Donghai Securities: Export of excavators significantly increased within one month, leading company's performance expected to increase.

East Sea Securities released a research report stating that with the start of major water conservancy projects, domestic demand is rebounding. On the overseas front, domestic companies are expanding their overseas presales and after-sales networks, establishing local production capacity overseas, entering a period of accelerated globalization, and gradually increasing market penetration rates. It is recommended to pay attention to leading companies with deep overseas presence, high brand recognition, a complete product matrix, efficient cost structure, and strong research and development capabilities. Key points from East Sea Securities are as follows: Event: China Construction Machinery Industry Association releases sales statistics of excavators and loaders for January 2026 Excavators: Sales of various excavators in January 2026 were 18,708 units, a year-on-year increase of 49.5%. Domestic sales were 8,723 units, a year-on-year increase of 61.4%; export sales were 9,985 units, a year-on-year increase of 40.5%. Sales of electric excavators in January 2026 were 35 units. Loaders: Sales of various loaders in January 2026 were 11,759 units, a year-on-year increase of 48.5%. Domestic sales were 5,293 units, a year-on-year increase of 42.8%; export sales were 6,466 units, a year-on-year increase of 53.4%. Sales of electric loaders in January 2026 were 2,990 units. High growth in excavator sales at the start of the year Domestically, excavator sales in January 2026 increased by 61.4% compared to the previous year, showing a strong growth trend at the start of the year. This was mainly due to a low base in January of the previous year caused by an earlier Chinese New Year, providing a foundation for high growth in January 2026. Future projects such as non-ferrous mines, major water conservancy projects, the New Tibet Railway, high-standard farmland, etc., will gradually materialize, releasing demand dividends and helping to boost the recovery of domestic construction machinery industry demand. The lifespan of excavators is about 8 years, with the previous peak in sales occurring from 2019 to 2022. The government's continuous promotion of large-scale replacement of old equipment with subsidies has stimulated downstream demand for upgrades, leading to a period of rational growth in excavator demand. It is expected that domestic sales will continue to show a recovery trend. Overseas, export sales in January 2026 increased by 40.5% year-on-year, showing improvements in overseas sales. In December 2025, China's total excavator (including crawler-type and wheeled) exports were US$1.277 billion, a 39.28% increase compared to the previous month and a significant 75.17% increase compared to the same period in 2024. There were significant increases in Russia, Indonesia, Guinea, and the Philippines, with Russia and Guinea both seeing increases of over 100%. High cost-effectiveness and quality after-sales service make domestically produced equipment popular, gradually increasing the global market penetration rate of domestic equipment. In terms of the amount of construction machinery exports, China's total trade export value of complete construction machinery in 2025 was US$60.169 billion, a year-on-year increase of 13.8%, further expanding the trade scale. The excavator industry is expected to continue recovering throughout the year. Significant growth in domestic and overseas sales of loaders Domestic sales in January 2026 increased by 48.5%, continuing to recover domestically mainly due to the concentration of major domestic projects starting, such as the Yaxi Hydropower Station and the New Tibet Railway, leading to a peak in demand for earth and stones and promoting an increase in domestic demand for loaders. Overseas exports of loaders in January 2026 increased by 42.8% year-on-year, mainly due to continued growth in infrastructure demand in global emerging markets. Electric loader sales reached 2,990 units in January 2026, with an electric penetration rate of 25.43%. As the downstream applications of electric loaders gradually expand and their economic viability becomes recognized by the market, the trend towards electrification is becoming apparent. Guangxi Liugong Machinery achieved steady growth in net profit in 2025 On January 28, 2026, Guangxi Liugong Machinery released its performance forecast, stating that the company achieved a net profit attributable to the parent company of 1.526 billion to 1.659 billion yuan in 2025, a year-on-year increase of 15-25%. The main reasons for the increase in the net profit attributable to the parent company were that demand for domestic construction machinery, especially earthmoving machinery, was affected by industry cycles and macroeconomic policies, stabilizing growth after rebounding from the previous year, and the overall international construction machinery market also showed signs of stabilizing and recovering. The company adheres to the new "three wholes" strategy of "comprehensive solutions, comprehensive digitalization, and globalization", implementing measures such as innovating the dual-cycle development model of international and domestic markets, optimizing business portfolios, and reducing costs and increasing efficiency across the entire value chain, achieving double growth in revenue and profits. Risk factors include trade friction risks, slowdown in overseas demand, market competition risks, and policy risks below expectations.