Construction machinery stocks experienced a collective downturn. At the time of writing, LONKING (03339) fell 7.55% to HK$2.94, SANY INT'L (00631) dropped 5.2% to HK$13.86, and ZOOMLION (01157) declined 4.77% to HK$9.39. The decline follows the release of February excavator data by the Construction Machinery Industry Association. In February 2026, a total of 17,226 excavators were sold, representing a year-on-year decrease of 10.6%. Domestic sales accounted for 6,755 units, a significant drop of 42% compared to the same period last year. In contrast, export sales reached 10,471 units, showing a strong year-on-year increase of 37.2%.
Shenwan Hongyuan Group believes the decline in domestic February sales is primarily due to the timing of the Spring Festival holiday rather than weakening demand. The Spring Festival in 2026 fell on February 17th, whereas in 2025 it occurred on January 29th. After adjusting for the difference in working days, the underlying demand in the industry demonstrates notable resilience. Soochow Securities indicated that domestic sales for January and February aligned with expectations, while exports significantly surpassed market forecasts. They attribute the strong export performance to recovery in Europe and America and sustained strength in markets like Africa and Indonesia. The firm is optimistic that 2026 will mark the beginning of a formal upward cycle for exports. Exports currently contribute to over 80% of the sector's profits. With the export cycle entering an upward trend, the sector is anticipated to experience improvements in both earnings and valuations during 2026.
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