According to media reports, the secretary-general of the China Construction Machinery Industry Association revealed that the "Twelfth Five-Year Plan" for the construction machinery industry has been reported to the relevant state departments and will be released in July. We believe that the release of the industry's "Twelfth Five-Year Plan" will point out the direction for the development of construction machinery in the next five years, and will help enhance the market's confidence in the long-term growth space of construction machinery.
(1) The industry as a whole will continue to achieve stable growth: At the end of the "Twelfth Five-Year Plan" period, that is, in 2015, the sales revenue of the construction machinery industry is expected to reach 900 billion yuan, with an average annual compound growth rate of 17%. Among them, the industry's exports will reach 26 billion US dollars, accounting for nearly 20% of exports. Although compared with the growth rates of 21.3 per cent and 28.1 per cent in 2001-2005 and 2006-2010, the growth rate of the industry has slowed significantly during the 12th Five-Year Plan period. However, we believe that after the peak growth in the past decade, the market is generally worried that the construction machinery market has been saturated and difficult to achieve growth, and the introduction of the "Twelfth Five-Year Plan" will enhance the market's confidence in the long-term growth space of construction machinery to a certain extent;
(2) The growth rate of each product will show great differences: from the 12 products counted by the industry association, tower cranes and concrete machinery represented by concrete pump trucks and concrete mixer trucks are expected to achieve a compound annual growth rate of more than 15% in the next five years, benefiting from the increase in penetration rate. Wheeled cranes, crawler cranes, graders and pavers are expected to achieve steady growth, the average compound annual growth rate in the next five years will reach more than 10%; while the growth rate of road rollers, loaders and bulldozers will be relatively low due to the substantial increase in market ownership and substitution effect, and the average compound growth rate in the next five years will only maintain single-digit growth;
(3) The development of core components will be promoted to a new height: the lagging development of key basic components is the bottleneck restricting the long-term competitiveness of China's construction machinery. In the past decade, the market demand has been strong, and enterprises have focused on the rapid expansion of host production capacity to meet market demand, and the development of key components and basic processes has lagged behind for a long time. We believe that with the intensification of industry competition during the "Twelfth Five-Year Plan" period, the development of core components is expected to be promoted to a new height, and it is expected to form a situation in which the government-led, industry associations-led, and enterprise leaders jointly break through, so as to achieve quality Leap;
(4) Industry restructuring and mergers and acquisitions are expected to accelerate: We believe that with the new round of capacity expansion since 2010, overcapacity may become a key factor restricting market development in the middle and late "Twelfth Five-Year Plan. In the next five years, leading enterprises in the industry are expected to make use of their own advantages to expand the product chain and market layout through mergers and acquisitions, eliminate backwardness and low-level repeated construction through market competition mechanism, and significantly improve the industry concentration.
