According to a research report, excavator sales have demonstrated growth in both domestic and export markets. Against the backdrop of continued industry recovery both at home and abroad, construction machinery leading companies have seen capacity utilization rates rebound. Combined with ongoing cost reduction and efficiency improvements, and the manifestation of economies of scale, major industry leaders have achieved substantial improvements in profitability. With the gradual implementation of large-scale equipment renewal policies and real estate financial policies, along with the commencement of major water conservancy projects, domestic demand is recovering and warming up. The construction machinery industry is expected to continue its recovery throughout the year. Investors are advised to focus on leading enterprises with deep overseas presence, high brand recognition, comprehensive product portfolios, efficient cost management, and strong R&D capabilities, including Sany Heavy Industry (600031.SH), XCMG (000425.SZ), ZOOMLION (000157.SZ, 01157), LiuGong (000528.SZ), Shantui (000680.SZ), and Hengli Hydraulic (601100.SH).

Key observations are as follows:

Event: The China Construction Machinery Association released statistics on excavator sales by major enterprises for August 2025. In August 2025, various types of excavators sold totaled 16,523 units, up 12.8% year-over-year, with domestic sales at 7,685 units (up 14.8% year-over-year) and exports at 8,838 units (up 11.1% year-over-year). Electric excavator sales reached 31 units in August 2025. From January to August 2025, total excavator sales reached 154,181 units, up 17.2% year-over-year, with domestic sales at 80,628 units (up 21.5% year-over-year) and exports at 73,553 units (up 12.8% year-over-year).

Excavator sales show dual growth in domestic and export markets. Domestically, excavator sales from January to August 2025 increased 21.5% year-over-year, showing strong recovery momentum with growth exceeding 20%. August alone saw domestic sales grow 14.8% year-over-year, maintaining double-digit growth. From domestic macroeconomic data, according to the National Bureau of Statistics, domestic infrastructure fixed investment grew 7.29% year-over-year by July 2025, with water conservancy management growing 12.60%. Infrastructure investment continues to drive downstream demand. The country continues to promote urban renewal and old residential area renovation, with increased fiscal and monetary policy support and greater investment in "dual priorities" and "dual innovations," bringing rigid replacement demand. Support from non-ferrous mining, major water conservancy projects, and high-standard farmland projects will gradually materialize, helping boost domestic construction machinery industry demand.

Internationally, exports from January to August 2025 increased 12.8% year-over-year, with August excavator exports up 11.1% year-over-year. In the first half of 2025, China's construction machinery cumulative export value reached $27.998 billion, up 9.4% year-over-year, with excavator exports growing 23.10% year-over-year. In the medium to long term, infrastructure demand in global emerging markets continues to grow, with cost-effective domestic equipment with quality after-sales service gaining favor, and the global penetration rate of domestic equipment gradually increasing.

Excavators have a lifespan of approximately 8 years, with the previous sales peak occurring from 2019-2022. The government continues to promote large-scale subsidy policies for eliminating old equipment, stimulating early release of downstream replacement demand. Excavator demand has entered a period of rational growth, with full-year sales expected to show recovery.

Construction machinery leaders demonstrate significant cost reduction and efficiency improvements, enhancing profitability. Major domestic construction machinery leaders Sany Heavy Industry, XCMG, and ZOOMLION achieved operating revenues of 44.78 billion yuan, 54.808 billion yuan, and 24.855 billion yuan respectively in the first half of 2025, up 14.64%, 8.04%, and 1.30% year-over-year respectively. They achieved net profits attributable to parent companies of 5.216 billion yuan, 4.358 billion yuan, and 2.765 billion yuan respectively, up 46.00%, 16.63%, and 20.84% year-over-year respectively. From the expense perspective, in the first half of 2025, the combined sales, administrative, and R&D expenses of major leaders accounted for 14.18%, 11.12%, and 18.23% of revenue respectively, decreasing by 3.47pct, 1.82pct, and 0.97pct respectively compared to 2024. Against the backdrop of continued industry recovery domestically and internationally, leading companies' capacity utilization rates have rebounded. Combined with ongoing cost reduction and efficiency improvements, and the manifestation of economies of scale, major leaders have achieved substantial improvements in profitability.

Yajiang Hydropower Station groundbreaking boosts construction machinery domestic demand. On July 19, the groundbreaking ceremony for the Yarlung Tsangpo River downstream hydropower project was held, and China Yajiang Group was established on the same day, included in the central enterprise list. The project plans total investment exceeding 1.2 trillion yuan. According to the Construction Machinery Brand Network, construction machinery-related investment accounts for at least 15%, corresponding to a market scale exceeding 180 billion yuan. With a 10-year construction period, this translates to approximately 18 billion yuan in new equipment space annually. The project's initial bidding phase mainly focuses on road construction and leveling, already including thousands of mining trucks and transport vehicles, approximately 1,000 large excavators, 1,000 large loaders, and substantial quantities of concrete mixer trucks, rock drilling machinery, and tunneling equipment, stimulating domestic construction machinery market demand growth.

Investment recommendations: With the gradual implementation of large-scale equipment renewal policies and real estate financial policies, and the commencement of major water conservancy projects, domestic demand is recovering and warming up. Internationally, domestic enterprises are establishing overseas pre-sales and after-sales networks, building local overseas capacity, entering an acceleration period of globalization with gradually increasing market penetration rates. The construction machinery industry is expected to continue its recovery throughout the year. Investors are advised to focus on leading enterprises with deep overseas presence, high brand recognition, comprehensive product portfolios, efficient cost management, and strong R&D capabilities, including Sany Heavy Industry, XCMG, ZOOMLION, LiuGong, Shantui, and Hengli Hydraulic.

Risk warnings: Trade friction risks; overseas demand slowdown; market competition risks; policy implementation falling short of expectations.