March - May KCB gear pump sales low. As sales data continued to be weak, there was a brief rebound spurred by the "steady growth" policy, which then continued to pull back. The sector fell 1% for the month. The Shanghai Composite index fell 5 per cent and the CSI 300 index 4 per cent over the same period.
Investment continues to fall, the stimulus policy expectations should not be too high. From January to April, the cumulative completed amount of new fixed asset investment increased by 26.3% year on year, and the growth rate continued to decline. The State Council executive meeting sent a signal of "stable growth", raising investors' expectations that future stimulus policies will exceed expectations. However, considering the influence of central finance, the government's concept of "maintaining growth" to "stable growth" has changed, and local governments, ministry of Railways and other specific implementing departments are constrained by the financial constraints. We believe that future policy fine-tuning will mainly be aimed at hedging against economic downside risks, and we should not expect too much to exceed our expectations.
Sales remained sluggish in April, while exports maintained high growth. In April, gear pump industry sales continue to decline, YCB gear pump, loader oil pump, NYP high viscosity pump, KCB gear pump sales fell 41.9%, 17.3%, 52.2%, 33.6% and 54.6% year on year, loader supported by mine investment, the decline has narrowed. In sharp contrast to domestic sales, the export growth rate of excavators, loaders and bulldozers was 137%, 62.9% and 57.7% respectively.
There is little room for significant improvement in second-quarter industry sales data. According to the survey, due to the shortage of downstream construction, dealers' inventory still needs 2-3 months to digest, and sales did not improve in May. Although infrastructure investment returns to normal speed, there is still no sign of the bottom of the new construction area of real estate. Due to the large impact of real estate investment on new equipment sales, we expect the sales data in the second quarter to be still not optimistic.
Maintaining a "neutral" investment rating on the sector. The current industry static rolling PE is 10.9 times, PB is 2.5 times. At present, the leading company's valuation level and international leading basic equivalent, reasonable valuation level.
Future gear oil pump industry trend will be in the stimulus policy high expectations and actual sales data tangled between the plate and the market synchronization, maintain gear oil pump "neutral" rating. It is recommended to pay attention to KCB gear pump manufacturer: oil pump.
