Machine tool industry from the bottom up, wait for the opportunity

Investment Highlights:

1. China's machine tool consumption accounts for 45% of the world's total, approximately 28 billion, and the compound annual growth rate of 22% in the past 10 years. Machine tool production accounts for 31% of the world's total and is approximately 20 billion. Exports 8 billion, imports 16 billion.

2. In the short term, look at the downstream investment in fixed assets. The production cycle of the machine tool is about 2-6 months. As an obvious strong cyclical industry, its demand depends on the investment in downstream fixed assets. The growth rate of machine tools and CNC machine tools generally lags behind that of fixed asset investment growth by one quarter; the profit growth rate of machine tool industry and the growth rate of income are basically in the same direction, and the machine tool industry has good cost transferability.

3, long-term look at equipment upgrades. Manufacturing upgrades will increase the demand for high-end machine tools in the high-end manufacturing industries such as aerospace, automotive and parts and components. The upgrading of medium-to-high-end and large-scale equipment manufacturing capabilities, and the upgrading of ordinary machine tools to economical CNC machine tools cannot meet the development of the industry. The demand will be tilted towards sophisticated, high-efficiency, special-purpose, large-scale medium-to-high-end and large-scale CNC machine tools.

Investment Strategy:

1. Short-term focus will be on companies in the downstream industry where fixed asset investment can still maintain rapid growth. Kunming Machine Tool is recommended and Qinchuan Development is recommended.

2. In the medium term, we will focus on companies with product structure advantages. Due to the long development cycle of large-scale machine tool product development and market development, the advantages of layout products will enable the company to achieve excess returns, landing in the next few years, large-scale gantry machines, high-precision grinding machines and composites. The machining center is the fastest growing product. Recommended Kunming Machine Tool, Qinchuan Development, East China CNC. 3. Enterprises with strong R&D capability, high management level, and product structure adapting to industrial upgrading. Kunming machine tools, East China CNC and so on.