Machinery industry investment strategy analysis

 A mechanical analysis of the overall situation of the industry
(a) of the first half of the industry running smoothly, the growth rate slightly down
despite domestic credit crunch, raw material prices, labor costs and the U.S. subprime mortgage crisis, such as multiple negative factors,bailey UGG boots, but 2008 machinery industry as a whole is still a good start, and continued higher over the past few years boom.
from the first half of the situation, according to the statistics of Machinery Industry Federation, 1-June, the industry machinery industry production and sales continue to balance rapid growth, output value increased by 29.61%, and up 0.06 percentage points each. sales revenue increased by 30.04%, the 0.29 percent drop the previous month.
Figure (a) of the first half of 2008 machinery industry total output value and sales revenue growth rate changes
Source: Federation of Machinery Industry
import and export of machinery products have also maintained steady growth in the first half. exports reached 117.464 billion U.S. dollars, an increase of 34.56%, higher than national foreign trade export growth 12.66 percent; imports 96.946 billion U.S. dollars, an increase of 24.89%, lower than the national increase of 5.71 percentage points from foreign imports.
Figure (b) of the first half of 2008 foreign trade and import growth to
machinery industry Source: Federation of Machinery Industry
Figure (c) of the first half of 2008 foreign trade and export growth to
machinery industry Source: Federation of Machinery Industry
In addition, cost pressures, as expected, not great. face of steel and other raw materials rose sharply in the first half of the negative factors, machinery enterprises were price increases for some products, through product structure adjustment, improve the utilization of raw materials, to effectively control production costs. from a mechanical point of view semi-annual report of listed companies , mechanical industry, no market is expected to cost pressure and large. the decrease in gross margin was better than expected, the cost of the second half of the downward trend in the steel, machinery industry will be slightly warmer.
Figure (d) of the gross mechanical listed companies changes in interest rates
Company Name
07 mid (%)
07 年 (%)
08 mid (%)
China Shipbuilding
Source: CEIC
( b) The second half of the fundamentals may be warmer
view the whole machinery industry, in the second half growth will fall slightly. The main reason is the following: First, relatively high inflation during the first half, CPI exceeded 8%, The Government adopted a series of the first half of tightening macro-control policies, the effect will be reflected in the second half. Therefore, economic growth will slow down the growth rate down machinery industry is also difficult to avoid; second year of the machinery industry in 2007 trend is a former low-high, due to the base reasons, in 2008 before the advent of high to low trend also quite normal; third fall in exports continue to face pressure remains the main factors is the United States, Europe, Japan and other developed countries and slower economic growth RMB appreciation.
Figure (e) special equipment manufacturing industry in 2006 and 2007 the cumulative growth rate of sales change
Source: Guoyan Wang
factors from the cost point of view, cost pressures may be has been reduced, more obvious differentiation. from the first half of the industry and the company's operating situation, the cost of steel and other raw materials was not as expected as part of the sub-industry and company gross margins on the rise, mainly technical progress , the product upgrading of the structure and labor productivity results and other factors.
situation from the second half of this cost pressure may be reduced. machinery industry cost pressures are not great expectations. the decrease in gross margin better than expected, the cost of the second half of the downward trend in the steel, machinery industry will be slightly warmer.
addition, since the machinery in different sub-sectors within the industry and different companies in the concentration, industry competition, value-added products, the level of technological progress so quite different demand slowdown and rising costs in the context of the next sub-division between sectors and enterprises will become increasingly evident. the strong get stronger and the weak,cheap UGG boots, the weaker is the law of economic development.