Core Insights - The excavator and loader sales in September showed remarkable performance, particularly in overseas markets, indicating that the industry is entering a new development phase [1][2] - Domestic demand is expected to accelerate recovery due to equipment upgrades and local government debt management policies [1] - Chinese construction machinery manufacturers have enhanced their competitiveness in overseas markets, supported by the cost-effectiveness of domestic products [1][2] Excavator Sales Summary - In September 2025, a total of 19,858 excavators were sold, marking a year-on-year increase of 25.4%, with domestic sales at 9,249 units (up 21.5%) and exports at 10,609 units (up 29%) [1] - From January to September 2025, 174,039 excavators were sold, reflecting an 18.1% year-on-year growth, with domestic sales of 89,877 units (up 21.5%) and exports of 84,162 units (up 14.6%) [1] - Electric excavator sales in September reached 31 units [1] Loader Sales Summary - In September 2025, a total of 10,530 loaders were sold, representing a year-on-year increase of 30.5%, with domestic sales at 5,051 units (up 25.6%) and exports at 5,479 units (up 35.3%) [2] - From January to September 2025, 93,739 loaders were sold, showing a 14.6% year-on-year growth, with domestic sales of 49,996 units (up 20.7%) and exports of 43,743 units (up 8.31%) [2] - Electric loader sales in September totaled 2,586 units [2] Market Dynamics - The construction machinery industry is experiencing a new phase of high-quality growth, with both domestic and foreign demand contributing significantly [2] - The strong growth in domestic sales of excavators and loaders indicates that equipment upgrade policies and infrastructure projects are gaining momentum, boosting market confidence [2] - The overseas market is showing even stronger sales growth, with excavator exports increasing by 29% and loader exports by 35.3%, highlighting the penetration and competitiveness of Chinese brands in the global market [2] Long-term Industry Outlook - The competition in the industry has shifted from traditional scale and price wars to a focus on global operational capabilities and forward-looking technological strategies [3] - Leading companies are leveraging their extensive overseas channels and service networks to convert global infrastructure demand into substantial market share [3]

Investment Rating - The report maintains a "Recommended" rating for the engineering machinery sector [1] Core Insights - The report highlights a strong resonance between domestic and foreign demand, reinforcing the bullish outlook for beta investment opportunities in the sector [1] - Excavator sales reached 19,858 units in September 2025, a year-on-year increase of 25.44%, with domestic sales at 9,249 units (+21.54%) and exports at 10,609 units (+29.05%) [1] - Loader sales totaled 10,530 units, up 30.45% year-on-year, with domestic sales at 5,051 units (+25.58%) and exports at 5,479 units (+35.28%) [1] - The report notes that the domestic market is driven by supply-side renewal demand, with a significant recovery trend observed [1] - The overseas market shows sustained high demand in emerging markets, with exports of engineering machinery amounting to $38.597 billion, a year-on-year increase of 11.4% [1] Summary by Sections Industry Scale - The engineering machinery sector comprises 474 listed companies with a total market capitalization of 4,713.4 billion and a circulating market capitalization of 4,111.5 billion [1] Sales Performance - The report indicates that excavator and loader sales have both shown significant year-on-year growth, with excavators achieving a dual growth rate above 20% for the first time in 54 months [1] - The electric loader segment has seen remarkable growth, with sales increasing by 175.99% year-on-year, achieving a penetration rate of 24.56% [1] Domestic Market Analysis - The report discusses the investment and operational aspects of the domestic market, noting that fixed asset investments in infrastructure and real estate have shown mixed results [1] - The report emphasizes that the current recovery is characterized by structural changes in demand, leading to a stable performance in operating hours despite fluctuations in sales [1] International Market Analysis - Emerging markets continue to show robust demand, with significant growth in exports to regions such as Africa, the Middle East, and Southeast Asia [1] - The report highlights a marginal improvement in demand from Western Europe, which has positively impacted the sales of smaller excavators [1] Investment Recommendations - The report recommends focusing on leading companies in the engineering machinery sector, including XCMG, SANY Heavy Industry, Zoomlion, Shantui, and LiuGong, as well as key component manufacturers like Hengli Hydraulic and ADI Precision [1]

Core Viewpoint - The construction machinery industry in China is experiencing a recovery, supported by domestic demand and export growth, with significant increases in sales of excavators and loaders in August 2025 compared to the previous year [1][2][4]. Industry Events - In August 2025, a total of 16,523 excavators were sold, marking a year-on-year increase of 12.8%, while 9,440 loaders were sold, reflecting a 13.3% increase [2][3]. Sales Performance - For excavators, domestic sales reached 7,685 units, up 14.8% year-on-year, and exports totaled 8,838 units, increasing by 11.1% [3][4]. - Cumulatively, from January to August 2025, 154,181 excavators were sold, representing a 17.2% year-on-year growth, with domestic sales of 80,628 units (up 21.5%) and exports of 73,553 units (up 12.8%) [3]. - In the loader segment, domestic sales were 4,774 units (up 18.3%), and exports were 4,666 units (up 8.69%) in August 2025 [3][4]. - From January to August 2025, a total of 83,209 loaders were sold, with domestic sales of 44,945 units (up 20.2%) and exports of 38,264 units (up 5.3%) [3]. Market Outlook - The recovery of the construction machinery industry is underpinned by domestic equipment renewal policies and infrastructure project implementations, which are expected to bolster domestic demand [4]. - The overseas market is anticipated to maintain steady growth driven by global infrastructure demand and the competitive edge of Chinese brands [4]. - The industry is shifting from price competition to a focus on technology, branding, channels, and supply chain management, with leading companies in smart and electric machinery expected to better navigate cyclical fluctuations [4]. Investment Recommendations - The continued growth in sales of excavators and loaders suggests a positive outlook for the industry, with domestic demand likely to accelerate due to equipment renewal and local government debt management policies [4][5]. - The competitive advantage of domestic machinery manufacturers in overseas markets is expected to enhance their market position, leading to improved demand in both domestic and international markets [5].

