Article source: 35 bucket WeChat public account
At present, the contribution rate of agricultural science and technology progress in the mainland exceeds 63%, the mechanization rate reaches 74%, and the scientific and technological equipment ensures a bumper harvest of grain.
Recently, listed agricultural machinery companies have released 2023 annual performance forecasts, and on the whole, there are both profits and losses. 35 Dou selected 10 industry-leading companies to analyze and see how the revenue and profit of these companies were, and what is the trend compared with the previous year?
According to public information statistics, the performance profits of 10 listed agricultural machinery companies in 2023 are mixed. Among them, 6 companies are expected to have good performance, including 4 companies are expected to increase, 1 company has turned around losses, and 4 companies have expected to lose money.
Table 1: 2023 performance forecast of listed agricultural machinery enterprises Data source: enterprise performance forecast;
From the perspective of the upper limit of the net profit forecast, Huaichai Power has the highest 8.21 billion yuan, a year-on-year increase of 150%. The second and third are Zoomlion and YTO, which are expected to achieve net profits of 2.42 billion yuan and 936 million yuan respectively in the first half of the year, a year-on-year increase of 87.2% and 21.33%.
However, four companies, including Yongyue Technology, Xingguang Agricultural Machinery, Xinyan Co., Ltd., and Yunnei Power, are expected to have negative annual net profits in 2023, and the companies are in a state of loss. From the perspective of the upper limit of the forecast net profit, Yunnei Power has the highest pre-loss, reaching 1.05 billion yuan, an increase of 23.54% over the same period last year. Yongyue Technology, Xingguang Agricultural Machinery and Xinyan Co., Ltd. announced net profits of -58 million yuan, -100 million yuan and -120 million yuan respectively, a decrease of 42.84%, 24.86% and 284.02%.
Figure 1: Revenue of 10 agricultural machinery companies in the first three quarters of 2023 Data source: third quarter report of enterprises;
In 2023, affected by factors such as the continued downturn in the real estate market, the domestic construction machinery industry is still in a period of downward adjustment, and the development of agricultural machinery enterprises is very different. Judging from the operating income in the first three quarters, Huaichai Power is still at the top of the list, achieving revenue of 160.383 billion yuan. It was followed by Zoomlion, Yituo Co., Ltd., and Liugong, with revenues of more than 10 billion yuan. The revenue of other agricultural machinery enterprises did not exceed 1.83 billion yuan, showing a significant advantage in the scale of revenue of the head enterprises.
Figure 2: Year-on-year revenue growth of 10 agricultural machinery companies in the first three quarters of 2023 Data source: third quarter report of enterprises;
However, in the context of the gradual stabilization and recovery of domestic market demand and the continuous increase in overseas demand, the revenue of most agricultural machinery companies in the first three quarters of 2023 has increased compared with the same period last year, and only the revenue of three companies, Xingguang Agricultural Machinery, Xinyan Co., Ltd., and Yunnei Power, has decreased year-on-year. Yunnei Power saw a slight decline in revenue, with Starlight Agricultural Machinery's revenue falling sharply by 30.12% year-on-year, and Xinyan shares even worse, down 42.61%.
Figure 3: Revenue and profit margins of 10 agricultural machinery companies in the first three quarters of 2023 Data source: third quarter report of enterprises;
The profit margins of the 10 agricultural machinery companies in the first three quarters of 2023 showed obvious differentiation characteristics. YTO shares lead with a profit margin of 10.66%, while Yunnei Power is at the bottom with a profit margin of -79.56%, reflecting the large difference in profitability between different enterprises in the agricultural machinery industry.
The twin dilemmas of sluggish markets and high costs
Judging from the forecast data, the development of agricultural machinery enterprises shows an obvious trend of differentiation. Due to the sluggish market demand and lack of confidence, the demand momentum of the agricultural machinery market is insufficient, which in turn affects the decline of key indicators such as the main business income and efficiency of four agricultural machinery enterprises, including Yongyue Technology, Xingguang Agricultural Machinery, Xinyan Co., Ltd., and Yunnei Power. Looking at these 4 companies with pre-loss in 2023, the reasons for their performance changes revolve around two key factors.
First, the market is sluggish and industry competition is intensifying. Yongyue Technology pointed out that due to various factors such as the economic environment and the continued downturn in the real estate industry, the demand for unsaturated polyester resin has grown slowly and the industry competition is fierce. Xinyan and Yunnei Power also mentioned the changes in the market environment of the aerospace and automotive industries, as well as the resulting competitive pressure.
