Zheshang Securities: November Excavator Sales Exceed Expectations, Focus on Leading Construction Machinery Firms

Stock News12-09

Zheshang Securities released a research report indicating that China's excavator sales in November 2025 reached 20,027 units, up 13.9% year-on-year. Domestic sales accounted for 9,842 units (a 9.1% increase), while exports totaled 10,185 units (an 18.8% rise). The domestic recovery was primarily driven by demand from agriculture, forestry, and municipal projects, boosting sales of small and medium-sized excavators. Based on an 8–10-year replacement cycle, the domestic renewal demand is expected to gradually pick up in 2025, supporting a cyclical upturn.

China's construction machinery industry, with its competitive advantages such as cost-effectiveness, is transitioning from import substitution to global supply. The report recommends focusing on industry leaders. Key takeaways include:

1. **Excavator Sales Growth**: - November total sales rose 14% YoY (20,027 units), with domestic sales up 9% (9,842 units) and exports surging 19% (10,185 units). - January–November cumulative sales hit 212,162 units (+17% YoY), including 108,187 domestic units (+19%) and 103,975 exported units (+15%).

2. **Market Trends**: - **Global Expansion**: Chinese manufacturers are gaining overseas market share, supported by infrastructure demand from Belt and Road initiatives. KHL data shows XCMG, SANY HEAVY IND, and Zoomlion held a combined 12.4% of the global top 50 market in 2024, with room for further growth. - **Domestic Demand**: Projects like the Yarlung Tsangpo hydropower station (CNY 1.2 trillion investment) and the proposed Xinjiang-Tibet Railway (CNY 95 billion registered capital) signal potential demand recovery. - **Replacement Cycle**: The 2015 trough suggests a renewal wave starting in 2025, underpinning sector recovery.

3. **Industry Developments**: - SANY HEAVY IND listed on HKEX (06031) in October, raising HKD 13.3 billion. Shantui also announced plans for an HKEX IPO. - XCMG launched an equity incentive plan (4.7 billion shares, ~4% of equity), while Zoomlion proposed a CNY 6 billion HKD convertible bond.

**Risks**: Slower-than-expected infrastructure/real estate investment, trade tensions, and project delays.

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