China Galaxy Securities: In January 26th, domestic excavator sales saw a significant increase both domestically and abroad, with demand for European and American construction machinery also showing signs of recovery.

China Galaxy Securities released a research report stating that in January 2026, domestic and overseas sales of excavators increased by +61.4%/+40.5% respectively, with high growth in domestic and overseas sales of automobiles, crawler-type, and on-board crane in December. In January, Pangyuan Leasing's tower crane ton-meter utilization rate recorded the highest monthly value in January in 22 years, and the weekly value of Pangyuan Index at the beginning of February was marginally raised, with the recovery trend of domestic excavators and non-excavator continuing. Overseas demand from Europe and America has shown some recovery, with strong orders in hand for leading overseas manufacturers such as Carter's Incorporated CAT.US, and it is expected that the terminal demand for engineering machinery in North America in 2026 will grow moderately, while demand for mining machinery in Australia and Africa remains strong, and construction activities in Africa are also relatively active. Key points from China Galaxy Securities: - In January, domestic and overseas sales of excavators increased by +61.4%/+40.5%. - According to association statistics, (1) Excavators: in January, sales of various excavators reached 18,708 units, a year-on-year increase of 49.5%. Among them, domestic sales were 8,723 units (including 24 electric excavators), a year-on-year increase of 61.4%; exports were 9,985 units (including 11 electric excavators), a year-on-year increase of 40.5%. Domestic sales were disturbed by the Chinese New Year season, while overseas recovery in Europe and America, strong metal prices, and strong demand in mining markets in Australia and Africa. (2) Loaders: in January, domestic sales of loaders increased by +42.8% year-on-year, with exports increasing by +53.4%. The electrification rate in January was 25.43%, an increase of +3pct compared to the previous month. - Other products: in December, sales of various construction cranes showed high growth in both domestic and overseas markets. Association data shows that (1) Sales growth in December: mobile cranes as a whole +38%/domestic +39%/export +37%; crawler cranes as a whole +68%/domestic +96%/export +57%; on-board cranes as a whole +35%/domestic +37%/export +28%; tower cranes as a whole -31%/domestic -46%/export -9.8%; forklifts as a whole +0.03%/domestic -5.2%/export +8%; lifting platforms as a whole -8.4%/domestic -25%/export +2%. - In January, domestic working hours/opening rate increased compared to the same period last year by +24%/-2.6pct, and in December, Komatsu working hours in Europe, America, and Indonesia all showed improvement. Association data shows that in January, the average monthly working hours of major construction machinery products were 72.5 hours, a year-on-year increase of 23.9% but a decrease of 5.19% compared to the previous month; the average opening rate was 48.1%, a decrease of 2.63pct year-on-year and a decrease of 3.63pct compared to the previous month. According to the Komatsu official website, in December 25, the working hours of Komatsu excavators in North America, Europe, Japan, and Indonesia increased by +9.6%, +4.1%, -4.9%, +3.4%, respectively. - Carter's Incorporated CAT.US: Strong order in hand, expecting a moderate growth in demand for engineering machinery terminals in North America in 2026. 1) Engineering machinery: The terminal user sales for Q4 25 increased by 11% year-on-year, exceeding expectations. It is expected that the terminal user sales in 2026 will increase, based on a relatively favorable level of orders in hand (some of which are from dealer replenishment). Specifically, North America is expected to see moderate growth, with steady capital expenditure on construction projects by terminal users. The growth rate in Latin America is expected to be similar to that in 25; the economic situation in Europe is expected to improve, with strong construction activities in Africa and the Middle East; in the Asia-Pacific region, China and other regions maintain a moderate growth, while the Chinese market rebounds from a low point. 2) Resource business: The terminal user sales for Q4 25 decreased by 7% year-on-year, mainly due to weak coal prices. It is expected that the terminal user sales in 2026 will increase, mainly driven by the rising demand for copper and gold, as well as the promotion of heavy construction and aggregate industries. Equipment renewal demand is expected to increase compared to last year. Recommendations based on the upward trend in domestic and foreign sales include leading mainframe manufacturers Sany Heavy Industry (600031.SH), XCMG Construction Machinery (000425.SZ), ZOOMLION (000157.SZ, 01157), Guangxi Liugong Machinery (000528.SZ), and core component manufacturers Jiangsu Hengli Hydraulic (601100.SH). Risks include macroeconomic risks below expectations, policy advancement below expectations, intensifying industry competition, risks of export trade disputes, and exchange rate fluctuation risks.