At present, the mainland agricultural machinery industry has formed a situation where large-scale competition and professional competition of small and medium-sized enterprises coexist: the number of enterprises in the industry is large, mostly small and medium-sized enterprises, the overall strength is weak, the homogenization is serious, and the industry competition pattern presents the characteristics of small and scattered. In 2016, the number of agricultural machinery enterprises above designated size in the mainland was 2,429, and in 2022, it will be less than 1,700, a decrease of more than 30%.
Figure 4: Competitive echelon of listed enterprises in China's agricultural machinery industry (by sales volume in 2023) Source: Huaxin Securities
Second, the input cost is high and the cost pressure is high. Xingguang Agricultural Machinery said that the depreciation and amortization of plant, land, equipment and fixed expenses such as personnel wages are still large, and the unit cost of products in the current period has not been effectively diluted. In order to consolidate the existing market and actively explore new domestic and foreign market shares, Yongyue Technology has generated greater pressure on its operating costs and invested heavily in the UAV market, resulting in a decline in corporate net profit. Yunnei Power's R&D investment and sales expenses increased over the same period, resulting in an increase in operating costs, and its engine products are mid-to-high-end products in the same industry, and the cost of engine parts is high.
2023 is the first year for the mainland agricultural machinery industry to fully enter the national four era. However, due to the forward shift of market demand, as well as the increase in user purchase costs and operation and maintenance costs after the implementation of the national four standards, the domestic agricultural machinery market demand has declined. With the implementation of China IV emission standards for non-road machinery, the improvement of technical requirements and the gradual reduction of subsidy policies have posed significant cost pressures on small and medium-sized enterprises.
With the future transformation of the agricultural machinery industry to high-end and intelligent, it is expected that more small-scale enterprises will withdraw from the market due to problems such as insufficient technical strength, limited manufacturing level and capital turnover difficulties. This will lead to a further increase in industry concentration and form a market pattern dominated by a small number of large enterprises.
Intelligent tractors, going to sea, and low-altitude economy may become a way to break the game
In recent years, agricultural machinery enterprises have also shown a new development trend while facing multiple difficulties such as poor profitability, weak independent innovation ability, low product technology level, and overcapacity.
First, intelligent tractors have become a new focus of industrial development
Figure 5: Proportion of sales of different agricultural machinery and equipment in 2023 Source: Huaxin Securities
It can be seen from the sales data of agricultural machinery subsidies in 2023 that wheeled tractors topped the list with sales of 23.784 billion yuan, accounting for as much as one-third of the total sales of agricultural machinery, showing a strong recovery momentum. This trend not only reflects the recovery of the domestic market's demand for tractors, but also highlights the key role of intelligent tractors in promoting the development of the industry.
Observing the international market, tractor giants such as Fendt, John Deere, and Case New Holland have taken the lead in applying automation, intelligence, and information technology to upgrade their tractor products. The smart agriculture and precision agriculture technology solutions launched by these companies use advanced technologies such as GPS, GIS and GSM to achieve precision agriculture operations, such as Case AFS system, New Holland PLM system, John Deere AMS system, etc., all represent the forefront of industry technology.
Compared with international counterparts, there is still a certain gap in mainland tractor technology as a whole. In order to catch up with the pace of international agricultural machinery development, domestic agricultural machinery enterprises have taken intelligent tractors as a new focus of development. In recent years, the concentration of the agricultural machinery industry in mainland China has become higher and higher, with CR3 being 27%, CR5 being 37%, and CR10 being 53% in 2019, and CR3 being 43%, CR5 being 53%, and CR10 being 67% in 2022. With an obvious trend of concentration and oligopoly competition, the industry continues to reshuffle.
In the face of shrinking international market demand and increasingly fierce competition among domestic brands, leading agricultural machinery companies such as China Yituo, Lovol Heavy Industries, and Weichai Lovol are exploring new development paths and have launched intelligent tractor products to meet the challenges of smart agriculture development at home and abroad.
Experts said that under the guidance of the land circulation policy, the mainland will definitely be a trend of large-scale farm operations in the future, and it will inevitably rely on large-scale and advanced machinery to improve operation efficiency. Referring to the experience of Europe and the United States, it is an inevitable trend of future agriculture to take large tractors as the carrier, and integrate and hang machinery and equipment for ploughing, land preparation, sowing and fertilization before and after the integration and hanging to achieve integrated and efficient operation, and to be empowered by unmanned technology. The development of smart agriculture is not simply to replace manned equipment with unmanned equipment, but should consider how to achieve intelligent and efficient management of agricultural production through the automatic driving system system, the application of unmanned intelligent tractors is only one of the links, through the existing agricultural machinery intelligent, unmanned transformation, which is also the key to China's agriculture to achieve digitalization and catch up with advanced countries in Europe and the United States.
