2025-09-08 04:11Summary of Conference Call on China Industrials Industry Overview - The focus is on the capital goods sector in China, particularly driven by industrial upgrades, technology iterations, a domestic replacement cycle, and overseas opportunities. [1][9] - Li-battery equipment and construction machinery are highlighted as being in a favorable position. [1] Key Insights Automation and General Machinery - Expected growth recovery in automation at approximately 5% year-on-year in 2026, driven by: 1. Replacement demand. 2. New energy no longer being a drag. 3. AI applications creating new capital expenditure demand, such as intelligent robots and PCB equipment. 4. Enhanced competitiveness of advanced equipment manufacturers globally. - Preferred companies include Inovance for localization and Geekplus for strong orders in warehouse automation. [3] Heavy Industry - Construction Machinery (CM) is entering an improving cycle with ongoing domestic recovery and recovering overseas demand. Preferred companies are Sany Heavy and Hengli. - Anticipated 15% year-on-year growth in heavy-duty truck (HDT) sales in the second half of 2025, primarily driven by electric models, followed by a slowdown to 5% year-on-year growth in 2026 due to domestic replacement demand. - For railway equipment, steady rolling stock deliveries are expected in the second half of 2025 and early 2026, but new orders are projected to decline in 2026. [4] Intelligent/Humanoid Robots - Adoption is expected to ramp up in the second half of 2025, benefiting suppliers and integrators. Preferred companies include Hengli, Inovance, and Shuanghuan for their mass production advantages. [5] New Energy Equipment - Demand for LiB equipment is projected to increase by 46%, 24%, and 21% in 2025, 2026, and 2027 respectively, reaching a historical cyclical high due to growing demand and technology iterations. - Preferred companies in this sector are Wuxi Lead and Hangke. - A negative outlook is noted for solar equipment in 2026 due to severe overcapacity and sluggish demand. [6] Long-term Growth Drivers - AI technology diffusion into intelligent manufacturing and equipment. - Ongoing localization of advanced equipment, with current localization rates around 40-45% for automation and industrial robots, expected to reach 70-80% by 2030. - Global expansion of equipment exports, which have outpaced overall Chinese exports from 2020 to 2025. [19][20] Market Dynamics - The equipment cycle is shifting into an upcycle after 3-4 years of downturn, particularly in construction machinery, lithium battery equipment, and automation. [9] - The impact of anti-involution on capital goods is viewed as limited, with potential for additional demand in certain sectors. [20] Investment Recommendations - Top picks include Sany, Wuxi Lead, Hangke, Inovance, and Geekplus. [9] - The report emphasizes the importance of focusing on leading and innovative players in the sector. [17]