GF Securities: Strong start after the holiday in the construction industry. The resonance of construction machinery inside and outside is gradually getting closer.

GF SEC issued a research report stating that on the domestic sales side, there is vigorous production after the holidays and an improvement in the growth rate of excavators. On the export side, global demand is accelerating, with mining activities in Africa adding to the recovery in Europe and the United States. There is a gradual resonance within and outside the industry. (1) Hydraulic component companies for excavators may be the first to benefit, as these companies have hardly expanded production in the past 20 years and there are already signs of tight production capacity; (2) Main engine manufacturers of construction machinery are accelerating their valuation recovery. GF SEC's main points are as follows: Event According to data from the Construction Machinery Association, 17,226 various excavators were sold in February 2026, a year-on-year decrease of 10.6%; of which, domestic sales were 6,755 units, a year-on-year decrease of 42%; exports were 10,471 units, a year-on-year increase of 37.2%. From January to February 2026, a total of 35,934 excavators were sold, a year-on-year increase of 13.1%; with domestic sales of 15,478 units, a year-on-year decrease of 9.19%; and exports of 20,456 units, a year-on-year increase of 38.8%. The negative year-on-year growth in domestic sales from January to February is mainly influenced by the rhythm of the Chinese New Year (1) On the financial side, after a high growth in local special bonds in January, the growth rate sharply dropped in February. According to Wind, the total issuance amount of local bonds in January 2026 increased by 96% year-on-year, but quickly fell to -2% in February; (2) From a sales perspective, the growth of excavators was mainly concentrated in the days after the Spring Festival. The timing of the Spring Festival compressed the post-holiday recovery time, and the base effect affected the year-on-year data of excavators. The post-holiday start has been good, and March can be more optimistic (1) In terms of the start of work, according to the official WeChat account of MySteel, as of March 4th (the sixteenth day of the lunar month), the resumption rate of work on 10,692 construction sites nationwide was 23.5%, the same as last year; the labor start rate was 29.7%, an increase of 2.2% year-on-year; and the funding rate was 35.5%, an increase of 0.5% year-on-year. The labor start rate and funding rate continue to improve, mainly reflected in the strong support of funds for high-speed rail, water conservancy, building exchange, and talent settlement projects, with steady growth in the issuance of special bonds in the East, and some progress in the implementation of special funds in the Northwest and South China regions; (2) Excavator sales: According to the statistics on domestic sales of excavators in the past twenty years by the Construction Machinery Association, the sales of excavators in March are about 1.5-1.8 times the total sales from January to February. Assuming that the month-on-month trend of excavators this March is close to the historical median value and calculated according to the lower limit estimate, the year-on-year growth of domestic excavator sales in March is about 20%, which is close to the grassroots research results of excavator domestic agents at the beginning of March. Structurally, the expectations for excavators in regions such as Southwest, Northwest, and Central China are more optimistic, which is basically consistent with the data on regional start-ups. Export remains high in growth, with mining investments overlapping with the recovery in Europe and the United States In February 2026, the month-on-month export of excavators increased by 5%, unaffected by the Chinese New Year holiday, reflecting the strong momentum of overseas demand. According to AEM data, the year-on-year growth of overseas excavator sales in January 2026 was +22%, reaching a new high since February 2004. Structurally, there are two main characteristics: (1) Strong demand in resource-rich areas, with excavator sales in Africa and Australia in January 2026 increasing by +98% and +102% respectively; (2) The recovery in Europe and the United States continues, with excavator sales in North America and Europe in January 2026 increasing by +21% each. Risk warning: Macro-economic risks; Global trade friction risks; Equipment renewal falling short of expectations.