The second is to expand overseas markets and become a new business space
China's agricultural machinery is emerging around the world. According to data released by the China Construction Machinery Industry Association, in 2023, the cumulative export of construction machinery from mainland China will be 48.552 billion US dollars, a year-on-year increase of 9.57%. In RMB terms, the cumulative export value from January to December was 341.405 billion yuan, a year-on-year increase of 15.8%.
When analyzing Huaichai Power, Zoomlion, Yituo Co., Ltd., and Liugong, the four agricultural machinery companies with revenues of more than 10 billion yuan in the first three quarters of 2023, it can be clearly seen that these enterprises are actively deploying in overseas markets.
Figure 6: Overseas revenue and proportion of four leading agricultural machinery companies Data source: 2023 annual report of enterprises;
In the international market, the performance of the four giants is remarkable. Zoomlion and Liugong also achieved revenue of 10 billion yuan in overseas markets. Huaichai Power's overseas market accounted for 53.17%, while Zoomlion and Liugong's overseas market accounted for 38.04% and 41.65% respectively. Even Yituo, which accounts for only 8.5%, is actively strengthening the construction of its overseas channels.
In the 2023 reporting period, Weichai Power's acquired KION successfully got out of the predicament of inflation and supply chain problems, achieving a record revenue of 11.43 billion euros. Among them, the forklift business performed particularly well, achieving revenue of 8.48 billion euros. Zoomlion's overseas revenue increased by more than 79.2% year-on-year, and its construction lifting machinery occupies the highest market share in Turkey, Central Asia and other markets, and its products have also maintained its leading position in the Turkish market.
YTO shares in the Russian-speaking region, South America and other key export areas continue to cultivate, overseas market layout continues to expand, the annual export sales of tractor products increased by 43% year-on-year, showing a strong growth momentum. LiuGong also achieved stable development of its international business in 2023, with more than 30 product lines achieving rapid growth in international business, with growth rates far exceeding the industry average, and international business revenue exceeding the 10 billion yuan mark for the first time, a year-on-year increase of more than 30%.
In the process of expanding overseas markets, the strategies adopted by these companies can be summarized into three main types:
1. Market first, broaden product channels. At present, the overseas sales of YTO shares are mainly sold through local dealer channels, and the overseas sales markets mainly include Asia, Russian-speaking areas, South America, Africa and countries and regions along the "Belt and Road".
2. Leverage strength to accelerate the layout of the supply chain. With "global village, end-to-end, and twin platform" as the main line of strategic development, Zoomlion makes full use of Internet thinking to build a unique overseas business system based on "end-to-end, digitalization, and localization" to achieve leapfrog development of overseas business. At present, Zoomlion has built more than 30 first-class business airports and more than 350 second-level outlets around the world, and the production base in Mexico is under construction.
3. Integration and symbiosis, multi-strategy simultaneously. Through industrial linkage with more than 10 European and American high-tech enterprises, Weichai Power has built a global power industry joint fleet and successfully integrated all mergers and acquisitions. Liugong is an early international business development enterprise in the industry, and carries out international business in accordance with the "trilogy" strategic thinking of marketing network construction, R&D and manufacturing localization, and investment and mergers and acquisitions. The company has set up four overseas manufacturing bases and four overseas R&D institutions, has a number of marketing enterprises with complete machines, services, accessories and training capabilities, and provides a full range of sales and service support for overseas customers through more than 2,700 outlets of more than 300 dealers.
Third, low-altitude economy + agriculture has become a new potential for the growth of agricultural machinery
Driven by the current industrial policy, low-altitude economy-related concept stocks have become a hot spot in the market and continue to be sought after by investors, and their industrial upgrading has also attracted a lot of attention. With the rapid development of the low-altitude economy, under the new trend of combining the low-altitude economy and agriculture, related enterprises will have the opportunity to achieve rapid business growth and qualitative leap through technological innovation and market expansion.
Although the first quarter of 2024 has ended, some agricultural machinery companies have not yet announced their financial reports for 2023. Even so, thanks to the boom of the low-altitude economic concept at the beginning of the year, agricultural machinery companies performed strongly in the capital market, and there were many times of daily limits.
Specifically, on April 12, the overall performance of the agricultural machinery sector was strong, the share price of Xingguang Agricultural Machinery hit the daily limit, Weima Agricultural Machinery rose by more than 10%, and Huaxi Technology, Jifeng Technology, Xinchai Shares, etc. also recorded gains. On April 18, Yongyue Technology also hit the daily limit.
The reason for the price limit of Starlight Agricultural Machinery is agricultural machinery + drone + unmanned driving + data elements. The company's main business is the research and development, production and sales of agricultural machinery. Products include combine harvesters, balers, tractors, rotary cultivators, silage machines, dryers, cotton pickers, flower vitality and fertilizer machines for comprehensive utilization of agricultural and rural waste, intelligent fish farming runways, etc.
