CITIC Securities Research has released a sector analysis focusing on several key industrial machinery and equipment segments, outlining current trends and future prospects.

Humanoid Robots: The year 2026 is anticipated to be a significant year for specialized applications of humanoid robots, with market focus shifting towards their practical deployment in real-world scenarios. As the versatility of robots improves, their adoption is expected to gradually expand across industrial and commercial fields. Physical AI represents the next wave of artificial intelligence, with robots serving as one of its primary physical embodiments, warranting close attention. Furthermore, the mass production of projects like Optimus is approaching, with recent guidance on supply chain production volumes becoming clearer, validating the anticipated scaling pace. Upcoming events such as the V3 product launch and further progress in mass production remain key points to monitor. Concurrently, ongoing IPOs for domestic robotics companies may lead to a revaluation of these entities. The sector is expected to see continuous catalysts over the next quarter, with a recommendation to focus on high-quality segments within the supply chain.

Power Generation Equipment (Gas Turbines): There is strong confidence in the overseas expansion of domestic gas turbine manufacturers. While a recent Morgan Stanley report suggests global gas turbine orders may peak in 2026 and decline from 2027, with potential oversupply post-2030 due to advancements in supplementary technologies like SOFC and fuel cells, a different perspective is offered. Firstly, capacity expansion is more complex than a simple linear projection. The journey from planning to stable delivery capability takes time, and deliverable capacity varies significantly across manufacturers, models, and regions. Constraints in heavy-duty gas turbine delivery stem from multiple factors including engine cores, critical high-temperature components, long-lead forgings, supply chain support, system integration, and on-site engineering. Secondly, domestic Chinese gas turbines themselves represent a crucial supplementary route to address supply gaps, analogous to new pathways like SOFC and engines. While some alternative technologies are in early stages with inherent uncertainties, domestic turbines offer a shorter delivery cycle as an important supplement. Even in a worst-case scenario of declining global orders, orders for domestic turbines are not expected to fall. The industry is observed to remain highly robust, with domestic turbine orders still growing strongly, delivery cycles remaining long, and effective supply continuing to be tight.

Construction Machinery: Excavator sales for May, both domestic and international, continued to exceed expectations, presenting a firm opportunity for strategic positioning at current levels. In May, total excavator sales reached 24,794 units, a year-on-year increase of 36.2%. Domestic sales were 11,628 units, up 38.6%, while exports were 13,166 units, up 34.2%. Both domestic and export growth accelerated. Domestic sales this year have shown a noticeable shift in the peak season, partly due to a later Chinese New Year. Since March, domestic excavator sales have recovered to show strong year-on-year growth, a trend expected to continue. Exports have maintained robust performance, seemingly unaffected by international tensions, tariff changes, or interest rate adjustments, sustaining China's high-growth momentum in construction machinery exports. The domestic competitive landscape is improving, with leading companies initiating price increases. Starting May 1st, companies including Sany, XCMG, LiuGong, and Shantui announced price hikes of approximately 5% for excavators. Sany and XCMG also raised prices for crane products. This reflects a moderation in the industry-wide price war seen earlier in the year, signaling a shift towards more sustainable development.

Semiconductor Equipment: The global upcycle continues to be confirmed, supporting a positive outlook for the semiconductor industry trend, with attention on component price increases. SEMI's upward revision of its full-year forecast and SK Hynix's plan to triple capacity by 2034 further solidify the establishment of a global semiconductor upcycle. On June 11th, SEMI released a report significantly raising its 2026 growth forecast for the global front-end semiconductor equipment market from 16.5% to 23.5%, reaching $152.2 billion. Global semiconductor equipment billings for Q1 reached $36.55 billion, up 14% year-on-year, setting a new historical quarterly record. Following SK Hynix's recent announcement of a plan to double capacity within five years, SK Group Chairman Chey Tae-won further indicated in a recent interview that if all construction plans proceed as expected, Hynix's capacity could triple by 2034 compared to current levels. The components segment is expected to show the highest elasticity in this cycle. The global semiconductor equipment component supply chain is experiencing a historically rare, broad-based wave of price increases. Pricing power within the semiconductor industry chain is structurally shifting from chip end-users towards the equipment and component segments. Component manufacturers are typically smaller in scale with high fixed cost ratios, meaning price increases translate directly into profits. Furthermore, production line expansion cycles are lengthy, typically 12-18 months, resulting in the poorest supply elasticity. Attention should be paid to the import substitution demand and pricing logic arising from extended delivery times for overseas suppliers of components such as valves/piping, ceramic parts, RF power sources, and gas boxes.

Lithium Battery Equipment: Market concerns have been disproven, presenting a timely opportunity for strategic investment in the sector at current low valuations. Eve Energy's early disclosure of its 2026 interim report on June 15th allowed the market to see the initial translation of the current lithium battery upcycle, driven by energy storage demand, into corporate earnings. Furthermore, valuations across the lithium battery upstream and downstream industry chain are at extremely low levels, making trades based on interim report performance highly attractive. Key lithium battery equipment companies saw strong stock performance last week. Current industry fundamentals remain robust. Production schedules for June from six major battery cell manufacturers totaled 175.7 GWh, up 68% year-on-year and 6% month-on-month. Q2 schedules total 493.0 GWh, up 57% year-on-year and 23% quarter-on-quarter. The fulfillment rate for new equipment orders is high, with potential for continued upside surprises. Order books, profitability, and cash flow for leading companies have shown clear early signs of recovery. Long-term, the lithium battery equipment industry has formed a distinct pattern of "one superpower, multiple strong players, with a significant long tail." Current relevant policies are expected to accelerate this industrial trend. Leading platform-type companies are capturing increasing market share through overseas expansion, turnkey projects, and major clients. Specialized equipment leaders enjoy higher profit elasticity due to technological barriers and involvement in new technology segments. Standardized tail-end manufacturers may still face price competition and consolidation pressures. The current sector's demand-driven logic is clear, with factors like high oil prices and strong downstream demand creating a positive synergy. The configuration value of the lithium battery equipment and solid-state battery sectors continues to be viewed favorably.

Key Risk Factors:

1. Risk of fluctuations in the domestic macroeconomy: The machinery sector is a typical midstream capital goods industry, closely linked to macroeconomic cycles. Significant shifts in domestic macroeconomic policies would inevitably impact overall demand for machinery.

2. Risk of volatility in overseas markets: The international expansion of Chinese companies is unlikely to be entirely smooth. Future journeys will inevitably encounter various frictions, requiring careful judgment to distinguish between temporary setbacks and the emergence of new trends.

3. Risk of downstream capacity expansion falling short of expectations: If downstream industries' capacity expansion lags behind forecasts, corresponding equipment demand would decline, adversely affecting orders and performance for companies within the sector.