The Pacific Securities: Excavator sales in July exceed expectations, both domestically and for export, achieving high growth rates.

Pacific Securities released a research report stating that the domestic excavator market gradually emerged from the bottom last year. In the first half of this year, a total of 65,637 excavators were sold domestically, an increase of 22.9% year-on-year. The overall trend continues to be positive, with a high growth of 38.3% in the first quarter, a 16.4% year-on-year increase in April, a slight decrease of 1.5% in May, a positive growth of 6.2% year-on-year in June, and an increased growth rate in July to 17.2%, indicating a stronger-than-expected growth in July. The engineering machinery sector is still favored, and domestic performance is expected to continue to perform well in the second half of the year, with export demand likely to continue and expectations of strong performance among major machinery manufacturers. Key viewpoints of Pacific Securities: - Excavator sales in July exceeded expectations, both domestically and for export, achieving high growth rates. - The China Construction Machinery Industry Association released data on excavator sales in July, with a total of 17,138 excavators sold, representing a 25.2% year-on-year increase. Of these, domestic sales were 7,306 units, a 17.2% year-on-year increase, and export sales were 9,832 units, a 31.9% year-on-year increase. - Domestic sales remained strong in the off-season, and a positive trend is expected to continue in the second half of the year. - Export sales have shown a significant increase in year-on-year growth, which is expected to have a positive impact on the profitability of major machinery manufacturers. Export sales have gradually emerged from the bottom since the second half of last year, with an overall upward trend in the first half of this year. In the first half of the year, a total of 54,883 units were exported, an increase of 10.2% year-on-year. July saw a significant acceleration in monthly sales, reaching the highest year-on-year increase in nearly two years. Demand in the European market has improved marginally this year, with good performance in monthly export sales in Southeast Asia, the Middle East, South America, Africa, and other regions. Overall, the overseas trend is positive. According to the data disclosed in the 2024 annual report, the gross profit margins of major construction machinery manufacturers, including Sany, XCMG, Guangxi Liugong Machinery, Zoomlion, and Shantui, from overseas sales are 68.74%, 51.20%, 58.12%, 58.49%, and 71.10% respectively. Currently, overseas sales contribute significantly to the profitability of major manufacturers, and it is expected that as export sales continue to increase year-on-year, they will have a positive impact on the performance of these companies. Risk factors include lower than expected downstream construction activities in China and slower than expected market development overseas.