Investment Rating - The report maintains a strong buy recommendation for leading companies in the engineering machinery sector, including SANY Heavy Industry, XCMG, Zoomlion, LiuGong, and Shantui [10]. Core Insights - The engineering machinery sector is experiencing a significant recovery driven by both domestic and international demand, with a notable increase in performance elasticity [8]. - The sector's revenue for the first half of 2025 reached 187.92 billion yuan, reflecting a year-on-year growth of 8.02%, while net profit increased by 22.94% to 18.661 billion yuan [19][22]. - The report highlights a shift from an "export-only" growth model to a "dual-core" model, with both domestic and international sales contributing to revenue growth [19]. Summary by Sections 1. Operating Conditions: Accelerated Revenue Growth and Strong Profit Elasticity - The engineering machinery sector has shown significant excess returns, with the sector's stock price increasing by 27.56% from the beginning of 2025 to September 9, compared to a 16.16% increase in the CSI 300 index [8][14]. - Domestic excavator sales from January to August 2025 increased by 21.55% year-on-year, driven by structural infrastructure projects [2]. - The average expense ratio for the sector decreased by 0.3 percentage points, primarily due to increased foreign exchange gains [8]. 2. Engineering Machinery: Steady Recovery and Upward Trend - Domestic excavator sales are expected to continue growing, with major projects like the Yaxia Hydropower Station accelerating demand [2][3]. - The overseas market saw excavator exports increase by 12.79% year-on-year, reversing a two-year decline, with total engineering machinery exports reaching 33.486 billion USD, up 10.8% [3][8]. - The report emphasizes the strong performance of leading manufacturers in both domestic and international markets, with SANY Heavy Industry and LiuGong showing particularly strong revenue growth [19][24]. 3. Investment Recommendations - The report suggests focusing on leading manufacturers of complete machines, component manufacturers, and high-altitude work platform/forklift manufacturers due to the expected recovery in demand [9][10]. - Specific companies recommended for investment include SANY Heavy Industry, XCMG, Zoomlion, LiuGong, and Shantui for complete machines, and Hengli Hydraulic and Aidi Precision for components [9][10].

Group 1 - The sales of various excavators in June reached 18,804 units, a year-on-year increase of 13.3%, with domestic sales at 8,136 units (up 6.2%) and exports at 10,668 units (up 19.3%) [1] - The sales of various loaders in June totaled 12,014 units, a year-on-year increase of 11.3%, with domestic sales at 6,015 units (up 13.6%) and exports at 5,999 units (up 9.11%) [2] - The engineering machinery industry is experiencing a dual drive of "improving domestic demand and increasing exports," supported by accelerated infrastructure investment and equipment renewal policies [3] Group 2 - The total sales of excavators from January to June reached 120,520 units, a year-on-year increase of 16.8%, with domestic sales at 65,637 units (up 22.9%) and exports at 54,883 units (up 10.2%) [1] - The total sales of loaders from January to June amounted to 64,769 units, a year-on-year increase of 13.6%, with domestic sales at 35,622 units (up 23.2%) and exports at 29,147 units (up 3.71%) [2] - The trend of product electrification is becoming an important structural driver for industry growth, further solidifying the recovery foundation [3]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 11.22 RMB based on a 17x PE for 2025 [3]. Core Viewpoints - The company is expected to benefit from state-owned enterprise reforms and improved profitability, with a projected net profit margin increase of 3.2 percentage points from 2022 to Q3 2024 [1]. - Domestic demand for excavators is anticipated to recover, with sales expected to reach 100,500 units in 2024, representing an 11.7% year-on-year increase [1]. - The mining machinery segment is poised for significant growth, with expected revenues of 8.501 billion, 11.552 billion, and 15.445 billion RMB from 2024 to 2026, reflecting growth rates of 45.1%, 35.9%, and 33.7% respectively [2]. Summary by Sections Investment Logic - The company has optimized its revenue structure by merging with Xugong Limited, incorporating high-margin products such as earthmoving and mining machinery [1]. - The focus on improving gross margins and reducing risk exposure has been emphasized through market-oriented executive compensation and stock incentives linked to ROE and net profit [1]. - The company is expected to see a revenue growth rate of -2.7%, +11.5%, and +14.7% from 2024 to 2026 [1]. Mining Machinery - The global open-pit mining machinery market exceeds 37 billion USD, with a projected 3% year-on-year increase in demand for 2024 [2]. - The company has secured nearly 4 billion RMB in orders from top foreign clients, indicating a potential breakout period for its mining machinery segment [2]. - The company’s risk exposure has decreased significantly, which is expected to enhance its valuation as net profit margins improve [2]. Profit Forecast, Valuation, and Rating - The company is projected to achieve revenues of 90.317 billion, 100.662 billion, and 115.458 billion RMB from 2024 to 2026, with corresponding net profits of 5.946 billion, 7.799 billion, and 10.263 billion RMB [3]. - The expected PE ratios for the same period are 19, 14, and 11 times respectively [3].