The overseas leader soared 30 times! Are construction machinery stocks cycle or growth?How to solve the mystery of this century

Original title: Overseas leaders soared 30 times! Are construction machinery stocks cycle or growth?How to solve the mystery of this century: this curve is completely clear

Summary

[Overseas leaders soared 30 times! Are construction machinery stocks cycle or growth? How to solve the mystery of this century]From a traditional perspective, the construction machinery sector is regarded as a daunting path by most investors. In the history of A-shares, the gap between its peak and trough may be as high as 80%, and the cycle of deep recession may be as long as several year. However, since 2005, leading overseas construction machinery stocks such as Caterpillar and John Deere have risen for a decade, with gains as high as 30 times and 15 times respectively, and dynamic valuations have reached 37 times and 25 times respectively. , The valuation level obviously exceeds the empirical valuation of cyclical stocks by 10 to 15 times. (Broker China)

From a traditional point of view, the construction machinery sector is regarded by most investors as a daunting one. In the history of A-shares, the gap between its peak and trough may be as high as 80%, and the cycle of deep recession may last for several years.

But since 2005,CaterpillarAnd JohnDierHowever, the leading overseas construction machinery stocks have risen for a decade, rising by 30 times and 15 times respectively, and their dynamic valuations have reached 37 times and 25 times, respectively. The valuation level has obviously surpassed that of cyclical stocks by 10 to 15 times. Empirical valuation.

Valuation is an international language, with benchmarking, in fact, it can be simplified as an expectation of growth.CaterpillarAnd JohnDierThe trend of A-share investors also makes A-share investors think: Can partial-cyclical stocks in the traditional sense have the power to grow through the cycle?

This article selectedZoomlionIs a sample, because this company has been on the market for 21 years since it went public in 2000.Operating incomeThe annual growth rate is as high as 32.2%. At the beginning of its listing in 2000, its operating income was only 244 million yuan, but in 2020 the company’s operating income was as high as 65.1 billion yuan, and its growth is not surprising; this company also experienced 2013 to 2017 After five years of in-depth adjustments, it then entered a high-quality upward growth channel. The operating income in 2020 has exceeded the operating income in the peak period of 2012.ZoomlionChairman Zhan Chunxin believes that engineeringMachinery IndustryIt is moving upwards as a whole with the development of the national economy.

This article observes and analyzes the entrepreneurial spirit, organizational system, R&D system, industry pattern and other dimensions. These observations also answer the debate on the cycle and growth of the construction machinery sector to a certain extent.

　　Five-year major adjustments are more internal factors

“Compared to the peak of development in 2012, in 2020 we have achieved a tangible high-quality development result.”ZoomlionChairman Zhan Chunxin is acceptingBrokerageThe Chinese reporter said in an interview.

To understand a company’s behavior and corporate culture, it’s inseparable from understanding its history, which is also understandingZoomlionFoundation.

　　ZoomlionBorn from Minister of Construction ShaConstruction machineryResearch Institute (Changsha Construction Machinery Institute for short), which is known as the Chinese EngineeringMachinery IndustryThe birthplace of technology, and provided technical support for 70% of Chinese construction machinery enterprises at that time.At that time, as ChangshaConstruction machineryZhan Chunxin, an engineer of the Institute, has participated in the product development and trial production of many large domestic heavy industry enterprises.

therefore,ZoomlionSince its birth, it has a strong scientific research and innovationNew culture. Zhan Chunxin has been an engineer for 12 years since he was transferred to Changsha Construction Machinery Research Institute in 1980. Since 1992, he has been the vice president of Changsha Construction Machinery Research Institute. He was then the second batch of professor-level senior engineers who enjoyed special government allowances from the State Council. Served as a judge of the National Science and Technology Progress Award.

In 1985, the reform of the national scientific research institute system was officially launched, and the business funding of the Changsha Construction Machinery Institute was reduced year by year. But the country also pointed out a way for applied scientific research institutes to convert their technological achievements and take the road of marketization. After several years of experimentation, in 1992, Zhan Chunxin and seven other colleagues borrowed 500,000 yuan to establish Zoomlion.

Relying on a drawing, two welding machines, wrenches, hammers and other tools, Zhan Chunxin and his colleagues built the company’s first concrete pump in an extremely simple factory building. Due to the short supply of products, Zoomlion achieved sales of 5 million yuan in 1993 and realized profits and taxes of 2.3 million yuan. By 1996, Zoomlion had initially met the conditions for listing. In 2000, Zoomlion was successfully listed on the Shenzhen Stock Exchange, and in 2010, it was successfully listed on the Hong Kong Stock Exchange.

