Zhongjin: Excavator domestic and external demand exceeds expectations in May, optimistic about the sustainability of the future.

CICC released a research report stating that domestic and overseas demand for excavators in May exceeded market expectations. The market was generally concerned that high oil prices would drag down overseas excavator demand, but the bank believes that in the high-profit mining industry background, overseas mining demand is relatively strong and is expected to drive continuous growth in engineering machinery demand. In the low-expectation high-reality background, it is recommended to layout investments. The recommended companies include Sany Heavy Industry (600031.SH), XCMG Construction Machinery (000425.SZ), ZOOMLION (000157.SZ), Guangxi Liugong Machinery (000528.SZ). CICC's main points are as follows: Acceleration in year-on-year growth of domestic and overseas excavator sales in May According to data from the China Construction Machinery Association, sales of various excavators in May 2026 were 24794 units, an increase of 36.2% year-on-year. Among them, domestic sales were 11628 units, an increase of 38.6% year-on-year; exports were 13166 units, an increase of 34.2% year-on-year. Both domestic and overseas demand exceeded market expectations. Replacement demand drives domestic excavator demand growth, the bank is optimistic about the sustainability The current round of domestic excavator demand is mainly driven by replacement, and the overall domestic market is in a weak recovery state. The stronger-than-expected domestic demand in May was mainly due to inventory discrepancies between last year and this year. Last May, the channels were in destocking period, with overall low inventory, while this May, the channels were replenishing inventory. In addition, in terms of end demand, some customers placed orders in advance due to the price increase notices issued by the main engine manufacturers starting in June. Overall, the bank is optimistic about the sales recovery brought by this round of replacement demand. The bank is more concerned about overseas demand exceeding expectations, with both year-on-year and month-on-month export data accelerating against the backdrop of high oil prices In May, excavator export sales reached 13166 units, an increase of 34.2% year-on-year and 11.3% month-on-month, with export volume accelerating. The market is concerned about the drag on demand from high oil prices. 1) In terms of regions, the weak demand regions are Southeast Asia, while Africa and South America, mainly driven by mining demand, saw sales growth of more than 30%-40% year-on-year, effectively boosting exports. In the current level of mining profit, the bank believes that countries mainly driven by mining demand have a lower sensitivity to oil prices. 2) The bank also observed that demand in Southeast Asia began to recover in May under the backdrop of declining oil prices. It is optimistic about the pull of mining demand on subsequent exports of engineering machinery and recommends continued attention to the impact of oil prices on US interest rate policy. Risks Impact of US interest rate hikes on end demand; domestic recovery falling short of expectations.