According to a research report from Gf Securities, domestic sales of excavators in March increased by 23.5% year-on-year. Structurally, this reflects weaker growth in large excavators, indicating more cautious capital expenditure from downstream customers, while the rental and used equipment markets have become more active. Major projects in the southwestern region remain the core driver of growth. Some provinces in Eastern China are seeing a shift from domestic excavator sales to exports. In overseas markets, strong export growth continues to signal high demand.
On the corporate side, the electrification penetration rates for loaders and concrete mixer trucks have exceeded market expectations. Breakthroughs in these product categories essentially indicate the maturity of core electrification technologies in construction machinery, paving the way for further iterations toward intelligent and unmanned operations. Key views from Gf Securities are as follows:
Domestic Market: Recovery in Construction Activity, Major Infrastructure, and Local Government Bonds Sales: The 23.5% year-on-year increase in domestic excavator sales for March reflects three structural trends: slower growth in large excavators points to more cautious capital spending by downstream clients, increased activity in rental and secondary markets, major projects in the southwest driving growth, and a shift from domestic sales to exports in some eastern provinces.
Construction Activity: Increasing signs of improved construction activity emerged in March, including better regional utilization rates, CMI, and Pangyuan Index readings, suggesting the potential for higher-quality domestic sales growth compared to last year.
Projects: The 15th Five-Year Plan outlines 21 modern infrastructure projects. Infrastructure fixed-asset investment completed in January-February returned to positive growth, indicating ample project reserves.
Funding: Since 2025, the year-on-year growth in local government bond issuance has shown strong correlation with domestic excavator sales growth, indicating that improved funding is a key internal driver of the recovery in construction activity.
Overseas Markets: Global Synchronization, Recovery in Europe and America, African Mining China's customs data showed a 56% year-on-year increase in construction machinery export value in February, reflecting robust overseas demand. Analysis of three independent data sources indicates: Off-Highway Research reported global earthmoving machinery sales rose 2% year-on-year in 2025, signaling the start of a global upcycle, with North American and Indian sales expected to hit record highs by 2030; AEM data showed overseas excavator sales growth in January-February reached the highest level since the 2022 cycle, with excavators recovering earlier and faster as leading-cycle products; financial reports from companies like Komatsu and Caterpillar reflect strong African mining activity, cyclical recovery in Europe and the US, strong order backlogs, and historically low dealer inventories.
Corporate Sector: Mining Machinery Growth, Electrification, Cash Flow Mining Machinery: According to Bloomberg and Caterpillar projections, global mining capital expenditure is expected to increase approximately 50% by 2030 compared to 2024. Driven by this capital spending, exports of mature product lines to Asia, Africa, and Latin America are accelerating. For emerging product lines, companies are securing large orders for heavy-duty mining machinery, using electrification technology to overcome the long-term technical advantages of international leaders and narrow the gap with Caterpillar and Komatsu.
Electrification: Data from the Construction Machinery Association shows electrification penetration rates for loaders and concrete mixer trucks reached about 40% and 80% respectively in 2025, exceeding market expectations. Breakthroughs in these products indicate maturity in core electrification technologies, setting the stage for further development toward intelligent and unmanned systems.
Corporate Financials: Taking Sany Heavy Industry as an example, net operating cash flow reached 20 billion yuan in 2025, a 49% increase from the peak of the last cycle (2020). This improvement is driven by international expansion, capital expenditure management, and reduced depreciation. Strong cash flow provides flexibility for risk management, capital operations, and shareholder returns.
Investment Recommendation Each cycle in the construction machinery sector brings new dynamics and investment logic. The current upcycle in domestic and international markets forms the foundation, while additional factors like mining machinery growth, electrification, and improved cash flow create potential for corporate valuation reassessment. Recommended stocks include Hengli Hydraulic, Sany Heavy Industry, XCMG Machinery, Zoomlion, and Zhejiang Dingli. Investors are also advised to monitor Eddie Precision Machinery and Shantui Construction Machinery.
Risks include trade friction, exchange rate volatility, and policy changes.
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