Huachuang Securities: In February, excavator sales continued to outperform expectations, with construction machinery benefiting greatly from resonance at home and abroad.

Huachuang Securities released a research report stating that according to the China Construction Machinery Industry Association, in February 2025, excavator sales reached 19,270 units, a year-on-year increase of 52.8%, with 11,640 units sold domestically, a year-on-year increase of 99.4%; and 7,630 units exported, a year-on-year increase of 12.7%. From January to February, the cumulative sales of excavators reached 31,782 units, a year-on-year increase of 27.2%, with 17,045 units sold domestically, a year-on-year increase of 51.4%; and 14,737 units exported, a year-on-year increase of 7.4%. Since 2025, from the perspective of industry demand, key projects in various regions have accelerated, and the issuance of special bonds has also shown a trend of acceleration. It is expected that the industry will accelerate recovery against the backdrop of warming demand. In addition, the rigid demand for equipment updates and interventions in policies and regulations may continue to drive the recovery of the domestic excavator market, and the industry is expected to stabilize and move upward. Huachuang Securities' main points are as follows: Excavator sales in February continued to exceed expectations, with both domestic and foreign markets accelerating recovery rapidly. According to the China Construction Machinery Industry Association, in February 2025, excavator sales reached 19,270 units, a year-on-year increase of 52.8%, with 11,640 units sold domestically, a year-on-year increase of 99.4%; and 7,630 units exported, a year-on-year increase of 12.7%. From January to February, the cumulative sales of excavators reached 31,782 units, a year-on-year increase of 27.2%, with 17,045 units sold domestically, a year-on-year increase of 51.4%; and 14,737 units exported, a year-on-year increase of 7.4%. The China Construction Machinery Market Index (CMI) was 107 in February 2025, a year-on-year increase of 10.3%, indicating an improvement in project construction after the end of the Spring Festival holiday, with equipment utilization rates and hours increasing. The just-concluded "Two Sessions" set a target for China's domestic GDP to grow by around 5% in 2025, continuing high-quality growth. Economic growth is inseparable from the advancement of major projects, and the demand for domestic construction machinery is expected to continue its recovery trend. Since 2025, local governments have actively laid out plans in advance. As of February 26, the issuance or planned issuance of new special bonds in various regions has exceeded 590 billion yuan, an increase of over 190 billion yuan from the same period last year, laying a foundation for economic development for the whole year and providing strong financial support for the smooth progress of subsequent infrastructure projects. In February, both domestic and foreign sales of loaders grew year-on-year, and the penetration rate of electrification continued to rise. In February 2025, sales of various types of loaders reached 8,730 units, a year-on-year increase of 34.4%, with growth significantly higher than the previous month. Domestic sales in the Chinese market reached 4,505 units, a year-on-year increase of 63%, achieving high-speed growth against the relatively low base during the Spring Festival last year; exports reached 4,225 units, a year-on-year increase of 13.2%, remaining steady compared to the previous month. Loaders, relying on their ease of mobility, increasing environmental requirements downstream, and benefiting from the decline in raw material prices of lithium batteries, have seen a rapid increase in the penetration rate of electrification. In February 2025, sales of electric loaders reached 1,327 units, with an electrification rate of 15.2%, maintaining an upward trend compared to the overall 10.4% in 2024. China leads the industry in the electrification of construction machinery. The trend towards electrification and lithium-ionization is expected to accelerate product exportation, with confidence in Chinese manufacturers continuously increasing their influence overseas to surpass European, American, and Japanese manufacturers. In 2024, the export value of construction machinery grew by 8.9% year-on-year, with all of the top 5 cumulative export values increasing year-on-year except for the United States. In December 2024, China's construction machinery export trade amounted to US$5.05 billion, a year-on-year increase of 26.3%, maintaining rapid growth. For the entire year of 2024, the total export trade value of construction machinery was 52.86 billion yuan, a year-on-year increase of 8.9%. Regionally, in 2024, Russia, the United States, and Indonesia ranked in the top three for export value with US$6.36 billion, US$4.05 billion, and US$2.56 billion respectively, showing year-on-year changes of +5.0%, -5.3%, and +10.8% respectively. The United States and Indonesia continued to show improvement year-on-year. Countries with high growth rates in China's construction machinery exports were mainly distributed in South America and the Middle East. The United Arab Emirates (US$1.36 billion), Saudi Arabia (US$1.83 billion), and Brazil (US$2.14 billion) saw year-on-year growth rates of 55.0%, 47.5%, and 45.5% respectively, further increasing from 2023. Investment recommendation: For domestic sales, the excavator market has been gradually improving since March 2024. In terms of tonnage structure, small excavators rebounded first, large excavators turned positive year-on-year in the second half of 2024, and medium excavators turned positive in the fourth quarter of 2025. Since 2025, from the perspective of industry demand, key projects in various regions have accelerated, and the issuance of special bonds has also shown a trend of acceleration. It is expected that the industry will accelerate recovery against the backdrop of warming demand. In addition, the rigid demand for equipment updates and interventions in policies and regulations may continue to drive the recovery of the domestic excavator market, and the industry is expected to stabilize and move upward. For exports, excavator exports turned positive year-on-year in August 2024 and continued until the end of the year. Loader exports saw a continuous year-on-year increase in cumulative growth rates in 2024, reaching 13.8% for the whole year. China's construction machinery maintains a competitive position in the international market, and considering that various main manufacturers are gradually improving their layout overseas, the advantages of Chinese brands in products and services are gradually being reflected. It is expected that the export market will continue to show good growth in the future. Targets for investment: Recommend focusing on Sany Heavy Industry (600031.SH), Jiangsu Hengli Hydraulic (601100.SH), ZOOMLION (000157.SZ,01157), and paying attention to Guangxi Liugong Machinery (000528.SZ), XCMG Construction Machinery (000425.SZ), and others. Risk warning: Slowdown in domestic economic recovery; intensified market competition; fluctuations in raw material prices.