Orient Securities: Agricultural machinery goes overseas to promote large-scale upgrading, and industry prosperity is expected to continue
The Zhitong Finance App learned that Orient Securities released a research report saying that China's agricultural machinery exports have continued to grow since this year. The bank has observed an increase in the average price of exports, reflecting the large-scale development of agricultural machinery driven by the sea. As overseas demand continues to pick up, the bank expects the trend of large-scale domestic agricultural machinery to continue, and the boom of industry leaders is expected to continue, bringing investment opportunities. Some of the relevant targets are: Yituo Shares (601038.SH, unrated) and Zoomlion Heavy Industries (000157.SZ, purchase).
Orient Securities's main views are as follows:
Domestic agricultural machinery AMI continues to stand on the boom and bust line. The sector economy continues to recover, and the trend of large-scale agricultural machinery is obvious
According to data from the China Agricultural Machinery Distribution Association, in August, China's agricultural machinery market sentiment index AMI reached 57.2%, +4.5 pct month-on-month and +1.3 pct year-on-year. It remained above the 50% boom and dry line for two consecutive months, in the boom expansion range, reflecting the agricultural machinery market entering the repair channel. Judging from the operating status, there are obvious signs of sector repair. In August, sales, efficiency, and managers' confidence indices rose simultaneously, and profit improvement became the core inflection point; judging from the model structure, the large-scale trend continued, and high-horsepower tractors continued the upgrade trend. The large tractor index in August was 58.9%, +6.6 pct month-on-month, and high-end continuously variable speed tractors with 200 horsepower or more were driven by the “Premium Engine Premium” policy, and demand continued to be higher than that of medium-sized tractors.
Agricultural machinery exports have increased, average product prices have risen, and exports have boosted the large-scale expansion of agricultural machinery
According to the August foreign trade data of the General Administration of Customs, domestic tractors exported 15,183 units in August, +11.6% year on year, export value of 785 million yuan, +23.9% year on year; total exports in 18 months were 136,243 units, +13.4% year over year, with export value of 7.025 billion yuan, or +19.4% year on year. Whether monthly or cumulative, the growth rate of export value is higher than the growth rate of quantity. The bank believes that the current rise in the average unit price of China's tractor exports reflects the trend of increasing the size of agricultural machinery overseas.
The benefits of going out to sea have improved demand and supply have been upgraded, and the sea-view climate in Longtou is expected to continue
The bank believes that agricultural machinery such as Chinese tractors going overseas will mainly benefit from the construction of developing countries, so there is a certain degree of sustainability. According to the China Chamber of Commerce for Import and Export of Mechanical and Electrical Products, the Belt and Road countries account for nearly 80% of China's tractor exports. Among them, Brazil, Ukraine, Indonesia, and Argentina are the main market countries. The bank believes that the trend of going overseas will continue. On the one hand, from a demand perspective, global agricultural machinery is expected to stabilize as agricultural product prices recover after two years of downturn. On the other hand, from the perspective of China's supply, the level of large-scale and intelligent domestic agricultural machinery has risen in recent years, and product competitiveness continues to rise, which is conducive to increasing market share. In the past, domestic agricultural machinery overseas depended more on small models, and as the supply of high-horsepower products gradually matures, overseas markets are expected to continue to increase their procurement of high-efficiency high-horsepower tractors. The bank expects that the space for agricultural machinery to go overseas will be further opened up, driving the revenue and profits of leading domestic agricultural machinery companies to increase.
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