Whether the industry of construction machinery and aerial work platform can usher in an inflection point in 2024 is discussed

Domestic demand is weak throughout the year, exports carry half of the sky, 2023 construction machinery industry is still hovering in the cycle of the downward dilemma. Construction machinery major enterprises through cost reduction, adjustment of product structure and other measures to increase gross profit margin, in the low base effect last year, this year's net profit growth began to stabilize.

Facing the upcoming 2024, what are the views and statements of upstream and downstream enterprises of construction machinery on whether they can recover next year?

Many industry insiders agree that the three main variables for the recovery in 2024 include: the progress of domestic demand stabilization (whether the operating rate picks up), exports (overseas market share), and equipment entering the renewal cycle.

1. Will the operating rate recover in 2024?

People in the midstream industry chain believe that next year, with the gradual emergence of policy effects, the industry is expected to enter a stable recovery stage.

Liugong Securities said, "The industry will enter a stable recovery stage next year." Today's industry (domestic demand) has declined sharply for two consecutive years, taking earth-moving machinery as an example, its demand has been lower than the most sluggish 2015, so there is no basis for further decline."

Hengli hydraulic securities sources said, "(next year's domestic demand) is not worse." First, the macro economy has been stimulating; Second, inventories are continuing to be drawn down."

Zoomlion securities department said, "We think the worst time is over." However, the specific situation will depend on the resumption of construction and real estate projects. Real estate does have some policy loosening, but the current market response is not very obvious, so we need to see the end of next year, to observe the start of the project.

2. What is the export market in 2024?

Domestic demand in 2024 is affected by the real estate recovery process, and expanding overseas market share is still the first choice for construction machinery head enterprises next year.

Xugong Machinery believes that from the proportion of the main export market, most products still have a lot of room for improvement.

Sany Heavy industry relevant person said that the market growth space in overseas markets is very large, only to do a good job in overseas markets, in order to cope with the cyclical fluctuations in domestic market demand.

The above person said, "The market share of the company's pump and valve products still has room to improve, mainly in overseas markets."

Liugong Securities said that exports are expected to maintain a relatively stable growth next year, but the growth rate may not be as high as the previous two years.

3. Can 2024 equipment updates boost the market?

In addition to the two major influencing factors of project start-up rate recovery and export boost, the equipment renewal cycle window may be approaching, and the eighth year of excavator is estimated as the peak of renewal, 2023-2024 domestic excavator renewal demand or will bottom out and rebound.

Hengli hydraulic securities said that we are also waiting for an update cycle, and then enter the supply chain of overseas manufacturers, because the product verification company has been doing, in fact, the company has supplied some back-end market, including repair, maintenance and other fields."

Liugong securities said that the peak of the last round of updates is 2016, 2017, which is the peak of the elimination of old equipment, but now there are no obvious signs of (replacement), so it depends on the recovery of the market next year and the elimination of the machine."

The securities department of Zoomlion believes that "from the 2016 period, the life cycle of the product is generally 8-10 years, but the possibility of large-scale equipment updates soon is not very likely."

From the strategic layout of the head construction machinery enterprises with the largest market share at present, product internationalization, electrification and diversification are the three main directions of force. Some leading enterprises are smoothing cyclical fluctuations by promoting non-cyclical products such as agricultural machinery, mining machinery, and high machinery.

Looking forward to the industry situation in 2024, the industry growth rate or within 10% growth, and the head enterprise with scale advantages, product diversification and other advantages, is expected to take the lead in stabilizing.