Construction machinery sector underperformed the market in September.Construction machinery fell-9.51%in September,compared with-3.01%for the Shanghai composite index and-3.54%for the csi 300 index.Construction machinery continued to underperform the market.
Investment in fixed assets stabilizes and growth has yet to pick up.From January to August,investment in fixed assets totaled 18.06 trillion yuan,up 25.0 percent year on year,and new investment in fixed assets totaled 7.4 trillion yuan,up 35.0 percent year on year,not much different from the previous period.Real estate investment in major downstream industries remained relatively stable,and the growth rate of railway investment fell sharply.With CPI still high,policy easing is not expected in the near term,and railway investment will not restart until the investigation into the high-speed rail accident is completed.Overall,growth in fixed asset investment has yet to pick up.
Construction machinery industry sales seasonal recovery.In August,the construction machinery sales season,excavator,crane and bulldozer sales have narrowed the year-on-year decline,the loader sales growth expanded;Each sub-industry showed different degree of growth on a month-on-month basis.The export market has rebounded.September is the traditional sales season in the second half of the year.It is expected that the sales volume of construction machinery will rebound in the next 1-2 months on a month-on-month basis.However,due to the high base from September last year,the year-on-year decline may continue.
The safety margin of industry valuation is gradually emerging.At present,the overall static PE of the construction machinery sector is 12.64x,and the overall PB is 2.56x.The valuation level is close to the level in the financial crisis in 2008.China's urbanization process is still advancing.With the continuous improvement of product quality,there is still room for import substitution and export to rise.Investors will gradually get used to the rapid growth of the industry in the past few years and return to stable growth.After the previous substantial adjustment,the industry valuation will gradually reflect pessimistic expectations.After the stock price continues to adjust,construction machinery will have a certain margin of safety.
Investment advice:as we entered the traditional sales season in the second half of the year,the sales volume of construction machinery rebounded on a month-on-month basis.After the adjustment,the safety margin of the industry's valuation was gradually improved.Maintain industry"neutral"investment rating for the time being.