle, the excavator industry experienced positive growth for 23 consecutive months;

(2) 2011.05-2016.04, the industry entered the adjustment stage. Except 2013.04-2013.12, due to the peak of investment in the downstream mining industry, there was a short upward reversal in the excavating machine industry, and the overall prosperity of excavating machine was relatively low during the five-year period:

(3) from May 2016 to November 2019.11, the industry recovery has entered the second round of upward cycle. According to the data disclosed by the association, the industry has experienced positive growth for 42 months, except for negative growth in May 2019.

From the time dimension: this recovery cycle is longer and more resilient, and the boom continues.

Compared with the high tide period of the two-wheel excavator industry, founder securities believes that the industry ecology has changed substantially. Performance at the industry level:

(1) this recovery cycle lasts longer and the boom continues;

(2) the tonnage structure is developing towards both ends (small dig and large dig), and the absolute sales volume and category proportion of medium dig are shrinking;

(3) domestic longtou enterprises such as sany and XCMG have led the domestic substitution, and domestic brands have risen.

The year 2020 is the final year of building a well-off society in an all-round way. China development securities said the prosperity of the construction machinery sector is expected to continue in 2020. Under the multiple factors such as the gradual stabilization of the growth rate of infrastructure investment, the coming of the industry replacement cycle and the opening of the export increment market under the background of One Belt And One Road strategy, the construction machinery business cycle is expected to continue to lengthen, and the leading enterprises have more advantages under the background of the increasing industry concentration.

Dongxing securities (12.470, -0.09, -0.72%) calculated according to its sample data that the average operating hours of second-hand excavators produced in 2011 were 9,012 hours. Based on the current average working intensity of a single excavator of 1,000-1,500 hours per year, second-hand excavators in 2011 will reach the theoretical obsoleted value around early 2021. That is to say, the peak of excavator stock renewal will occur in 2021, assuming no drastic fluctuations in downstream demand.