Summary of Conference Call Records Industry Overview - The excavator market in July exceeded expectations for both domestic and international sales, with a strong upward cycle observed in both markets [1] - The domestic excavator market is experiencing structural optimization, with an increased demand for medium and large excavators, leading to enhanced profit elasticity [1][2] - The overall engineering machinery sector is characterized by a robust profit pool, presenting high investment value [2] Key Insights - **Domestic Market Dynamics**: - The demand for small excavators is supported by central government funding for water conservancy projects and high-standard farmland construction, with a significant increase in fixed asset investment in the water management sector [1][7] - Medium and large excavators are affected by the slow issuance of local government special bonds, leading to a cautious outlook for the next 3-5 years [1][8] - The relationship between excavator sales and stock prices is significant, with stock prices influenced by sales trends despite the limited impact of sales on overall profits [3] - **Sales and Inventory Trends**: - There is a notable divergence between sales and operating hours, primarily due to the increased share of small excavators and low operating rates for medium and large excavators [4] - Dealer inventory levels have been low, around 1.5 to 2 months, leading to a replenishment phenomenon in July, which supported sales [6] - **Future Demand Projections**: - The demand for small excavators is expected to remain strong as long as government policies are clear and funding is in place [7] - The medium and large excavator market may rely heavily on policy guidance and support in the coming years [8] Export Performance - Excavator exports are projected to grow by 10%-15% for the year, with strong performance noted in Africa, Indonesia, and the Middle East [1][10] - The total export value for excavators is expected to reach approximately 7-8 billion RMB, with a year-on-year growth of 60% [11] - The demand structure in key regions has improved, with medium and large excavators making up a significant portion of exports [11] Non-Excavator Segment - The non-excavator segment has shown good profit release, with improvements in export structure and a narrowing decline in certain product categories [9] - The overall trend for cranes and other lifting equipment remains positive, with a significant market share held by Chinese brands [13] Investment Recommendations - The focus for stock selection this year is on leading companies such as SANY and XCMG, which are expected to have greater profit elasticity in an upward cycle [15] - Other recommended companies include Liugong, Zoomlion, and Shantui, which are seen as having potential for growth but may not match the profit realization of the leading firms [15]

Core Insights - The relationship between China and Central Asian countries has seen significant growth and vitality, with increased trade and cultural exchanges being highlighted as key developments [8]. Group 1: China-Kazakhstan Relations - The introduction of a visa exemption agreement in 2023 has led to the establishment of multiple direct flight routes between China and Kazakhstan, facilitating easier business travel [10]. - Chinese products are increasingly popular in Kazakhstan, with local consumers showing a preference for Chinese goods, leading to a rise in cross-border shopping activities [10]. - The upcoming second China-Central Asia Summit is expected to further enhance practical cooperation between China and Kazakhstan [10]. Group 2: China-Tajikistan Relations - There has been a notable increase in Chinese enterprises investing in Tajikistan, particularly in international trade and construction sectors [12]. - A shift from "sitting merchants" to "traveling merchants" is observed, with Chinese companies now conducting market research and adapting their offerings to local needs [12]. - Cultural exchanges, such as the establishment of a Chinese library in Tajikistan, are seen as vital for enhancing mutual understanding and cooperation [13]. Group 3: China-Uzbekistan Relations - The "Two Zones and One Park" industrial technology zone project is underway, aimed at attracting Chinese investments in green energy and high-end manufacturing [14]. - The growing presence of Chinese nationals in Uzbekistan reflects the strengthening ties between the two countries, with local governments eager to collaborate with Chinese businesses [15]. - Plans for establishing vocational training schools and promoting traditional Chinese medicine in Uzbekistan indicate a commitment to long-term bilateral cooperation [16].

Group 1 - In April 2025, total sales of excavators reached 22,142 units, representing a year-on-year growth of 17.6%. Domestic sales accounted for 12,547 units, up 16.4%, while exports totaled 9,595 units, increasing by 19.3% [1][2] - From January to April 2025, a total of 83,514 excavators were sold, marking a year-on-year increase of 21.4%. Domestic sales during this period were 49,109 units, up 31.9%, and exports were 34,405 units, growing by 9.02% [2] - The domestic sales accounted for 57% of total sales in April 2025, while exports made up 43%. For the first four months of 2025, domestic sales represented 59% of total sales, with exports at 41% [2] Group 2 - The average working hours for major construction machinery in April 2025 increased by 3.20% year-on-year, with excavators averaging 85 hours of operation [3] - The overall operating rate for major construction machinery in April 2025 was 62%, showing a year-on-year decline of 4.29 percentage points, although it increased by 1.17 percentage points compared to the previous month [3] - The utilization rate of tower cranes from Pangyuan Leasing improved significantly, reaching 49.7% in March 2025, which is a year-on-year increase of 3.5% and a month-on-month increase of 20.5% [3] Group 3 - The risk exposure of most Chinese construction machinery manufacturers to the U.S. market is relatively low, with companies like XCMG and Zoomlion having less than 1% and around 1% of their total revenue from the U.S., respectively [4] - Recommended stocks include SANY Heavy Industry, Zoomlion, XCMG, and Hengli Hydraulic, with LiuGong identified as a beneficiary [5]