Soochow: China-US talks release positive signals, favorable for the overseas expansion logic of the machinery sector.

Soochow released a research report stating that on September 24 local time, the Chinese and US heads of state held talks at the White House, and the economic and trade teams of both sides have reached a new round of joint arrangements. China-US economic and trade cooperation is gradually advancing from the earlier stage of mechanism building and framework discussions to concrete implementation, and the trade policy environment is expected to stabilize. China's machinery industry continues to enhance its overseas competitiveness through product cost-effectiveness, supply chain, and service advantages. If subsequent tariff reduction arrangements are gradually implemented, the profit and order expectations of related enterprises are both expected to improve marginally. The main line of equipment going global remains unchanged, and globalization remains an important growth DRIVE. Soochow's main views are as follows: Event: The China-US heads-of-state talks released positive signals, and China-US economic and trade relations are expected to continue improving. On September 24 local time, China's head of state held talks with US President Trump at the White House, and the economic and trade teams of both sides have reached a new round of joint arrangements. During Trump's visit to China in May earlier, China and the US had already formed a preliminary consensus on establishing a trade council, an investment council, and a reciprocal tariff reduction framework of US$30 billion or more for each side. This talks further confirmed the relevant economic and trade consultation outcomes and clearly promoted subsequent implementation. Overall, China-US economic and trade cooperation is gradually advancing from the earlier stage of mechanism building and framework discussions to concrete implementation, and the trade policy environment is expected to stabilize. The improvement in China-US economic and trade relations is expected to reduce uncertainty in global trade policy and boost expectations for economic growth and corporate investment. As the world's two largest economies, China and the US have seen repeated trade frictions over the past few years that have to some extent affected global corporate investment, supply chain layout, and trade activities. As the economic and trade communication mechanisms between the two sides gradually become more regular, the risk of further escalation of trade frictions is expected to decline, which is conducive to enhancing corporate investment confidence and promoting improvement in global trade and capital expenditure. Furthermore, if specific tariff-reduced products and rates are gradually implemented later, the cost of China's manufacturing exports to the US is expected to decline, and the profit and order expectations of related enterprises are both expected to improve marginally. The main line of equipment going global remains unchanged, and globalization remains an important growth DRIVE. In recent years, China's machinery industry has continued to enhance its overseas competitiveness through product cost-effectiveness, supply chain, and service advantages, so changes in the external trade environment will affect the pace of its globalization expansion. Specifically, construction machinery continues to make breakthroughs in emerging markets such as the Middle East, Africa, and Latin America, and external demand has become an important support for a new round of industry growth. The machine tool industry is highly correlated with overseas manufacturing capital expenditure, while oilfield service equipment and industrial valves benefit from growth in global energy investment, and both have strong export attributes. Meanwhile, the stock prices of these enterprises that previously had high exposure to the US have continued to be suppressed by tariffs and trade policy uncertainty. If subsequent tariff reduction arrangements are gradually implemented, customers' willingness to purchase and profit expectations are both expected to improve, and the medium- to long-term growth logic is expected to strengthen. Investment recommendations. For construction machinery, recommend [Sany Heavy Industry], [XCMG Construction Machinery], [ZOOMLION], [Guangxi Liugong Machinery], [Shantui Construction Machinery], [Jiangsu Hengli Hydraulic], and suggest paying attention to [Yantai Eddie Precision Machinery]; for forklifts & aerial work platforms, recommend [Zhejiang Dingli Machinery], [Hangcha Group], [Anhui Heli Co., Ltd.]; for electric/power tools, recommend [Hangzhou GreatStar Industrial]; for machine tools, recommend [Wuhan Huazhong Numerical Control], [Neway Cnc Equipment (Suzhou) Co., Ltd], [Ningbo Haitian Precision Machinery], [Kede Numerical Control], [Guangdong Create Century Intelligent Equipment Group Corporation]; for oilfield service equipment, recommend [Yantai Jereh Oilfield Services Group], [Neway Valve], etc. Risk warnings: macroeconomic fluctuations; domestic policies falling short of expectations; international trade frictions.