Everbright Securities: In September, domestic sales of construction machinery continued to grow, and the industry has good short-term catalysts

According to the Zhitong Finance APP, Everbright Securities released a research report stating that in September, domestic sales of construction machinery continued to grow, with a significant recovery in the prosperity of non-excavator categories and impressive export sales. The report remains optimistic about the sustained growth of construction machinery upgrades driving sales, with good short-term catalysts for the industry. Additionally, as the internationalization and electrification processes of the construction machinery industry continue to advance, leading enterprises in the sector are expected to see both volume and profit increase. Furthermore, the commencement of the Yaxia Hydropower Project is expected to further boost demand for construction machinery, with a positive outlook for the industry's long-term performance.

The main points from Everbright Securities are as follows:

In September 2025, domestic excavator sales continued to grow, with a significant recovery in non-excavator categories.

In September 2025, the sales of excavators (including exports) in China reached 19,858 units, a year-on-year increase of 25.4%; among them, domestic sales were 9,249 units, a year-on-year increase of 21.5%. From January to September 2025, the sales of excavators (including exports) in China totaled 174,039 units, a year-on-year increase of 18.1%; among them, domestic sales were 89,877 units, a year-on-year increase of 21.5%. Domestic sales of non-excavator construction machinery showed a clear recovery trend, with domestic sales of loaders in September 2025 increasing by 25.6% year-on-year; domestic sales of graders increasing by 6.5% year-on-year; domestic sales of truck cranes increasing by 40.7% year-on-year; domestic sales of crawler cranes increasing by 66.7% year-on-year; and domestic sales of truck-mounted cranes increasing by 29.8% year-on-year.

In September 2025, domestic construction machinery sales continued to grow, confirming the upward trend of the domestic demand cycle recovery.

From the perspective of growth sources, there is still optimism about the sustained growth of construction machinery upgrades driving sales. The sales of excavators and other construction machinery rapidly increased from the bottom in late 2015 to a peak in early 2021. Considering that the typical lifespan of construction machinery is usually 8-10 years, it is estimated that there will be a compound growth of about 30% in replacement demand for domestic construction machinery in 2025 and the following years, which is expected to provide strong support for future excavator sales. Additionally, the large export of second-hand construction machinery to developing countries has objectively lowered the domestic ownership of construction machinery, which is also an important factor supporting new machine sales.

The policy support from the Two Sessions is substantial, ensuring the continued recovery of mid-term demand for construction machinery.

In terms of funding, the government work report for 2025 proposed to issue overlong special government bonds worth 1.3 trillion yuan this year, an increase of 300 billion yuan from the previous year; accelerate the implementation of a number of key projects to promote the smooth completion of major projects in the "14th Five-Year Plan"; and arrange local government special bonds worth 4.4 trillion yuan, an increase of 500 billion yuan year-on-year, primarily for investment in construction, land storage, acquisition of existing commercial housing, and alleviating local government debt. The report emphasized the need to strengthen counter-cyclical adjustments in fiscal policy, especially through the issuance of special government bonds and local government bonds, which are expected to stimulate infrastructure investment and subsequently drive downstream equipment demand.

In terms of structure, the government work report for 2025 proposed to deeply implement the new urbanization strategy, continuously promote urban renewal and the renovation of old urban communities, accelerate the improvement of urban flood control and drainage systems, as well as the construction of gas, water supply and drainage, heating, and underground utility tunnels; develop digital and intelligent infrastructure, and improve barrier-free and elderly-friendly supporting facilities The report indicates that the government will continue to strengthen investment in urban infrastructure construction and promote the development of new urbanization; especially in areas such as underground engineering, municipal construction, and water conservancy projects, the demand for construction machinery will continue to grow.

Excavator exports continued to grow in September 2025, and construction machinery has great potential for overseas expansion

In terms of sales, excavator export sales in September 2025 reached 10,609 units, a year-on-year increase of 29.0%; from January to September 2025, excavator export sales totaled 84,162 units, a year-on-year increase of 14.6%. In terms of value, China's construction machinery export value in September 2025 was USD 5.27 billion, a year-on-year increase of 29.6%; from January to September 2025, China's construction machinery export value was USD 43.86 billion, a year-on-year increase of 13.3%. In 2025, China's construction machinery exports face opportunities and challenges such as changes in the Russia-Ukraine situation, increased demand for infrastructure and mining machinery in Southeast Asia, Africa, and the Middle East markets, and improved penetration rates in high-end markets in Europe and the United States, while also facing risks of tariff uncertainties between China and the United States. As leading domestic construction machinery companies increase their overseas layout efforts, China's construction machinery exports are expected to maintain a growth trend.

Electric loader sales maintained a significant upward trend in September 2025, and the electrification of construction machinery is expected to accelerate

In September 2025, electric loader sales reached 2,586 units, a year-on-year increase of 176.0%; the electrification rate reached 24.6%, an increase of 13.0 percentage points year-on-year. From January to September 2025, electric loader sales totaled 21,407 units, a year-on-year increase of 157.2%; the electrification rate reached 22.8%, an increase of 13.6 percentage points year-on-year. The government work report in 2025 proposed to accelerate the comprehensive green transformation of economic and social development, promote energy-saving and carbon-reduction transformations in key industries, and advance the development and utilization of new energy; coordinate industrial structure adjustments and promote green and low-carbon development. We believe that greening and electrification are one of the key development directions for the construction machinery industry in the future, and domestic manufacturers are continuously overtaking with the momentum of electrification, which is expected to accelerate the electrification process of construction machinery and further enhance the revenue and profits of main engine manufacturers.

The commencement of the Yarlung Tsangpo River downstream hydropower project is expected to drive an increase in construction machinery demand

On July 19, the commencement ceremony for the Yarlung Tsangpo River downstream hydropower project (hereinafter referred to as the Yarlung hydropower project) was held in Nyingchi City, Tibet Autonomous Region. As a super-large-scale water conservancy construction project, the total investment of the Yarlung hydropower project is approximately 1.2 trillion yuan, making it the largest hydropower station project currently planned in the world. The Yarlung hydropower project mainly adopts the development method of "cutting corners and straightening, and tunnel water diversion," with plans to build five cascade power stations, partially put into operation by 2030 and fully completed by 2035.

Based on the experience of the Three Gorges and other large hydropower projects, the total investment in construction machinery equipment accounts for about 10% to 15% of the project investment, meaning the equipment demand could reach 120 billion to 180 billion yuan; considering the plateau construction environment of the Yarlung hydropower project and the preference for new energy and unmanned equipment under environmental protection requirements, the actual demand for construction machinery may be even higher. At that time, large excavators, rock tunnel boring machines, cranes, concrete machinery, and other construction machinery are expected to become the main demand categories, continuously driving the construction machinery industry Target Aspects

Recommend Sany (600031.SH), XCMG (000425.SZ), Zoomlion (000157.SZ, 01157), LIUGONG (000528.SZ), SHANTUI (000680.SZ), China Longgong (03339) and other main engine manufacturers, as well as Hengli Hydraulic (601100.SH) and other component manufacturers; suggest paying attention to China Railway Construction Heavy Industry (688425.SH), China Railway Industry (600528.SH), Shanhe Intelligent (002097.SZ), Guangdong Hongda (002683.SZ) and other beneficiaries related to hydropower engineering.

Risk Analysis

Infrastructure investment intensity is lower than expected, overseas exports of construction machinery are lower than expected, intensified industry price competition, and uncertainty risks of China-U.S. tariffs