The concrete machinery industry will pick up and all parties will be in good shape or will usher in an outbreak

Concrete machinery is the first product in the field of construction machinery in China that has reached the world's leading level. Especially after domestic enterprises have successfully acquired the three giants of the world's concrete machinery, Chinese enterprises have occupied the commanding height of the global concrete machinery, among which Zoomlion and Sany Heavy Industry are the leading enterprises in this field.

The industry has shifted from a boom to a sharp decline. From the perspective of the industry, the growth rate of sales volume and sales revenue have declined, and the gross profit rate has continued to decline. From the perspective of external reasons, the real estate investment market has declined and radical capacity expansion has taken place. Industry demand is heavily overdrawn. As a result, the once star product of concrete machinery, after several years of downward cycle, has changed from a profit center to a loss center, becoming a heavy burden for manufacturing enterprises.

 

The recovery degree of concrete machinery market determines the elasticity of profit recovery of construction machinery enterprises in the future. The concrete machinery industry has experienced a five-year adjustment since its peak in 2012, and it has become a top priority to digest the existing equipment, collect cash and repair the balance sheet. According to the calculation, the overstocked equipment in the peak period will be gradually digested.

 

Based on a typical case study, if new equipment enters the market at a high point in the early stage, the expected discounted payback period is about 3.7 years, referring to the basis of pumping price and capacity utilization rate in 2011 (the whole society's balanced capacity utilization rate is 72%). However, the real situation is that due to the excess capacity supply in the industry, the pumping price and pumping volume have declined to varying degrees. Accordingly, the investment recovery cycle has been extended from the expected 3.7 years to 5.7 years. Therefore, the equipment entering the market at a high level in 2011-2012 will be gradually digested and completed at the operating rate level in recent years.

 

The recovery of concrete machinery is expected to improve the gross profit rate of equipment enterprises. Nowadays, the change of the supply and demand pattern of the industry is gradually reflected in the sales of new machines. According to the current order scheduling and sales situation of the main engine factory, the growth rate is relatively obvious. In terms of finance, the level of gross profit margin has been greatly improved. Take Sany Heavy Industry as an example, the company's gross profit rate of concrete has been adjusted from 40% in peak period to 20-25%. Since the first quarter of 2017, the gross profit margin of concrete machinery of the enterprise has recovered to 28%, with a significant increase on a month on month basis.

 

It is expected that in the next few years, the spring of concrete machinery industry will come, and a large number of market demand and macro trend will be better or the industry will usher in the long-awaited outbreak.