The market or overdraft engineering machinery rushes to create a bubble

There are signs that the scale expansion of China's concrete machinery industry is spawning an industry's own financing bubble. On June 4th and 5th, news about the two giants of the industry also seems to support this sign.

On June 4, China Construction Machinery Corporation, Zoomlion Co., Ltd. (Zoomlion, 200157. SZ) issued an announcement stating that, in accordance with the financing needs of the company's business in 2012, the company intends to apply for credit (credit extension) from relevant banks. The total amount of financing business does not exceed 140 billion yuan, including bank-related businesses such as working capital loans, mortgage business, financial leasing, and various guarantees. Zoomlion’s plan to increase sales through the increase of financial leasing business attracted market attention.

On June 5, China Longgong Holdings Co., Ltd. (China Longgong, 03339.HK) was listed on the negative credit watch list by Standard & Poor's.

China Longgong is the first overseas listed company in the Chinese construction machinery industry and is one of the leading manufacturers of construction machinery in the Mainland. However, S&P said that its profit margins and credit protection measures may deteriorate in the next 12 months, while its operating conditions are getting weaker, demand from the infrastructure, mining and real estate industries is declining, or the demand for construction machinery will continue to be undermined.

Liu Zhipeng, an expert in engineering machinery and a managerial partner of Zhengluo Strategy Management Co., Ltd., said in an interview with the Post reporter yesterday that although the decline in China's construction machinery industry is not very severe, it is expected that the income and cash flow will not be very good, and industry competition will intensify.

Sheng Chunfang, secretary general of the China Construction Machinery Industry Association Concrete Machinery Branch, previously stated in an industry report that “in a fierce market competition, market expansion is undoubtedly the competition method commonly adopted by all companies. In the pace of expansion, the industry’s two major The giants Zoomlion and Sany Heavy Industry are particularly prominent in their expansion. The market is in an accelerated state, and the competition is accelerating, and it has become increasingly fierce."

One example that can be clearly seen in over-marketing or overdraft markets is that Zoomlion had previously funded the development of the concrete machinery industry through the sale of the sanitation machinery business and wanted to compete with Sany Heavy Industry (600031.SH).

Zoomlion’s authoritative sources said yesterday in an interview with the Post reporter that “under the current conditions of resources, Zoomlion could not support the rapid development of the two businesses of construction machinery and environmental protection industry at the same time. The company decided to concentrate its advantageous resources on environmental sanitation machinery. The rapid growth of business and the sale of premiums with higher return on assets will boost the leap-forward development of the main business of construction machinery."

However, an engineering machinery analyst from China told the Morning Post reporter yesterday (6th) that the development of China's construction machinery industry is in the history of the world's engineering machinery. Now it is a terrible time. Although the current development situation is still very good, but three A heavy industry and Zoomlion have adopted an uncompetitive method of competition and the competition is too fierce. “At present, the concentration of the concrete machinery industry is very high. The two companies accounted for more than 80% of the market share in such a situation. The two companies did not have peace talks, but rather pushed competition to the spotlight."

The analyst said that the concrete machinery industry is a phased industry, and the current competitive landscape is very good, but some companies use capital support to expand market share, over-marketing, resulting in future market overdrafts.

Zoomlion does not agree with this point. The authoritative source of the company told the Morning Post reporter that the line of credit reflects the strength of the company. The company’s 140 billion yuan credit is a kind of resource obtained by the bank. It is not an actual loan. Previously, the media had misunderstood. .

According to this practice, according to the usual practice, the company will apply for a certain amount of credit line to the bank on the premise of approval by the board of directors and the general meeting of shareholders at the beginning of each year. The main purpose is to win more credit resources for the company in order to ensure the continuity of daily business activities of the company. Carry out.

"From the perspective of the use of credit by Zoomlion in 2011, we applied for a credit line of 100 billion yuan in the whole year. By the end of December, the balance of the company's actual interest-bearing liabilities was 13.138 billion yuan," the source revealed.

Liu Zhipeng believes that Zoomlion, Sany Heavy Industry, and Xugong are three leading companies in China's construction machinery industry. Sany Heavy Industries focuses on R&D and is smart and smart; Zoomlion pays more attention to capital operation; Xu Tools has a good technical background And technical reserves.

Faced with a new round of shuffling, Liu Zhipeng believes that concrete machinery can be said to be one of the best businesses in the construction machinery industry, with high technology content and relatively high profit margins. But also to see that it is a generous business, investment and research and development requirements are high, SMEs can not do.

The aforementioned construction machinery analysts disclosed to the Morning Post reporter that when the country’s national construction in Japan reached a maximum of 10,000 concrete mixers, it is now only more than 1,000, and China now reaches about 60,000 units, and it is nearing its peak, and it is still going up.

"Some companies exchange orders and sales by reducing down payment. Some customers are buying for a short period of time. Over time, many machines are idle and unused, resulting in greater waste. Now, the second and third tier cities have not yet fully penetrated. But space will not be too big. Equipment in some places has been idle. This must be taken seriously." The analyst told the Morning Post reporter.

Sheng Chunfang also believes that in recent years, the construction machinery industry has benefited from favorable factors such as national infrastructure investment and urbanization, and there has been rapid growth in the favorable market. Many enterprises and individuals engaged in construction machinery have received huge returns and prompted more. People join them. However, construction machinery is greatly affected by the national macro-control policies, especially for concrete machinery. The market performance is basically determined by the amount of construction.

Liu Zhipeng said that the future trend of China's construction machinery industry will continue to increase market concentration, enhance competition, and eliminate some companies that have no advantage after market reshuffling.

“At present, Zoomlion’s financial data is still relatively healthy, and it has many firsts. For example, tower cranes and environmental sanitation machinery have the largest domestic market share and concrete machinery is the second largest in the country. Well, it may be Longgong, its loader market share is declining, the profitability of the product is thin, the competitiveness is not strong, and the cash flow is tight, and it is not a leading company. The future business prospects are not optimistic.” Liu Zhipeng told the Morning Post reporter .

According to the “Twelfth Five-Year” development plan of the Chinese construction machinery industry, it is predicted that by 2015, the industry’s sales scale will reach 900 billion yuan, with an average annual growth rate of 17%. The steady growth of investment in fixed assets is still an important driving force for the growth of the construction machinery industry, including the development of water conservancy construction, affordable housing, highways, and airport construction.