Product Structure Adjustment XCMG Machinery's GPM

On March 18, Xu Qing Machinery (000425.SZ) Securities representative Mr. Shan Qingting told reporters on the phone that due to measures such as adjusting the product structure, the company's comprehensive gross profit margin will continue to increase in 2011, but he said that it is still not disclosed. Amplitude.

Regarding ways to increase gross profit margins, Shan Qingting stated that it is mainly through cost reduction and efficiency gains: First, product structure adjustments to increase products with high gross margins; second, self-manufactured accessory products such as cabs, energy transformers, drive axles, etc. .

Specific to the product structure adjustment, he gave the company's 2011 ranking of major products from major to small: engineering lifting machinery, concrete machinery, compaction machinery, shoveling soil transport machinery. In 2010, the company's main product sales rank was engineering cranes, shovels, compactors, and concrete machinery. The company did not disclose the production of related products in 2010.

Shanxi Securities analyst Li Zhengdong stated that the increase in the output of concrete machinery is due to the high gross margins of the products. The gross profit margins of the concrete machinery of Sany Heavy Industry (600031.SH) and Zoomlion (000157.SZ/1157.HK) are all above 40%. The two together accounted for 80% of the market, and Xugong Machinery accounted for only 3.9%.

“The overall gross profit margin of Sany Heavy Industry is high (37.37% gross margin of main business in 2010) because concrete machinery accounts for a relatively high proportion,” said Shan Qingting.

In 2010, the comprehensive gross profit rate of Xugong Machinery's products was 21.69%, which was 2.33 percentage points higher than that in 2009.

Li Zhengdong explained to reporters on the phone that construction cranes (ie truck cranes) will continue to be the focus of the company. The company announced that its capacity will be expanded to 35,000 units this year and will be able to solve the capacity bottleneck. In 2010, the company sold about 18,145 truck cranes, ranking first in the industry, with a market share of 52.5%.

Li Zhengdong further analyzed that in 2010 Xugong Machinery's gross profit margin for concrete machinery was only 27.4%, precisely in order to compete for market and increase promotion efforts. Although the gross profit rate of XCMG's concrete machinery is lower than that of Sany Heavy Industry and Zoomlion, but with the increase in the proportion of this business segment in sales, it will still help to increase the gross profit margin of XCMG. He expects Xugong Machinery's concrete machinery will grow by 40%-50% in 2011. In 2010, the sales revenue of concrete machinery of the company was RMB 1 billion, an increase of 163% over the same period of last year.

Li Zhengdong said that in the long run, China will continue to accelerate the process of urbanization, and the utilization rate of commercial concrete in first-tier cities is as high as 95%, and the utilization rate of commercial concrete in second-tier and third-tier cities is only 35%. There is room for improvement and the development of concrete machinery is in line with The company's long-term development goals. "From an international experience point of view, construction machinery will always diversify from a single source and provide comprehensive solutions," said Li.

Li Zhengdong predicts that the overall market for construction machinery will increase by 40% to 50% in 2011. From the perspective of the industry orders in the first half of the year, the increase in the sales of concrete machinery by 50% to 60% can guarantee that the number of truck cranes is expected to increase by 30%. Expect 30% growth.

In 2010, Xugong Machinery achieved a total operating income of 25.2 billion yuan, a year-on-year increase of 21.8%, and a net profit attributable to owners of the parent company of 2.9 billion yuan, a year-on-year increase of 68%. In 2011, the company plans to achieve a business income of 35.2 billion yuan.