Orient Securities·2026-02-02 01:48Investment Rating - The industry investment rating is maintained as "Positive" [5] Core Insights - The demand for agricultural machinery is expected to be under pressure in 2025, but a marginal recovery is anticipated in 2026, driven by domestic and overseas market improvements [2][3] - Key investment opportunities include Yituo Co., Ltd. (601038, not rated) and Zoomlion Heavy Industry Science and Technology Co., Ltd. (000157, Buy) [3] Summary by Sections Agricultural Machinery Demand - In 2025, domestic production of medium and large tractors is projected to decline by 1.2% year-on-year, while small tractors are expected to see a more significant drop of 15.4%. Overseas, the UK is expected to register the lowest number of agricultural tractor registrations since World War II, and in the US, sales of agricultural tractors and combine harvesters are forecasted to decrease by 19.6% and 26.8%, respectively [8] - Looking ahead, the agricultural machinery demand is expected to improve marginally in 2026 due to supportive policies and easing trade risks [8] Policy Support and Market Recovery - The start of the 14th Five-Year Plan in 2026 is expected to bring more focus on agricultural modernization, with the central government's policy documents emphasizing support for agricultural development [8] - Continued support for equipment upgrades and a focus on precision in policy implementation are anticipated to benefit the agricultural machinery sector [8] - The export growth of agricultural machinery is expected to provide new growth opportunities for the sector [8] Overseas Market Outlook - After two years of contraction, the overseas agricultural machinery market is expected to recover in 2026, influenced by stabilizing agricultural product prices and easing trade tensions [8] - According to BMO Capital Markets, global agricultural product prices are projected to stabilize and recover in 2026-2027, which will positively impact demand [8]