The reason for Yongyue Technology's daily limit is that its main business is unsaturated polyester resin and drone business. Products include unsaturated polyester resin, intelligent unmanned aerial vehicles. After years of development, the company is currently one of the largest suppliers of artificial stone resin in China, the company has a good reputation and brand advantage in the industry, and the "Yongyue" brand has been widely recognized by customers.
Looking forward to the future, with the continuous introduction of government support policies and the increase in the market's attention to the low-altitude economy, agricultural machinery enterprises that have been strategically deployed in this field, such as Xingguang Agricultural Machinery, Yongyue Technology, Xinyan Co., Ltd., etc., are expected to achieve leapfrog development and become an important force to promote agricultural modernization and intelligence.
Write at the end
Agriculture is the foundation of the mainland and has always been valued by the state and the government. From the policy side, the state has frequently introduced favorable policies to support the development of the agricultural machinery industry. In order to improve the level of agricultural modernization in the mainland, mainland government agencies have introduced a series of policies and measures to improve the level of agricultural mechanization and promote the development of smart agricultural machinery. The key policies for 2023-2024 are summarized as follows:
Table 2: Key policies related to agricultural machinery in 2023-2024 Data source: Chinese government website;
At the same time, the No. 1 document of the central government in 2024 particularly emphasizes the "vigorous implementation of agricultural machinery and equipment to make up for shortcomings", pointing out that the shortcomings of agricultural machinery and equipment in the mainland mainly lie in large, high-horsepower, high-end intelligent agricultural machinery equipment and small machinery suitable for hilly and mountainous areas. The Ministry of Agriculture and Rural Affairs has continuously emphasized the importance of the development of agricultural machinery through many meetings, and clearly stated at the National Agricultural Machinery Equipment Supplement and Agricultural Machinery Stable Chain and Strong Chain Work Conference in October 2023 that it is necessary to adhere to the development direction of "one large and one small" plus intelligence, promote the iterative upgrading of high-horsepower machinery, strengthen the research and development and promotion of light and simple applicable machinery, as well as the technical research of intelligent key components, in order to make up for the shortcomings in the field of agricultural machinery and realize the stability and strengthening of the agricultural machinery industry chain. In February 2024, at the inaugural meeting of the Science and Technology Innovation Strategy Advisory Committee, the scientific and technological needs for the goal of building an agricultural power and the close attention to the international frontier of science and technology were further emphasized, aiming to carry out trending and forward-looking research on agricultural and rural science and technology innovation strategies and clarify the strategic breakthrough direction of scientific and technological innovation.
The mainland agricultural machinery industry is currently in the initial critical stage of industrial upgrading, and is facing the important task of making up for shortcomings, intelligent upgrading, and localized development. Although the comprehensive mechanization rate of crop cultivation and harvesting in mainland China has exceeded 72% in 2022 and is expected to reach 75% by 2025, there is still a lot of room for improvement compared with about 90% of agricultural mechanization in developed countries.
Huaxin Securities believes that the agricultural machinery market is in the stage of clearing inventory, and some products have a cyclical callback. On the whole, the cyclical nature of the market and the structural nature of products are intertwined, and high-quality China IV products are driving the market out of the cycle inflection point steadily, and it is expected that in 2024, with the continuous release of market demand and the increase of favorable factors, there will be recovery growth.
On the whole, the development of agricultural machinery enterprises can focus on the following key points:
1. As the key to the development of the industry, small and medium-sized enterprises should actively lay out and seek breakthroughs.
2. Accelerate the expansion of overseas markets, especially in key markets to increase exports.
3. Pay attention to the development of the low-altitude economy, especially those enterprises that have been involved in the field of UAVs, may usher in new development opportunities.
4. Continue to implement the subsidy policy for scrapping and updating agricultural machinery, promote the scrapping and renewal of old agricultural machinery, and promote the optimization and adjustment of the structure of agricultural machinery.
5. Accelerate the transformation of agricultural machinery products to the direction of intelligence and green.
6. In view of the further improvement of the comprehensive mechanization rate of crop cultivation and harvesting, especially the mechanization rate in hilly areas, agricultural machinery enterprises should consider in-depth development of this potential area.
Under the firm support and precise guidance of national policies, agricultural machinery enterprises urgently need to make every effort to promote intelligent upgrading, green development and service-oriented transformation to achieve efficient and intelligent innovation in agriculture. Agricultural machinery enterprises should make full use of the opportunities of the "two markets" at home and abroad, and actively "go out" to further enhance their competitiveness in the international market.
Resources:
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