According to the Zhitong Finance APP, Guojin Securities has released a research report stating that it is optimistic about the growth in scale, profit release, and continued improvement in operational quality of engineering machinery companies driven by the resonance of domestic and foreign sales. Currently, several major manufacturers have valuations of 12X or below for 2026, and the engineering machinery sector is welcoming a narrative turning point in the global cyclical recovery. It is recommended to allocate long-term sector positions and pay attention to XCMG (000425.SZ), Sany (600031.SH), Hengli Hydraulic (601100.SH), Zoomlion (000157.SZ), and LIUGONG (000528.SZ).
<h2>The main points of Guojin Securities are as follows:</h2>
The resonance of domestic and foreign sales will be the main theme of growth for engineering machinery manufacturers.
Domestic: In the first half of 2025, the domestic sales of earthmoving machinery remained strong, and the number of non-earthmoving sectors such as engineering cranes began to increase. In the first half of 2025, the revenue growth rates for Sany, LIUGONG, XCMG, and Zoomlion were 21.4%, 15.7%, 5.5%, and -11.6%, respectively. The gross profit margins of leading manufacturers in the first half of 2025 were 5%-10% lower than the peak in 2020. It is expected that as non-earthmoving sectors rise, domestic sales are likely to contribute more performance elasticity to engineering machinery manufacturers.
Overseas: Overseas remains a core link for profit release for manufacturers. From the perspective of gross profit margins, the overseas gross profit margins of engineering machinery manufacturers are much higher than those in the domestic market. In the first half of 2025, the gross profit margin differences between Sany, XCMG, Zoomlion, and LIUGONG overseas and domestically were 9.1%, 3.7%, 7.3%, and 13.9%, respectively. The high-margin overseas market remains key for profit release for manufacturers.
Optimistic about the resonance of domestic and foreign sales driving company scale growth, profit release, and continued improvement in operational quality. In the first half of 2025, the operating cash flow of leading manufacturers continued to grow, with XCMG and Zoomlion achieving more than double growth, and the inventory turnover days of the four major manufacturers decreased year-on-year in the first half of 2025. Optimistic about the continued resonance of domestic and foreign sales driving scale growth, profit release, and continued improvement in operational quality for engineering machinery manufacturers.
Optimistic about the global engineering machinery demand resonance recovery.
The update cycle supports earthmoving growth, and non-earthmoving is expected to bottom out and rise. 1) Earthmoving: Despite a significant decline in the operating rate from June to August, the domestic sales growth rates for excavators were +6.2%, +17.2%, and +14.8%, respectively. The export of second-hand machines is absorbing domestic inventory, and the demand for excavator updates is expected to continue to be released. We estimate that the excavator update demand from 2023 to 2027 will be 79,000, 92,000, 143,000, 195,000, and 249,000 units, respectively, and it is expected to accelerate growth next year. 2) Non-earthmoving: In July and August 2025, the domestic sales of three types of cranes grew in sync, with accelerated expansion in the domestic sales of truck-mounted cranes and all-terrain cranes in August. From a long-term perspective, the startup of cranes, concrete, and other non-earthmoving products lags behind excavators by about two years. Currently, excavators have already led non-earthmoving growth by one and a half years, and we are optimistic about the gradual upward trend in domestic sales of non-earthmoving machinery. 3) Major infrastructure projects are advancing, and we are optimistic about the upward trend in domestic demand: Several large infrastructure projects, such as the Yajiang Hydropower Station project with a total investment of 1.2 trillion yuan in July, the new reconstruction project of 300,000 kilometers of rural roads in August, and the Xinjiang-Tibet Railway, have successively started construction, which is expected to drive demand for various engineering machinery such as earthmoving, concrete, and cranes. We are optimistic about major infrastructure projects lifting the demand center for engineering machinery
In the context of the interest rate cut cycle, we are optimistic about the upward demand for overseas construction machinery. According to Komatsu's financial report, global construction machinery demand is expected to decline by 3% and 5% in 2023 and 2024, respectively. As of June this year, overseas demand has been declining for two and a half years, and inventory destocking is nearing its end. We are optimistic that the recovery in demand in Europe and the United States will drive a rebound in overseas demand against the backdrop of the interest rate cut cycle. 1) North America: From a long-term perspective, demand is expected to be released gradually starting in 2025 due to the lagging effects of the elections in 2024; in the short term, Caterpillar's positive sales in Q2 and two consecutive quarters of inventory replenishment are important signals of a turning point in Europe and the United States. Additionally, on September 18, the Federal Reserve cut interest rates by 25 basis points and is expected to implement two more rate cuts by the end of the year, which may further boost market recovery. 2) Europe: From a vertical perspective, European construction machinery demand is significantly pressured in 2024 due to declining demand in the real estate sector, dropping to 2020 levels and remaining at the bottom; in the short term, from April to July 2025, exports of excavators from China and Japan to Europe achieved four consecutive months of positive growth, with growth rates of 34.6% and 53.1% in June and July, respectively, indicating accelerated growth. Considering the inventory consumption in 2023-2024, the demand for the construction market driven by interest rate cuts, and infrastructure policies, we are optimistic about Europe entering an upward phase. 3) The prosperity of emerging markets is expected to be maintained: Economic growth in Southeast Asia, urbanization, and mining activities are collectively driving demand for construction machinery; infrastructure policies in countries like Saudi Arabia and high prices for resources such as copper and aluminum are expected to maintain high demand for infrastructure and mining in the Middle East, Latin America, and Africa.
Risk Warning
Domestic demand growth may fall short of expectations, risks of a harsh competitive environment in overseas markets, overseas demand growth may not meet expectations, risks of rising raw material prices, and exchange rate fluctuation risks

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000528

000425

Guojin Securities released a research report, believing that global demand for construction machinery is recovering, and recommends long-cycle sector allocation. The report points out that the resonance of domestic and foreign sales will drive the scale growth and profit release of construction machinery companies, with particular attention to XCMG, Sany, and other enterprises. It is expected that as the non-earthmoving market warms up, domestic sales will bring more performance elasticity to construction machinery manufacturers

Zhitong

Sany

Zoomlion

ZOOMLION

LIUGONG

XCMG

Guotai Junan Securities: Optimistic about the resonance recovery of global construction machinery demand, recommends long-cycle sector allocation