Pay attention to the rebound in demand for construction machinery industry and market incentives

Construction Machinery: Demand is expected to bottom out, and the issuance of key H-shares is expected to become a catalyst. According to statistics, sales of excavators, bulldozers, and loaders in August were 7,864,701, and 16,972 units, an increase of 11.1%, -26%, and 9.77% year-on-year, respectively, a year-on-year increase of 2.6%, -7.9%, and 5%. Although the absolute quantity is still at a low level, the sales data of the main varieties in August has picked up slightly. It is expected that the sales volume in September will continue to rise slightly. We recommend gradually increasing the allocation weights when the industry climate and valuation are in the bottom area, and suggest to pay attention to the investment opportunities that the H-shares of Xugong Machinery and other companies may bring to the industry and the company.

Railway equipment: The adjustment of CSR issuance plan will increase investor confidence. Affected by various negative events in the railway equipment industry in the previous period, railway-related stocks have all been significantly adjusted. China's share price of CNR has hit an all-time low in the previous period. According to our performance forecast, the valuation of major railway equipment companies is already in a low region, and short-term negative factors have been basically digested. With the reduction of CSR's issuance price and the introduction of a new plan for the company not less than RMB 6 billion, investors’ confidence in China’s high-speed rail equipment companies may be enhanced and it is recommended that they pay close attention.

Shipbuilding: The industry is still in the doldrums, focusing on offshore investment topics in the short term. The recent global new shipbuilding market is still sluggish. There are few bright spots in transaction prices and trading volume. We maintain the judgment of the global shipbuilding industry in the short-term downturn. For this sector, we still recommend the medium to long-term focus on thematic opportunities such as asset injection and aircraft carrier military. Recently, the introduction of the "Marine Engineering Equipment Luye Innovation Development Strategy" plan may form a certain stimulating effect on the stock market in the short term, and it is recommended to pay attention.

The heavy machinery industry still suggests focusing on the coal mining machine sub-sector. The heavy machinery sub-industry is still in a dilemma. The demand for equipment such as metal smelting, wind power, thermal power, hydropower, nuclear power, and chemical industry is still relatively sluggish, while sub-sectors such as coal mining machines are maintaining a higher degree of prosperity. In this section, we still recommend focusing on coal mining machine sub-sectors. Key companies include Zheng Coal Machinery, Tian Zai Technology, Linzhou Heavy Machinery and Shandong Mining Machinery.