Speaking of the reasons for the rapid development of Zoomlion’s golden 20 years from 1992 to 2012, Zhan Chunxin believes that there are two important reasons: one is scientific research and innovation.New cultureRich, engineers really go to the market, understand customer’s ideas, and make best-selling products that meet market needs, which promotes the substitution of domestic products for imports; the second is the leap and progress of China’s urbanization process.real estateThe great development of the market has provided the industry with a better room for growth.

However, the four trillion stimulus in 2008 and the credit sales policy of the industry at that time also planted turbulence factors for the subsequent major adjustments in the industry.

Construction machinery and equipment are generally sold under the credit model. At that time, the industry’s common practice was that companies relax their customers’ credit standards. Many speculative customers can get equipment worth millions of yuan with only a very low percentage of down payment. A huge amount of accounts receivable.

When the external environment goes down, the company’s own problems begin to gradually be exposed. “The development of the company started to slow down in 2011, and it started to go down in 2013, and it was not until 2017 that it broke out of the low point of nearly five years.” Zhan Chunxin said that it was a painful five years, when the focus of the company’s work was In order to deal with issues left over from history.

　　“A regular meeting will be held at 3 o’clock in the afternoon every Sunday. It lasts 6-8 hours. Sometimes bad news comes, and you have to keep listening if you can’t listen.” Zhan Chunxin said.

　　Organizational system and R&D system reform

During the five-year process of clearing up historical issues, Zoomlion came to life and completed the changes in the sales system, R&D incentive system, risk control system and product capabilities:

　　One,After sorting out the complete customer big data, the company has completed an end-to-end transformation from the sales system.

Brokerage China reporter once asked for adviceChina Merchants SecuritiesZhu Weihua, why Yili has always been in a stalemate with Mengniu before, but later when Yili could be ahead of Mengniu, Zhu Weihua explained with “product power, brand power and channel power”. In terms of channel power, Mengniu has adopted a large distributor system, while Yili has adopted in-depth distribution. There are two batches and three batches under large distributors, and each sales level must leave a profit margin; and in-depth distribution not only has more competitive prices to the terminal, but also has a better understanding of the situation of the terminal, and the feedback time is shorter, and the price The system is also more stable.

Previously, Zoomlion had many upper levels in the sales system, and it was difficult to achieve a clear grasp of terminal sales.

　　“When customers and companies are end-to-end, and products and companies are end-to-end, our management will be more precise.” Zhan Chunxin said.

In recent years, Zoomlion has been promoting end-to-end digital transformation. Specifically, the company can directly control the first-line sales data through the end-to-end platform, and clearly understand the business opportunities ahead,contractSpecific business conditions such as signing. The sales team can also clearly understand their own earnings and performance. Through the end-to-end model, the sales incentive mechanism is more complete, and the business information is scientific and clear.

At the same time, Zoomlion has also explored a complete set of strict end-to-end risk control system for the credit sales model. When a customer is overdue, the end-to-end risk control platform will issue a warning to the company in a timely manner, prompting the company to take corresponding measures.

　　Second,Zoomlion’s scientific research incentive system has also begun to advance gradually in 2014. “Although we had a hard time in those 5 years, in 2014 the company decided to launch the “Zoomlion Product 4.0 Project”, insisted on investing in technology research and development, and establishing an incentive system for scientific research personnel. Now Zoomlion High Quality development results cannot be separated from the foundation laid during the most difficult period in 2014.” Zhan Chunxin said.

The unique scientific research incentive system established by Zoomlion is vividly called the “fruit tree theory” by Zhan Chunxin: the income of scientific researchers is linked to the gross profit of the products developed by them in the market, and the products they develop are equivalent to planting fruit trees. The fruits of these trees can be enjoyed by scientific researchers. The more the product is developed, the more fruit trees are planted; the higher the gross profit of the product, the more fruits it bears, and the more scientific researchers earn. But the company has to “cut down trees.” If a fruit tree planted there can’t bear a few fruits, the company has to cut it down, and scientific researchers must move forward and innovate continuously.

　　Third,In terms of product strength, “Zoomlion has put forward the concept of “technology is the root and product is the foundation” since 2014. Although life is not easy, we must grasp this fundamental as a company and use the ultimate thinking to integrate technology and products. Do it well.” Zhan Chunxin said.

