Industry News:

Media report 2: The Secretary General of China Construction Machinery Industry Association revealed that the 12th Five-Year Plan for the construction machinery industry has been submitted to relevant state departments and will be released in July. We believe that the release of the industry's 12th Five-Year Plan will point out the direction for the development of construction machinery in the next five years and help enhance the market's confidence in the long-term growth space of construction machinery.

1) The industry as a whole will still 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%, of which industry exports will reach 26 billion yuan US dollars, exports account for nearly 20%. Although compared with the growth rates of 21.3% and 28.1% in 2001-2005, 2006-2010, the industry growth rate has slowed down significantly during the "Twelfth Five-Year Plan" period. However, we believe that after experiencing 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, to a certain extent, enhance market confidence in the long-term growth space of construction machinery. .

2) The growth rate of each product will show great differences: From the statistics of the 12 products of the industry association, tower cranes and concrete machinery represented by concrete pump trucks and concrete mixer trucks are expected to achieve an average annual compound growth rate of more than 15% in the next five years, benefiting from the increase in popularity; wheeled cranes, crawler cranes, graders, and pavers are expected to achieve stable growth, with an average annual compound growth rate of more than 10% in the next five years; while road rollers, loaders, and bulldozers have a lower growth rate due to the substantial increase in market ownership and substitution effects, 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 elevated to a new level: The lagging development of key basic components is a bottleneck restricting the long-term competitiveness of my country's construction machinery. In the past decade, the market demand was strong, and enterprises focused on the rapid expansion of host production capacity to meet market demand, and the development of key components and basic processes lagged behind for a long time. We believe that with the intensification of industry competition during the "12th Five-Year Plan" period, the development of core components will be expected to be elevated to a new level, and it is expected to form a situation where the government takes the lead, industry associations take the lead, and leading enterprises make joint breakthroughs, thus achieving a qualitative leap;

4) Industry restructuring and mergers and acquisitions are expected to accelerate: We believe that with the new round of production capacity expansion since 2010, overcapacity may become a key factor restricting market development in the middle and late stages of the "Twelfth Five-Year Plan". In the next five years, industry leading companies are expected to use their own advantages to expand their product chains and market layout through mergers and acquisitions, and use market competition mechanisms to eliminate backward and low-level duplication of construction. Industry concentration will significantly increase.