High risk of investment in construction machinery industry

This year, the construction machinery industry is facing a very serious situation. According to November's data, regardless of the total output value of industrial output or the value of shipments, both the absolute amount and the year-on-year growth rate are even worse than last year, but the chain ratio has increased significantly, indicating that market demand is improving. In fact, because it is the rolling of inventory, although some space has been released, the pressure on enterprises has declined, but the pressure of inventory still exists.

Due to the downturn in the market and the irrational behavior of enterprises in the earlier period, some banks listed the construction machinery industry as an investment in high-risk industries, and the loan difficulty of enterprises has increased significantly. This has also led to difficulties in the source of funds for enterprises and once again aggravated the pressure on corporate cash flow. In a vicious cycle, the risk of investment in construction machinery will increase.

In 2012, with the news that the construction machinery stock market was negatively bearish, the stock price has changed a lot, and both the stock market investment and industrial investment have high risks.

Potential risks of investment increase 1. Financial risks. 1. Monetary Policy Risk: After the financial tsunami in 2008, the central bank’s monetary policy began to change from “tight” to “moderately loose” in 2011, and “tight” monetary policy may purchase products through loans and instalments. Users have a certain influence. 2. Risk of exchange rate changes: The renminbi will continue to maintain its appreciation, which will bring benefits to importing companies and at the same time bring greater pressure on exporters. Enterprises with more exports will face greater risks. The risk prevention measures are preferably based on microscopic situations (target customers), supplemented by the macro level, careful analysis and evaluation of various businesses, and subsequent decision on fund strategies.

Second, policy risks. The new "Enterprise Income Tax Law" was implemented starting from the new corporate income tax law in early 2008. Because of the internal and external system and the adoption of a unified tax rate, the statutory tax rate of most companies in the industry will increase from 15% to 25%, and the increase will be achieved. 66.7%, in the next two years, the industry does not benefit from the introduction of new income tax incentives for the construction machinery industry, and the profitability of the industry will be greatly affected. On the other hand, due to the impact of eliminating outdated production capacity policies, the top ten industry adjustment and revitalization plans put forward requirements for the elimination of backward production capacity in the next three years for steel, nonferrous metals, light industry and textiles. Eliminating outdated production capacity will inevitably affect the development of construction machinery in this industry. . To this end, we should take certain risk prevention measures. Among them, the country’s industrial policy is the main criterion for regulating the development of the industry. Investment actions should pay close attention to the industrial policy of the industry and avoid participating in projects that are inconsistent with the national industrial policy, so as to avoid policy risks.

Third, supply and demand risks. This aspect is mainly manifested in domestic and international supply and demand risks. China's construction machinery industry has the issue of overcapacity. In 2011, there were more than 50 types of loader manufacturers in the domestic market. 28 major companies controlled more than 90% of the market, and about 40 excavator manufacturers. The 23 major companies controlled the market share of more than 80, and the two leading manufacturers had a serious surplus situation. This is a typical situation of 82. In terms of supply and demand risks in overseas markets, most small and medium-sized enterprises of construction machinery in China adopt a low-cost, low-price, and low-grade competition model in their exports, which will easily aggravate international trade disputes and make China increasingly an object of trade protectionism. There is an anti-dumping risk. Therefore, risk prevention measures are adopted. On the one hand, in the event of an overall supply and demand risk, investment institutions should focus on segmenting market supply and demand analysis, select construction machinery sub-products with little conflict between supply and demand, and reduce investment risks; on the other hand, investment institutions Should choose to produce enterprises with higher technological advantages and quality advantages to reduce investment risks.

Fourth, technology risks. In engineering machinery products, there are not many core technologies with complete independent intellectual property rights in China, and cloned products occupy a large proportion. At present, the speed of new product development and old product renewal for domestic enterprises is accelerating, but the use of international advanced products for technology transfer or Although more re-cloned models were changed, core technologies and key components were independently developed. Therefore, in terms of risk prevention and control, we should realize that the level of production is an indicator that investment institutions need to pay close attention to, and horizontally compare the production technology level of advanced companies with other companies in the industry to eliminate low-quality enterprises. Comparing with the level of technological development in the previous period, we can grasp the development trend of the industry in the future and discover quality risks to avoid risks.

V. Related industry risks. The fluctuation of raw material prices represented by steel products has a great impact. Steel is one of the largest cost components of construction machinery companies. The risk of rising steel prices still exists. At the same time, iron ore price negotiations have not yet resulted. The media reported that iron ore The price increase of giants is 80%-90%, such as 4 iron ore price increase, it is estimated that this will directly lead to the rise of steel prices. There is also a certain risk in the downstream industry. Real estate and infrastructure construction such as railways, highways, and rail transportation occupy most of the needs of the construction machinery industry. If there is a significant decline in the newly-started area of ​​real estate in China, it will directly lead to concrete machinery. Demand falls. At the same time, if investment in railways, highways, rail transit, etc. cannot continue to increase or decline, it will lead to a decrease in the sales of products such as excavators and cranes. Therefore, in terms of risk prevention measures, it is recommended that the construction machinery industry with a strong cost control capability be selected to reduce risks.

6. Regional risks. First, different regions have different fixed asset investments. Fixed asset investment mainly depends on the government’s investment policy. For different regions, whether at the national planning level or at the local government level, the intensity of fixed asset investment varies. . Therefore, different regions have different requirements for construction machinery products. Secondly, different regional governments have different plans and priorities for the construction machinery industry. For example, Hunan Province, Jiangsu Province and other provinces all support the construction machinery industry as a strategic industry. The government's support will certainly help the development of the company. Third, the regions in which construction machinery companies gather will form a clustering effect, which is conducive to the development of enterprises. On the contrary, companies will face more risks. In terms of preventive measures, various factors in the region will affect the production and operation of the company. Comprehensive consideration of regional economic development, regional resource advantages, and regional competition will reduce investment risks.

VII. Risk of mergers and acquisitions and restructuring. From an international point of view, under the dual influence of economic globalization and capital liberalization, the international construction machinery manufacturing industry has undergone structural changes. First, industrialized countries have gradually introduced labor-intensive and labor-intensive manufacturing industries; Second, international industrial transfer The pace is accelerating. The method of transfer has also shifted from joint ventures and cooperation to the current sole proprietorship and mergers and acquisitions. The industrial transfer has seen a new trend of increasing depth and breadth. Therefore, the traditional superior products of China's construction machinery have the risk of mergers and acquisitions. As an investment institution, it is necessary to avoid investing in the construction machinery enterprises that have been phased out, so as to build a strong investment risk. Investment institutions can carefully choose to participate in the merger and reorganization projects of large and powerful construction machinery companies. Such industries or regional leading enterprises will be good investment targets.