China Galaxy Securities: Excavator exports and domestic sales were impressive in September, with strong demand for overseas mining machinery.

China Galaxy Securities released a research report stating that the domestic construction rate is still under pressure, and demand for small excavators is supported by stock renewal, machine substitution, agricultural water conservancy, and urban renovation. The continuous growth of domestic sales of small excavators is expected to be driven by the advancement of large-scale projects and the opening of mining rights in Xinjiang and Inner Mongolia in the future. The September construction start-up growth rate is relatively good, with a narrowing decrease in tower crane sales and increased certainty in the non-excavation recovery. In terms of exports, the September export of large excavators saw a high increase, and with the continued upward trend in gold and copper prices, the prosperity of the mining machinery industry is expected to continue. In September, the operating hours of Komatsu excavators in North America and Europe increased rapidly, indicating a clearer trend of recovery in the high-end market. Based on steady domestic demand, overseas recovery in Europe and the US, strong mining demand, the recommendation is to invest in leading main engine manufacturers. Key points from China Galaxy Securities: - In September, excavator domestic and export growth rates increased by +21.5% and +29% respectively. According to association statistics, (1) excavators: In September, domestic sales of excavators reached 9,249 units, an increase of 21.5% year-on-year; export volume was 10,609 units, an increase of 29% year-on-year. The structure of domestic sales continues to show rapid growth in small excavators and pressure on medium and large excavators. On the export side, the export growth of large excavators in September continued to be impressive, and the growth rate of small excavators was also relatively fast, partly due to a relatively low base in the same period last year. (2) loaders: In September, various types of loaders were sold totaling 10,530 units, with a year-on-year growth of 30.5%. Among them, domestic sales were 5,051 units, an increase of 25.6% year-on-year; exports were 5,479 units, an increase of 35.3% year-on-year. The electrification rate in September was 24.56%, a decrease of -1.68pct compared to the previous month, and the cumulative electrification rate from January to September was 22.84%, an increase of +0.22pct compared to the previous month. Other products In August, the domestic growth rate of tower cranes and forklifts showed improvement, with marginal improvement in domestic and export sales; both forklifts and scissor lift platforms saw growth rates close to 20%. Association data showed sales growth in August: overall automobile cranes -4.65%/domestic +28.2%/exports -24.9%; crawler cranes +43.7%/domestic +51.7%/exports +40.2%; mobile cranes +7.29%/domestic +24.2%/exports -28.9%; tower cranes -9.79%/domestic -29.1%/exports +27.3%; forklifts +19.4%/domestic +19.3%/exports +19.6%; scissor lift platforms -18.7%/domestic -40.9%/exports -2.93%. Operating rate Domestic construction activity remains weak, while recovery in Europe and America is evident. According to association data, the average monthly working hours for construction machinery in September were 78.1 hours, a year-on-year decrease of 13.3% and a month-on-month decrease of 0.42%. The average monthly operating rate of major construction machinery products was 55.2%, a year-on-year decrease of 9.08pct and a month-on-month increase of 0.06pct. The operating hours of Komatsu excavators in September showed a clear recovery in Europe and North America. In September, the year-on-year growth in operating hours of Komatsu excavators in North America, Europe, Japan, and Indonesia were +10.2%, +7.3%, +2.7%, and +0.9% respectively. BICES 2025 Focus on high-end, electrification, and intelligence. Sany displayed 16 electrified and intelligent devices; XCMG focused on electrification and unmanned solutions, as well as new energy core components; Guangxi Liugong Machinery emphasized scenario-driven demand with over 40 devices covering multiple working conditions; Zoomlion showcased four major categories and 10 products; Hangcha focused on electrification and intelligence, introducing the world's first mass-produced 309V diesel-electric hybrid forklift. Risks: Risks include macroeconomic performance falling below expectations, policy progress falling short of expectations, increased industry competition, trade disputes, and exchange rate fluctuations.