China Galaxy Securities: The year-on-year growth rate of excavator sales both domestically and internationally continued to increase in November, with a significant improvement in domestic construction start-up rates.

China Galaxy Securities released a research report stating that the year-on-year growth rate of excavator sales both domestically and internationally continued to increase in November, with a significant improvement in domestic construction rates. Internal sales of cranes, concrete machinery, and high machine equipment remained weak, but with moderately loose monetary policy and more proactive fiscal policy, the real estate market is expected to "bottom out and stabilize," infrastructure investment is expected to continue to improve, and the industry is showing broader and more intense expectations of a turnaround. Customs data shows a marginal improvement in the export prosperity of engineering machinery. Positive about the current industry cycle beta and leading main engine manufacturers achieving upward resonance, recommended main engine manufacturers XCMG Construction Machinery (000425.SZ), Guangxi Liugong Machinery (000528.SZ), Sany Heavy Industry (600031.SH), ZOOMLION (000157.SZ). Key points of China Galaxy Securities' report: In November, the year-on-year growth rate of excavator sales continued to increase, with a good trend of industry demand recovery. According to the China Construction Machinery Industry Association, excavators: in November 2024, sales of various types of excavators reached 17,590 units, a year-on-year increase of 17.9%. Of these, domestic sales were 9,020 units, a year-on-year increase of 20.5%; exports were 8,570 units, a year-on-year increase of 15.2%. The month-on-month growth rate of excavator domestic sales has been positive for 8 consecutive months, with consecutive months of year-on-year growth approaching/exceeding +20%, and the trend of industry demand recovery becoming clearer. The month-on-month export growth rate increased by 5.7 percentage points, showing a trend of recovery in exports. Loaders: In November 2024, sales of various types of loaders reached 8,646 units, a year-on-year decrease of 2.56%. Of these, domestic sales were 4,383 units, a year-on-year decrease of 15.7%; exports were 4,263 units, a year-on-year increase of 16.1%. In November, 1,005 electric loaders were sold, with a monthly electrification rate of 11.62%, a cumulative electrification rate of approximately 10.49% from January to November, an increase of 0.11 percentage points from October. Other products: Domestic demand remains weak, with weak exports of forklifts, tower cranes, and high machines. According to the association's statistics, the sales growth rates show that for truck cranes overall -15.9% / domestic -39.2% / export +27.4%; crawler cranes overall -21.7% / domestic -44.9% / export -7.1%; rough-terrain cranes overall -2.04% / domestic +11.1% / export -38.7%; tower cranes overall -56.1% / domestic -66.7% / export +23%; forklifts overall 5.07% / domestic -2% / export +16.7%, in October, the electrification rates of forklifts overall, exports, and domestic sales reached 76%, 79%, 75%, respectively; aerial work platforms overall +0.31% / domestic -52.9% / export +88.1%. Start-up rate: Continuous recovery in excavator domestic demand, signs of overseas revival According to the Komatsu official website, in November 2024, the operating hours of Komatsu excavators in China were 105.4 hours, a year-on-year increase of 4.4%, with a stable growth rate month-on-month. Overseas, although North America saw a year-on-year decline, the operating hours of Komatsu excavators in Europe, Japan, and Indonesia all increased year-on-year. In October, the operating hours of Komatsu excavators in North America, Europe, Japan, and Indonesia were 59.9 hours, 73.8 hours, 46.1 hours, and 210.6 hours, respectively, with year-on-year growth rates of -9.0%, +3.1%, +1.0%, and +0.4%, respectively. Export data from January to October at the customs level: Marginal improvement in the prosperity of major product exports In October, the export amount growth rates of tower cranes (22%), excavators (31%), loaders (27%), engineering cranes (48%), and forklifts (30%) all increased compared to the previous month. The data from January to October shows that due to the high base in 23 years, the year-on-year export amounts of excavators and tower cranes are still negative, but the negative values are narrowing. In 24, the cumulative export amount growth rate of concrete machinery has been maintained at a high level, with a year-on-year increase of 37% in the first 10 months. China's construction machinery products (excluding forklifts) are mainly exported to non-European and American regions, with limited exports to the United States. According to customs data on export amounts from January to October, excavators are mainly exported to Africa (18%), Western Europe and other regions (14%), Indonesia (10%), and other countries in Southeast Asia (12%); loaders are mainly exported to Russia (19%), Latin America (13%), Africa and North America (12% each); cranes are mainly exported to Russia and the Middle East (engineering cranes: 17% and 21%; tower cranes: 25% and 22%); concrete machinery is mainly exported to Africa (18%), Southeast Asia (19%, with 4% to Indonesia), the Middle East (16%), and Russia (15%); forklifts are mainly exported to Western Europe (excluding Central and Eastern Europe; 21%), Latin America (15%), and Russia, North America, and the Middle East. Risk warning: Risks of macroeconomic performance falling short of expectations, policy implementation falling short of expectations, intensified industry competition, risks of export trade disputes, and risks of exchange rate fluctuations.