EB SECURITIES: Excavator sales continued to show a growing trend in July, with impressive growth overseas.

EB SECURITIES published a research report stating that the export sales of excavators will continue to grow rapidly in July 2026. Major manufacturers are implementing price increases for excavators, cranes, and other products, which is expected to reverse the current competitive situation in the domestic construction machinery market, and the profitability of construction machinery manufacturers is likely to continue to improve. The bank remains optimistic about the sustained growth in the replacement of construction machinery boosting sales, as there are good short-term catalysts in the industry; positive fiscal policies are expected to drive infrastructure investment, ensuring a continuous mid-term recovery in demand; at the same time, as the internationalization and electrification processes in the construction machinery industry advance, along with growing demand for mining machinery, leading enterprises in construction machinery are likely to see both sales and profits rise. EB SECURITIES' main points are as follows: Excavator sales trend continues to grow in July 2026, with equipment replacement demand gradually being released. In July 2026, Chinas excavator (including exports) sales reached 19,521 units, a year-on-year increase of 13.9%; among them, domestic sales were 7,608 units, a year-on-year increase of 4.1%. From January to July 2026, Chinas excavator (including exports) sales totaled 171,841 units, a year-on-year increase of 24.8%; of which domestic sales were 86,633 units, a year-on-year increase of 18.8%. In July 2026, domestic excavator sales continued to grow, and the bank remains optimistic about the sustained growth from the replacement of construction machinery boosting overall sales for the year. The previous cycle of excavator sales grew rapidly from the bottom in late 2015 to peak in early 2021. Considering that the typical lifespan of construction machinery is usually 8-10 years, the bank estimates that there will be a compound growth of around 30% in replacement volume for domestic construction machinery in 2026 and the following years, which is expected to strongly support future excavator sales. Additionally, the large-scale export of used construction machinery to developing countries has objectively lowered the domestic hold and is an important factor supporting new machine sales. Manufacturers continue to issue price increase notices, and the competitive landscape in the construction machinery industry is expected to reverse. On August 7, 2026, XCMG Construction Machinery issued a price increase notice for its entire product line in the Southwest region, planning to increase the terminal prices of all XCMG products in five provinces in the Southwest by 2% starting August 15. Previously, manufacturers such as Sany Heavy Industry, XCMG Construction Machinery, Guangxi Liugong Machinery, and Shantui Construction Machinery had also issued price increase notices for excavators and cranes. This price adjustment in the construction machinery sector is mainly influenced by rising upstream raw material prices, but fundamentally reflects the continued recovery in domestic demand for construction machinery and the ongoing enhancement of domestic manufacturers' competitiveness. As major manufacturers' price increases gradually take effect, the current competitive situation in China's construction machinery market is expected to shift from price-based competition to value-based competition, allowing manufacturers to achieve simultaneous volume and price increases. Strong funding support ensures a sustained recovery in domestic demand for construction machinery. In terms of funding, the government work report for 2026 proposed an arrangement of 755 billion yuan for central budget investment this year and an additional 800 billion yuan of ultra-long-term special treasury bond funds for two major constructions; at the same time, it proposed allocating 200 billion yuan of ultra-long-term special treasury bond funds to support large-scale equipment replacements. The bank believes that the replacement of construction machinery equipment is the core driving factor for the current recovery in the sector. As supporting funds are gradually put in place, the process of updating construction machinery equipment is expected to continue to advance, providing strong support for the sustained recovery of the construction machinery industry; at the same time, the commencement of key projects such as the Yaxi Water Conservancy Project is also expected to continuously drive demand growth in the construction machinery sector, ensuring a continued recovery in domestic demand. Excavator exports continue to grow in July 2026, with broad expansion space in overseas markets. In July 2026, excavator export sales reached 11,913 units, a year-on-year increase of 21.2%; from January to July 2026, excavator export sales totaled 85,208 units, a year-on-year increase of 31.7%. The government work report for 2026 proposed further expanding high-level opening-up while strengthening connections with countries along the Belt and Road. In 2026, China's construction machinery export faces both opportunities and challenges such as changes in the Middle East, growing demand for infrastructure and mining machinery in Southeast Asia, Africa, and South America, and increasing penetration in high-end markets in Europe and the United States. As China further expands its high-level opening-up, leading construction machinery manufacturers are increasing their overseas layouts, and China's construction machinery exports are expected to maintain a growth trend. Sales of electric loaders continue to rise sharply, accelerating the penetration of electrification in construction machinery. In July 2026, electric loader sales reached 4,078 units, a year-on-year increase of 70.6%; the electrification rate reached 34.6%, an increase of 8.1 percentage points compared to the previous year. From January to July 2026, electric loader sales totaled 29,523 units, a year-on-year increase of 80.6%; the electrification rate was 31.5%, an increase of 9.3 percentage points year-on-year. The government work report for 2026 proposed speeding up the elimination of outdated production capacity and supporting the innovative application of green and low-carbon technology. The bank believes that greening and electrification are among the key development directions for the construction machinery industry in the future. Domestic manufacturers are leveraging the momentum from electrification to gain market share, and the electrification process in construction machinery is expected to accelerate, leading to further increases in revenue and profits for manufacturers. Forklift sales continue to grow, with intelligent logistics opening up growth space. In July 2026, sales of various types of forklifts reached 147,839 units, a year-on-year increase of 24.6%; among them, domestic sales were 85,608 units (including 1,139 AGVs), a year-on-year increase of 22.8%; export sales totaled 62,231 units (including 41 AGVs), a year-on-year increase of 27.2%. From January to July 2026, total forklift sales reached 1,009,773 units, a year-on-year increase of 17.7%; among them, domestic sales were 629,457 units (including 6,555 AGVs), a year-on-year increase of 15.3%; export sales reached 380,316 units (including 593 AGVs), a year-on-year increase of 22.0%. The rapid development of industries such as Siasun Robot & Automation and artificial intelligence has driven an increase in the penetration rate of unmanned forklifts. According to the 2026 Unmanned Forklift Application Scenario Map, sales of unmanned forklifts in China reached 32,000 units in 2025, a year-on-year increase of 30.6%, but with a penetration rate of only 2.2%, indicating significant growth potential in the market. Demand for mining machinery continues to rise, offering broad growth space for domestic manufacturers. Driven by increased global capital expenditure in the mining industry, emerging market expansions, and the trends of intelligence and electrification, the mining machinery industry continues to flourish, with revenues and orders from mining machinery companies remaining at high levels. Relevant data indicates that the global mining machinery market size was approximately $123 billion in 2025 and is expected to grow to $160.3 billion by 2030, with a compound growth rate of about 5.4%. According to the 2025 Global Top 50 Mining Equipment Manufacturers, the total sales of the top 50 global mining equipment manufacturers in 2025 was $76.66 billion, with Chinese companies' combined sales at $14.72 billion, accounting for 19.2%. Compared to leading international mining machinery companies like Caterpillar and Komatsu, Chinese mining machinery firms still have substantial room for increasing their global market share. The bank believes that mining machinery will be an important source of growth for future construction machinery companies. As global capital expenditure in mining machinery increases, Chinese mining enterprises continue to expand overseas, and the product strength of Chinese mining machinery enterprises continuously improves, the market share of Chinese construction machinery manufacturers in the mining machinery sector is expected to significantly increase. Risk Analysis: The intensity of infrastructure investment may fall short of expectations, overseas exports of construction machinery may not meet expectations, intensified price competition in the industry, uncertainties regarding Sino-US tariffs, and exchange rate fluctuation risks.