Construction machinery business layout to deal with industrial winter

Recently, Caterpillar Inc., the world’s largest engineering machinery giant, announced the reduction of its financial year 2012 earnings forecast. It expects revenue to be approximately US$66 billion this year, which is lower than the previous forecast of US$68 billion to US$70 billion. In the face of the cold winter of the industry, the giants of domestic construction machinery began to show their supernatural powers.

Industry winter

According to foreign media reports, due to the weaker-than-expected global economic conditions, Caterpillar Inc. lowered its fiscal 2012 financial performance forecast. It now expects the company's annual earnings per share of 9.00 to 9.25 US dollars and revenue of about 66 billion US dollars; and before Expected earnings per share of approximately $ 9.60, income of 68 billion to 70 billion US dollars. Caterpillar also expects that sales and revenue for the next fiscal year will be in line with the 2012 fiscal year.

When the global economy weakened, China's construction machinery industry also fell into the winter of development. According to the statistics released by the China Construction Machinery Industry Association, the total profit of the construction machinery industry in China dropped by 20.3% year-on-year in the first 7 months of the year, and the lowest level of industry sales occurred. Loads, bulldozers, graders, construction cranes, industrial vehicles, road rollers, paver, excavator, etc. The production and sales of the 8 main types of construction machinery all showed a substantial decline on the basis of a higher base in the same period of last year, except for flat land. Outside the machine, the decline of other types of products is more than 10%, of which the loaders, rollers, and excavators are reduced by more than 20%.

The performance of the leading listed companies in the construction machinery industry declined in the third quarter, and signs of strategic shrinkage of some companies are gradually emerging. According to the third quarter results report, there are 7 listed construction machinery companies performance decline, Shantui shares (000680, stock bar), Tianye Tonglian (002459, stock bar) for the first time loss, and construction machinery (600984, stock it) is continuous Loss. Shantui shares and Tianye Tonglian were the first to lose, and construction machinery continued to lose. In addition, the performance of the four companies represented by Liugong and Shanhe Intelligence (002097, stocks) declined significantly, among which Shanhe Smart's net profit fell by 90% in the first three quarters, and Valin Xingma (600375, stocks) had the lowest net profit, but it was also high. 50%.

Liugong and Shanhe Intelligence are cautiously anticipating 2012 annual performance. Liugong said that due to the sluggish macro economy and sluggish industrial market, the company’s product sales and operating income all dropped year-on-year, which will result in a sharp decline in its 2012 results. The annual net profit is expected to fall by 70% to 90%. Shanhe Intelligence expects its profit to drop by between 60% and 90%.

The winter of the construction machinery industry is far from passing and the market demand is still sluggish. In the case of a decrease in revenue and a drop in net profit of construction machinery enterprises, receivables rose but did not drop, and they still maintained significant growth. Sany Heavy Industry (600031, shares it), Zoomlion (000157, shares it), Xugong Machinery (000425, shares it), Liugong, Shantui shares, XGMA shares (600,815, stock it) and Shanhe Intelligence is the construction machinery industry has For a typical listed company, the increase in accounts receivable is still strong.

Diversification Strategy

In the face of the industry in the winter, major domestic construction machinery giants have demonstrated their power. The engineering machinery giant Xugong Group is currently making rapid progress in its diversified development strategy. Previously, XCMG Group, with its engineering cranes as its core business, has developed its business into the fields of shovels, concrete machinery, road machinery, fire engines, and other construction machinery and accessories.

On October 30th, Xugong Machinery announced the entry into the field of rare earths at the time of the release of the three quarterly reports. The listed company added 490 million yuan to its wholly-owned subsidiary Xugong Investment Co., Ltd. (“Xugong Investment”) in a self-raised manner. A further RMB 490 million was invested to establish Ganzhou Rare Earth Storage Co., Ltd., which accounted for 49% of the stocks of the company.

The registered capital of this storage company is RMB 1 billion, which is mainly engaged in the sale of rare earth separation products and sales of rare earth metal products, the development of rare earth deep processing products, the production of rare earth production chemical raw materials, sales of auxiliary materials, and consulting services for rare earth technologies. XCMG believes that in view of the scarcity of rare earth resources, the extensive application, and the unique position of China's rare earth resource reserves and supply, investment in setting up a storage and storage company will expand the company's business scope and enhance the company's visibility in the resource sector, and it is expected to realize substantial investment. Return. In addition, Xugong also invested 500 million yuan to establish Xuzhou Xugong Finance Co., Ltd. to engage in investment business, investment management, asset management and related consulting business.

Recently, President of Sany Heavy Industry expressed to Wenbo that internationalization has become the company's third venture. In 2012, the company’s overseas revenue could reach 10 billion yuan, accounting for about 15% of total revenue. He also expects that after 5 years, the sales revenue of the international market will increase to 40% to 50% of the company's total revenue, which is about 3 times the current level. At present, SANY's overseas development is gradually changing from investment and establishment to mergers and acquisitions. After the company grows stronger in the future, mergers and acquisitions will be the main way to integrate the minimum cost of market consolidation and become the main route for Sany's future “sea-going”. Sany has already invested in many places abroad, including Brazil, Germany, the United States, and Indonesia. In the future, overseas investment will be increased according to the plan. At the same time, it will also increase the leverage of overseas acquisitions and will not rule out another acquisition in Europe.

After Sany Heavy Industries assisted Putzmeister in completing a new acquisition this year, it recently invested 8.1 million euros in the acquisition of a 100% stake in Intermix GmbH held by Hans-George Stetter. While seeking to transform its overseas investment, Sany Heavy Industry reorganized the Construction Machinery Business Unit. In order to better achieve economies of scale, the original five business divisions were merged into three business divisions.

After another domestic construction machinery giant, Zoomlion, acquired Italian CIFA, bought out German JOST related technology and established a joint venture with Indian EM Corporation, Zoomlion recently made heavy fists and signed a deal with the world-famous Italian RIBA company. The establishment of a high-carbon materials company will focus on R&D, manufacturing and sales of high-strength composite components such as carbon fiber for industrial construction machinery and equipment. At present, Zoomlion has spared no effort in transnational technical cooperation. According to statistics, in 2008 Zoomlion successfully acquired Italy's CIFA company, the world's top brand of concrete machinery. In 2011, it bought out a full set of technologies for the high-end experts of the tower crane, the German JOST flat-top tower. This move has enabled the Zhonglian tower crane to gain access to Europe and the United States. Access permits for high-end markets and the establishment of a German R&D center further strengthened Zoomlion’s advantages in technological innovation.

Guo Xuehong, vice president of Zoomlion, pointed out that the main battleground of Zoomlion is still in the country, and overseas markets are still in the initial stage of trial or start-up. At present, the global economy has continued to slump, but one day it will recover. Zoomlion plans to have sales in overseas markets reach 30% of the total output value of concrete machinery by 2015. Therefore, while consolidating the domestic market, we will unswervingly take the path of international development, improve the global market layout, strengthen technological innovation, take the road of international high quality, and consolidate the leading position of concrete machinery in the industry.

Although China's construction machinery industry fell into a slump this year, Caterpillar is very optimistic about China and is actively building factories in China. The company believes that China’s urbanization has decided that by 2025, more infrastructure such as roads and airports will still need to be built. Although the company is currently facing relatively large inventory pressure, it has positioned “winning in China” as 2011. One of the eight strategic plans to 2015. Caterpillar estimated in the semi-annual report that the steady growth measures of the Chinese government are expected to accelerate the growth of the construction machinery industry in late 2012 and 2013.