Agricultural machinery consumer demand will enter a virtuous circle

Agricultural machinery is a fine-grained industry in the machinery industry. Its reputation is not as good as that of construction machinery, but its growth rate is not inferior. Data show that from 2003 to 2012, the total output value of the agricultural machinery industry increased from 7.3 billion to 310 billion, with an average annual compound growth rate of 17.1%; the total agricultural machinery power increased by 460 million kilowatts in ten years, with an annual compound growth rate It is 6.8%. Although this value is still small and the explosiveness is insufficient, the degree of prosperity is maintained at a relatively high level all year round, and there is no feature affected by the economic cycle. It is understood that the scale of domestic agricultural machinery manufacturing has leapt to the second place in the world, second only to the United States.

For the reasons for the rapid development of the agricultural machinery industry, CITIC Securities researcher Zhang Hao believes that there are four main aspects: farmers' purchasing power, labor reduction, agricultural machinery subsidies, and sound social services. It is reported that in 2012, the amount of government subsidies for the agricultural machinery industry has reached 21.5 billion yuan. In the future, under the background that all levels of government continue to increase investment in the three rural issues, the growth potential of the agricultural machinery industry is expected to open further. At the same time, Zhang Jian believes that consumer demand for agricultural machinery will enter a virtuous circle, and that the industry's average annual demand growth rate can reach 15-20% in the next five years.

Industry concentration will increase

China's agricultural machinery industry is not rich in products, low technology content, the competition is mainly concentrated in the low-end products, mainly in the planter, power, energy consumption, etc., and the industrial concentration is very low. According to statistics, in 2009, there were 2,380 enterprises in the agricultural machinery industry in China. The total market share of the top three companies was 18.6%, and the total market share of the top ten companies was 37.4%. According to the development experience of foreign agricultural machinery industry, the market share will be concentrated in large-scale enterprises, and the gradual disappearance of small-scale enterprises will be a high probability event. The top three agricultural machinery manufacturing companies in Germany accounted for 85% of the total market capacity of the industry. The top five companies in Japan accounted for 90% of the total market share. The top three companies in the United States accounted for 76% of the total market share. Obviously, there is still much room for improvement in the market concentration of China's agricultural machinery industry.

In 2011, the Ministry of Industry and Information Technology issued the "Agricultural Industry Development Plan (2011-2015)" to explicitly propose the encouragement of the development of agricultural machinery enterprises to form a cluster of large-scale leading enterprises and SMEs. By 2015, five annual sales revenue will be created. More than 15 billion yuan in large-scale enterprise groups. In other words, some large companies in the industry are expected to gain government support and become bigger and stronger. Some companies with poor market prospects and small-scale operations will be eliminated.

Finding Outstanding Companies from the Industry Chain

The upstream of the agricultural machinery industry is mainly supporting processing suppliers and steel suppliers, including steel and rubber industries. Downstream mainly through agricultural machinery dealers sold to agricultural machinery specialized households, or directly for farmers and agricultural machinery specialized households.

Obviously, if the price of raw materials in the upstream market is greatly reduced, agricultural machinery companies will obviously benefit. At the same time, if the company’s products are uniquely competitive, they will continue to benefit from having pricing power in negotiations with downstream customers. Along this line of thinking, it can be found that Sanlux and New Research shares deserve attention.

Sanlux: Benefiting Continued Downward Price of Rubber

The company is the absolute leader in the rubber V-belt (V-belt) industry, accounting for more than 30% of the domestic market share and accounting for more than 50% of the export share. In 2012, the production triangle exceeded 400 million A meters. The natural rubber is the main raw material of the company's products, which accounts for a relatively high cost, and the low price of natural rubber is beneficial to the company's profitability. Data show that since the beginning of this year, the price of natural rubber has fallen by nearly 20%, which has allowed the company's performance to continue its high growth in 2012. In the first quarter, the financial report showed that the company's net profit increased by 58.78% year-on-year. The industry believes that due to the weak recovery in the global economy leading to weak demand, the rubber industry surplus can not be changed in the short term, the current price of more than 20,000 tons is far from the bottom. In other words, the company will continue to reduce the cost of benefits.

In addition, the company is involved in higher-end product areas such as automobile belts (10 million A meters) and agricultural machinery belts (15 million A meters) through IPO fund-raising projects. In 2012, it again re-entered the field of higher-end agricultural machinery and high-tech upstream ropes through additional funding, continuously improving the industrial chain and finding new growth points with strong profitability.

New research shares: positioning high-end agricultural machinery leader

The company is the only agricultural machinery company engaged in R&D, design, production and sales of various agricultural and animal husbandry machinery in the two cities. The main products include corn harvesters (market share No. 2), silage harvesters (market share No. 1), and pepper harvesters (market share No. 1). Relative to other enterprises in the industry, the outstanding competitive advantage of New Research shares is R&D capability. According to statistics, the company has been restructured and set up by the institute, with independent R&D and innovation capabilities. It has researched and developed various types of agricultural and pastoral machinery products with independent intellectual property rights. It is understood that in 2013 and 2014, the company has introduced a number of new products to the market. Large-scale self-propelled corn combine harvesters 4YZB-10 and 4YZB-5 can each produce 5 units, which can be mass-produced in 2014; Sales can be achieved; self-propelled blue (yellow) storage harvesters, straw harvesters and balers can be produced in small quantities in 2014. With the large-scale and cross-regional operation of the “Sanxia” agricultural machinery operation, sales volume of the company’s flagship products is expected to rise rapidly and its performance is expected to rebound quickly.