China Galaxy Securities released a research report stating that 16,523 excavators of various types were sold in August, representing a 12.8% year-on-year increase. Domestic sales reached 7,685 units, up 14.8% year-on-year, while exports totaled 8,838 units, up 11.1% year-on-year. Domestic sales were primarily driven by small excavators, benefiting mainly from machine-for-labor replacement, urban renewal, and farmland construction. Exports were mainly driven by large excavators, benefiting primarily from African infrastructure and mining projects. Looking ahead to the second half of the year, demand from wind power, nuclear power, and new rural construction is expected to drive solid growth in large-tonnage mobile cranes and concrete pumps within the non-excavator category. The firm is optimistic about steady growth in excavator demand and gradual recovery in non-excavator equipment in the second half, with continued strong demand from overseas markets in Africa and the Middle East.

**August Excavator Domestic and Export Growth at +15%/+11% Respectively**

According to industry association statistics: (1) Excavators: 16,523 excavators of various types were sold in August, up 12.8% year-on-year. Domestic sales reached 7,685 units, up 14.8% year-on-year, while exports totaled 8,838 units, up 11.1% year-on-year. Domestic sales were primarily driven by small excavators, benefiting mainly from machine-for-labor replacement, urban renewal, and farmland construction. Exports were mainly driven by large excavators, benefiting primarily from African infrastructure and mining projects. (2) Loaders: 9,440 loaders of various types were sold in August, up 13.3% year-on-year. Domestic sales reached 4,774 units, up 18.3% year-on-year, while exports totaled 4,666 units, up 8.69% year-on-year. The electrification rate for August was 26.24%, down 0.33 percentage points month-on-month. The cumulative electrification rate for January-August was approximately 22.62%, up 0.46 percentage points compared to January-July.

**Other Products:** July mobile crane categories showed positive growth in both domestic and export sales. Forklift domestic sales and exports both achieved double-digit growth. Aerial work platforms continued to show weakness in both domestic and export markets.

Association data shows July sales growth rates: Mobile cranes overall +9.6%/domestic +6.8%/export +12.5%; Crawler cranes overall +57.5%/domestic +72.2%/export +53%; Truck-mounted cranes overall +9.1%/domestic +9.3%/export +8.1%; Tower cranes overall -26.9%/domestic -42.5%/export +7.4%; Forklifts overall +14.4%/domestic +14.3%/export +14.5%; Aerial work platforms overall -38.3%/domestic -51.4%/export -26.3%.

**Operating Hours:** Domestic operations continued to weaken while overseas markets showed recovery, with North America displaying clear recovery trends. Association data shows that the average monthly operating hours for major construction machinery products in August was 78.4 hours, down 9.45% year-on-year and 2.92% month-on-month. The monthly operating rate for major products was 55.1%, down 6.83 percentage points year-on-year and 1.14 percentage points month-on-month. Komatsu excavator operating hours data shows that all four major overseas regions showed recovery in July operations, with North America demonstrating particularly strong recovery momentum. In July, Komatsu excavator operating hours in North America, Europe, Japan, and Indonesia were 72.8/78.1/49.4/221.3 hours respectively, with year-on-year growth rates of +6.6%/+0.6%/+3.3%/+2.7% respectively.

**Construction Machinery Industry 2025 H1 Performance Summary**

**Overall Performance:** Construction machinery manufacturers showed adjusted net profit growth > attributable net profit growth > revenue growth, indicating improved operational quality. SANY achieved higher growth rates in Africa and Asia-Pacific, with European presence declining due to Putzmeister pressure and Russian market decline. XCMG's exports showed high proportions to Southeast Asia and Latin America, achieving solid growth in Middle East/Southeast Asia/Africa/Europe-Americas-Australia. Zoomlion increased its presence in non-China peripheral regions including Europe, Latin America, and Africa. LiuGong's overseas distribution became more balanced compared to the same period in 2024.

Manufacturers generally maintained stable operating cash flows, with all reducing off-balance-sheet risk exposure.

**Product Performance:** Manufacturers' earthmoving machinery showed superior growth rates. SANY and XCMG's earthmoving products saw gross margin increases, while LiuGong's earthmoving gross margins declined due to intense competition in electrical equipment. Zoomlion's earthmoving gross margins decreased due to increased small excavator proportion. Additionally, overall excavator market concentration is expected to improve, with LiuGong's domestic excavator market share increasing nearly 2 percentage points in the first half, and XCMG's domestic excavator market share also improving.

Domestic non-excavator equipment is expected to gradually recover. 2025 interim results showed Zoomlion's concrete and mobile crane domestic sales both achieved double-digit growth, while XCMG's crane domestic sales also posted positive growth. In the first half, except for aerial work platforms, loaders, and mobile cranes, all other product categories achieved double-digit export volume growth.

**Investment Recommendations**

China Galaxy Securities believes: 1) Domestically: Excavator domestic demand is mainly driven by small excavators, operating rates remain under pressure, but non-excavator equipment is beginning to recover. In the second half, demand from wind power, nuclear power, and new rural construction is expected to drive solid growth in large-tonnage mobile cranes and concrete pumps within non-excavator categories. 2) Exports: August large excavator exports showed strong growth, primarily benefiting from African infrastructure and mining demand. The second half is expected to see continued positive demand from Africa, Middle East and other regions, with accelerated recovery in Europe and Americas.

The firm is optimistic about steady excavator demand growth and gradual non-excavator recovery in the second half, with continued strong demand from overseas Africa and Middle East markets. Recommends leading manufacturers SANY Heavy Industry (600031.SH), XCMG Construction Machinery (000425.SZ), LiuGong (000528.SZ), Zoomlion Heavy Industry Science & Technology (000157.SZ), and core component manufacturer Hengli Hydraulic (601100.SH).

**Risk Warnings:** Risk of macroeconomic performance falling short of expectations, risk of policy implementation falling short of expectations, risk of intensified industry competition, risk of export trade disputes, risk of exchange rate fluctuations.