Zoomlion further proposes “spectrum optimization, intelligence, and modularity”. Model spectrum optimization refers to simplifying product varieties, specifications, and structural forms, so as to reduce costs and increase efficiency; “modularity” means that a component can be used in multiple products; “intelligence” means that through embedding The integrated sensor enables the product to “perceive, have a brain, and think”, and can realize “self-diagnosis, self-adjustment, and self-adaptation”. Since 2014, Zoomlion has launched 300 intelligent 4.0 products to the market.

In terms of smart manufacturing, Zoomlion began its layout in 2014 and has successively built smart factories and smart factory lines such as tower cranes, aerial work machinery, mixer trucks, and hydraulic smart components. At present, it is building the world‘s largest and most comprehensive construction machinery industrial base—Zoomlion Smart Industrial City. On December 31, 2020, Zoomlion Smart Industrial Park opened its first excavator off the assembly line.There is a smart factory with the highest degree of intelligence, flexibility, and assembly accuracy in the industry, and an unmanned “black light production line”. An excavator assembled from thousands of parts can be offline in 6 minutes. ; In the entire Zhongda Dig assembly workshop, there are more than 100 logistics distributionrobot, As small as a screw, as large as a boom shaker weighing several tons, they can all be delivered in a timely, accurate and fully automated manner.

The advantage of intelligent manufacturing is that the utilization rate of blanking will be higher, and the labor cost will be lower, which will bring products more competitive in cost and quality. On January 1 this year,TeslaAfter zooming in, after the domestically produced Model 3, it was announced that the domestically produced Model Y was officially launched, with the highest price dropping by 165,100 yuan! In response to this news, industry analysts have analyzed the Chinese reporters from brokerage firms.TeslaIts cost advantage lies in its modular automatic production line, which brings the low-cost advantage of overcoming competitors.

In the five years of the industry’s downturn, Zoomlion has completed changes in all aspects of business model, incentive model, product upgrade, manufacturing upgrade, and digital transformation. In the process of self-subversion, it has constructed its own “Industry 4.0” model. . Among them, the support of the Industrial Internet is inseparable.

Based on informatization exploration and big data accumulation since 2014, Zoomlion established Zhongke Yungu in September 2018, which is an “industrial Internet platform with industrial know-how”. Zhongke Yungu focuses on construction machinery, intelligent agricultural machinery,Smart agricultureIn key areas such as cloud computing, the Internet of Things, big data, artificial intelligence and blockchain and other emerging technologies, it promotes the transformation and development of traditional industries to digital and intelligent manufacturing, and helps enterprises restructure and innovate business models.

　　Entrepreneurship of continuous innovation and advancing with the times

As a local venture capitalist said, in Zhan Chunxin, you will see the ambitions of the country’s important industrial power, the spirit of timelessness, he loves this company so much, and constantly surpasses himself, so that he can do it for decades. Only by being unique and working hard to achieve a sales scale of 60 billion yuan from zero, if there is no entrepreneurial spirit, the enterprise will inevitably be hierarchical and mediocre, and it will be difficult to surpass itself.

Entrepreneurship is also reflected in the company’s toughest moments. It can lead the company to climb out of the pit without being overthrown, and sum up a set of effective management methods based on the lessons of blood and tears in actual combat. Zhan Chunxin said, “We have developed at a high speed, have been proud, and have been beaten to the floor, but in the end we can get up. This may be the most precious wealth.”

At the 2014 annual meeting, Zhan Chunxin said impassionedly: “In 2014, we were indeed at a trough, but this is not another peak? Our direction has never been so clear, and our pace of transformation has never been so firm. Our management has never been so fine. The market trough not only allows us to understand a lot, but also sharpens our bones and strengthens our spirit. The ability to adapt to the extreme cold environment has reached a new height. Only adjusting the pace and saving Only after energy can we go further and climb higher!”

At the 2018 annual meeting, Zhan Chunxin said: “We have not only walked through a long and deep trough, but also walked through ourselves, and forged a proud climbing spirit amidst hardship.”

The entrepreneurial spirit is also embodied in the foresight and strategic decision-making ability. In June 2008, Zoomlion successfully acquired Global ConcreteMachinery IndustryItaly’s CIFA, ranked third, has rewritten the world‘s competitive landscape and has become the world‘s leading concrete company.

