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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  XCMG Construction Machinery Co., Ltd.    000425   CNE000000FH0

XCMG CONSTRUCTION MACHINERY CO., LTD.

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China construction machinery industry cheers strong 2020 sales but outlook uncertain

11/24/2020 | 10:53pm EST
Construction machinery trade fair Bauma China in Shanghai

SHANGHAI (Reuters) - China's strong construction machinery sales are expected to continue until at least early next year but could be hobbled by any slowdown in Beijing's recent infrastructure investment drive, industry executives said.

Construction equipment makers have experienced unexpectedly robust sales in China this year, especially for excavators, after the country embarked on a fresh building spree to bolster the economy following the emergence of the COVID-19 pandemic.

XCMG Construction Machinery told Reuters its sales in China had jumped by over 20% this year versus 2019, although overseas sales have been hit by the global spread of the virus.

Rivals such as Japan's Komatsu have similarly said they have seen a recovery in demand from China.

"Our original forecasts were not for such high-speed growth especially since it's the last year of China's 13th five year plan," said XCMG's Chairman Wang Min in an interview on the sidelines of the biennial Bauma China fair. The industry traditionally sees fewer new construction projects starting in such a year.

China's 14th five-year economic plan will be revealed at the annual parliament meeting in early 2021, with a focus on technology and domestic demand.

Overall, the industry is expected to see a 15% or more year-on-year jump in China sales this year, according to consultancy Off-Highway Research, which had previously forecast sales to fall 8% prior to the COVID-19 outbreak.

"We will definitely see growth in the first half of next year, but the second half, whether expectations will change, we have to see what policy decisions the National People's Congress make," Off-Highway's Director of Research Shi Yang, referring to the country's parliament. The consultancy is currently forecasting a 10% sales decline for 2021.

Rosy sales in China have not necessarily translated to profit jumps for equipment manufacturers, as a more players join a lingering price war, he added.

U.S.-based Caterpillar Inc, the world's largest equipment maker, unveiled a new range of cheaper, 20-ton "GX" hydraulic excavators for the Chinese market at the fair, which attendees said were being advertised by dealers for as low as 666,000 yuan ($101,000). Generally, Caterpillar's excavators sell for about 1 million yuan, they said.

A Caterpillar spokeswoman said the new series enabled it to offer equipment at a lower low price point and cost per hour.

"Competition in China is very fierce, the prices for some standard products have fallen to levels where they can't really go any lower anymore," XCMG's Wang said.

($1 = 6.5774 Chinese yuan renminbi)

(Reporting by Brenda Goh; Editing by Lincoln Feast.)

By Brenda Goh


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CATERPILLAR INC. -1.41% 194.62 Delayed Quote.6.92%
KOMATSU LTD. -0.27% 3007 End-of-day quote.6.73%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.08% 6.4881 Delayed Quote.-0.23%
XCMG CONSTRUCTION MACHINERY CO., LTD. -1.01% 5.88 End-of-day quote.9.50%
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Financials
Sales 2020 68 887 M 10 623 M 10 623 M
Net income 2020 3 788 M 584 M 584 M
Net cash 2020 8 802 M 1 357 M 1 357 M
P/E ratio 2020 12,2x
Yield 2020 1,05%
Capitalization 46 062 M 7 095 M 7 103 M
EV / Sales 2020 0,54x
EV / Sales 2021 0,49x
Nbr of Employees -
Free-Float 49,6%
Chart XCMG CONSTRUCTION MACHINERY CO., LTD.
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XCMG Construction Machinery Co., Ltd. Technical Analysis Chart | 000425 | CNE000000FH0 | MarketScreener
Technical analysis trends XCMG CONSTRUCTION MACHINERY CO., LTD.
Short TermMid-TermLong Term
TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
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Mean consensus BUY
Number of Analysts 9
Average target price 6,70 CNY
Last Close Price 5,88 CNY
Spread / Highest target 42,9%
Spread / Average Target 13,9%
Spread / Lowest Target -10,7%
EPS Revisions
Managers and Directors
NameTitle
Chuan Lu President & Director
Min Wang Chairman
Ge Li Chairman-Supervisory Board
Jiang Long Wu Chief Financial Officer, Director & Vice President
Shou Hang Zhang Member-Supervisory Board
Sector and Competitors