According to a research report from China Galaxy Securities, domestic operating rates remain under pressure; however, demand from stock upgrades, machine replacements, agricultural water conservancy, and urban renovations continue to support steady growth in small excavator sales. Future large-scale projects and the opening of mining rights in Xinjiang and Inner Mongolia are expected to drive a recovery in mid-to-large excavators. In September, the growth rate of excavator operations showed improvement, with a slowdown in tower crane declines and increased certainty in the recovery of non-excavator sales.

In terms of exports, large excavator exports saw significant growth in September, and with the continued rising trend of gold and copper prices, the firm remains optimistic about sustained demand for mining machinery. September also saw a rapid increase in operating hours for Komatsu excavators in North America and Europe, indicating a clearer trend of recovery in the high-end market.

With robust domestic demand combined with recovery in the overseas markets and strong mining demand, leading manufacturers are recommended. Key points from China Galaxy Securities are as follows: In September, domestic and foreign sales of excavators grew by 21.5% and 29%, respectively. According to association statistics, (1) the excavator market saw domestic sales of 9,249 units, a year-on-year increase of 21.5%; export volume reached 10,609 units, up 29% year-on-year. The domestic sales product structure continues to show rapid growth in small excavators while mid-to-large excavators remain pressured. On the export side, the growth rate of large excavator exports remained impressive in September, with small excavators also experiencing relatively fast growth, partly due to last year's lower comparative base. (2) For loaders: 10,530 units were sold in September, a year-on-year increase of 30.5%, with domestic sales of 5,051 units, up 25.6% and exports totaling 5,479 units, increasing by 35.3%. The electrification rate in September was 24.56%, down 1.68 percentage points month-on-month, with a cumulative electrification rate of 22.84% from January to September, up 0.22 percentage points.

Other products showed strong domestic sales growth in August, with marginal improvements in the sales of tower cranes; both domestic and foreign sales of forklifts grew close to 20%, while the decline in the sales of aerial work platforms narrowed. Association data for August shows the sales growth rates as follows: overall sales of truck cranes declined by 4.65%, but domestic sales rose by 28.2%, while exports fell by 24.9%; crawler cranes overall increased by 43.7%, with domestic sales growing by 51.7% and exports up by 40.2%; truck-mounted cranes saw an overall increase of 7.29%, with domestic sales up by 24.2% and exports down by 28.9%; tower cranes had an overall decline of 9.79%, with domestic sales down by 29.1% and exports up by 27.3%; forklifts overall increased by 19.4%, with domestic sales growing by 19.3% and exports increasing by 19.6%; aerial work platforms saw an overall decline of 18.7%, with domestic sales down by 40.9% and exports down by 2.93%.

Domestic operating rates in the industry remain weak, but there are clear signs of recovery in Europe and the U.S. According to association data, the average monthly operating hour for major construction machinery products in September was 78.1 hours, down 13.3% year-on-year and down 0.42% month-on-month; the monthly operating rate for major products was 55.2%, down 9.08 percentage points year-on-year, but up by 0.06 percentage points month-on-month. The operating hours for Komatsu excavators showed a significant recovery in September in Europe and North America, with year-on-year growth rates of +10.2% in North America, +7.3% in Europe, +2.7% in Japan, and +0.9% in Indonesia.

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Risks to consider include: lower-than-expected macroeconomic conditions, slower-than-anticipated policy implementation, intensified industry competition, risks related to export trade disputes, and exchange rate fluctuations.