"Neutral" report points According to reports, China's Ministry of Housing and Urban-Rural Development requires that all 10 million sets of affordable housing projects this year must be fully started before the end of November. At present, the overall operating rate of affordable housing is only about 30%. Capital shortage is the biggest obstacle. (Source: China News)

We have the following comments on this:

1. The regulations on start-up time did not exceed market expectations, and it is expected that the start of construction will advance steadily. 2. As a whole, the start of affordable housing has no significant effect on the sales of construction machinery; 3. Maintain the previous construction machinery industry. Views, suggest caution.

According to reports, the Chinese Ministry of Housing and Urban-Rural Development requires that all 10 million sets of affordable housing projects this year must be fully started before the end of November. At present, the overall operating rate of affordable housing is only about 30%. Capital shortage is the biggest obstacle. (Source: China News)

We have the following comments on this:

First, the regulations on the start-up time did not exceed market expectations. It is expected that the start of the construction of affordable housing will proceed steadily. From grassroots research, it is found that the current rate of affordable housing is not satisfactory. The overall operating rate of the country is about 30%, of which Chongqing is The highest, up to 40%.

Moreover, some projects started after the start did not continue to work, there is uncertainty in the completion time.

The Ministry of Housing and Urban-Rural Development stipulated that the start-up time was intended to prompt the local government to start construction as soon as possible, but this provision did not exceed the market expectation (previous market expectation: the full-scale start-up time of 10 million sets of affordable housing was Before the end of October).

On the other hand, according to the view of the Changjiang Securities Real Estate Research Group, it is expected that the construction speed of affordable housing construction will show a steady state in the second half of the year, and the probability of a concentrated start-up in a certain month or a certain quarter is very small.

Secondly, as a whole, the start of affordable housing has no significant effect on the sales of construction machinery sales. Safe housing starts are progressing steadily in the next six months and it is expected that it will not have a significant impact on market demand. The main reason is:

In the off-season of the traditional demand for construction machinery, because there are not many other construction projects, some of the construction machinery is idle and can be transferred to the construction of affordable housing projects, and the tenure of construction machinery in the first half of the year and the first half of the 11th year has increased substantially. Sales of construction machinery are unlikely to show significant growth. Specifically, the probability of growth in demand during the months of June and July is relatively small. In the peak demand season of construction machinery (September), it is affected by the start of construction of other solid investment projects and the start of construction of affordable housing. With the double stacking, the demand for construction machinery may increase. It is expected that the construction of affordable housing will directly drive the demand for three types of construction machinery: concrete machinery, large excavators, and loaders (the other models are indirectly driven), benefiting from the largest to the least For: concrete machinery> large excavators> loaders.

From the perspective of the process of building affordable housing, the specific driving situation is:

In the early stage of construction, the loader and excavator are mainly driven. The preparatory projects for the construction of affordable housing are generally infrastructure projects. The loaders are suitable for the work of gravel plants, and the demand is large. However, due to the large amount of loaders and most of the requirements are equipment renewal needs, overall, Safe rooms have little effect on loaders. The situation of grassroots research can also confirm this view: From January to May, the growth rate of loader sales in Chongqing was about 15%, which was not significantly higher than that of other provinces and cities. In addition, large excavation is suitable for earthwork operations, there is a certain demand, but the major excavation is mainly produced by foreign companies, and will not lead to a big pull on the sales volume of domestic OEMs.

During the construction phase of the house, the concrete machinery is mainly pulled.

In summary, we believe that the start of affordable housing in the second half of the year will not have a significant impact on sales of construction machinery.

Third, to maintain the previous view of the construction machinery industry, it is advised that our previous industry views are mainly:

In the first quarter, high growth in the industry overdrawn future demand. The rapid growth of sales in the first quarter is the result of the superposition of various factors, such as the aggressive evaluation policies of the host plant, exhibition marketing, and the easing of financing sales; • The OEM is facing destocking, accounts receivable accounts for high ratios, tight cash flow Pressure, sales and profits in the short term may be difficult to achieve high growth. In particular, the high level of inventory and weak demand may trigger direct or indirect “price wars” by OEMs, resulting in lower profit growth than sales revenue growth.

If the regulation and control policies are not changed, the dawn of the industry first appeared in August and September, and the stock price rebounded at a marginal rate. The logic of stock price rebound is that sales growth may recover in August and September. The main reasons for the recovery are: (1) September is the peak of traditional demand for construction machinery; (2) Water investment funds are in place, flood season and farmers are busy, and water conservancy investment or pulling Sales; (3) The gradual restoration of the infrastructure of the railway; (4) The commencement of protection of the housing. However, if the tightening policy is not relaxed, it is expected that the rebound will not be too great.

We maintain the views of the above industries and suggest that we continue to be cautious about the construction machinery industry. Subsequent recommendations focus on two aspects: changes in policy (repeated signs of loosening) and changes in industry sales data.