As a world-class concrete machinery manufacturer, the CIFA brand, global sales network, technical process and service system have injected new impetus into the development of Zoomlion and gained new advantages. The acquisition of CIFA has had a positive impact on Zoomlion’s R&D, production, procurement and sales. The five “inclusiveness, rules, responsibility, co-creation, and sharing” of Zoomlion’s experience gained through the acquisition of CIFA have been refined. This principle has also become the most important experience sharing of Zoomlion’s international production capacity cooperation.

Zoomlion acquired German m-tec in 2014. This acquisition paved the way for the birth of Zoomlion New Materials, a new business segment of Zoomlion. Zoomlion New Material is a brand-new sector planned and finally established by Zoomlion from 2020 to 2021. It is based on and originated from dry-mix mortar equipment technology and makes full use of m-tec’s technological leadership in the field of dry-mix equipment. With many years of experience and precipitation in operating equipment, we have entered the field of dry-mixed mortar materials. In other words, Zoomlion has “half-footed” into the field of construction materials.

In the field of agricultural machinery, Zoomlion has made a deep layout and independently developed high-end agricultural machinery products such as high-horsepower tractors and artificial intelligence agricultural machinery. Premier Li Keqiang boarded a 230-horsepower tractor produced by Zoomlion in the Kaifeng Industrial Park of Zoomlion on May 8, 2017. The tire of this tractor is as high as one person and can be ploughed up to half a meter. In 2018, Zoomlion The company has launched a strategic cooperation with the world‘s leading artificial intelligence company, and the two parties jointly develop and create a full range of AI products and solutions for agriculture.

“Looking further, what we are doing is an agricultural Internet. We have all the data on land moisture, agricultural machinery, and storage data.” ZoomlionSmart agricultureLast year, more than 3,000 acres of fully digitally managed farmland was deployed in Wuhu, Anhui and other places, and this year will expand to 40,000 acres.

The world-class lighthouse factory, Zhonglian Smart Industrial City, is planned and designed based on the ambition of “leading the next 20 years”. According to the 2020 annual report of Zoomlion, Zoomlion will take the construction of Zoomlion Smart Industrial City as an opportunity to simultaneously build more than 18 world-leading lighthouse factories, and accelerate the profound changes in industrial models and corporate forms. At the end of 2020, the first medium and large excavator rolled off the assembly line in the first opening zone, and the ZOOMLION Smart Industry City is gradually turning from a blueprint to a reality.

　　Zhan Chunxin put forward unique management ideas in many aspects, such as “extreme thinking”, “four essences” and “four essentials”. In his view, to build a business is to achieve the ultimate in technology, quality, cost, and service; it must be meticulously invested, smartly controlled, precise, and lean to win; it must be based on profit, quality, scale, and sustainable development. Find a balance between.

　　Whether it can cross the cycle depends on the company itself

Zhan Chunxin, who has 41 years of experience in the construction machinery industry, does not agree with the statement that the construction machinery industry is cyclical. He has witnessed the rapid growth of this industry. “In the 1990s, the sales scale of the largest companies in the construction machinery industry was only a few hundred million, but today there have been companies with tens of billions and hundreds of billions of sales in this industry, and the industry as a whole is upward.”

From the perspective of the external environment, the “14th Five-Year Plan” proposes to promote new types of infrastructure, new urbanization, transportation and water conservancy, etc.Construction, Support the construction of major projects that are conducive to the coordinated development of urban and rural areas. Implement major projects such as the Sichuan-Tibet Railway, the new western land-sea channel, the national water network, hydropower development on the lower reaches of the Yarlung Zangbo River, interstellar exploration, and Beidou industrialization, and promote major scientific research facilities, major ecosystem protection and restoration, public health emergency guarantee, major water diversion, and flood control The construction of a number of major projects with strong foundations, increased functions, and long-term benefits, such as disaster reduction, power transmission and gas transmission, and coastal transportation along the borders and rivers.

In addition, the aging population, mechanized farmland management and “carbon neutrality” are also conducive to the development of the construction machinery sector.

From the perspective of the industry structure, the market share of construction machinery tends to gather towards leading companies. Zhan Chunxin believes that the rapid development of my country’s leading construction machinery companies in the past few years is due to the rapid advancement of domestic substitution and the survival of the fittest in the industry, and the Matthew effect is prominent.

However, an upward external environment does not mean that business operations have not fluctuated. Zhan Chunxin believes that the construction machinery industry as a whole will oscillate upward, and the magnitude of the volatility depends on whether the company has a stable control and high-quality development.

(Source: Brokerage China)

(Editor in charge: DF358)