Excellent enterprises in the machinery industry are expected to reverse the downward trend of profits. The technological innovation capability of some enterprises is worthy of attention, and CNC machine tools will continue to be a hot spot for investment.

Policy support technology innovation

According to the latest research report of Everbright Securities, the sales volume of major construction machinery in January 2006 was at a low level, but it was more affected by the Spring Festival. The demand trend of construction machinery market in 2006 will remain generally the same as in 2005, and some models such as loaders and excavators are expected to achieve positive growth. In this context, the dominant enterprises in 2006 will reverse the downward trend of earnings.

The State Council recently announced the National Medium- and Long-Term Science and Technology Development Plan, which further clarified the medium- and long-term development goals of establishing an innovative country. Among them, CNC machine tools and aircraft manufacturing are listed in 15 special plans. Technological innovation will be the guiding principle of industrial policy, and the speed of localization of mechanical products, especially major equipment industries, will be improved. At the level of business management, a considerable number of companies and products have begun to be internationally competitive, and have achieved import substitution or bulk export, such as loaders, forklifts, bearings, etc., with the support of industrial policies, this trend will be further strengthened, thus forming Investment opportunities in the machinery industry in the market.

Shenyang machine tool is worthy of attention

In terms of individual stocks, Shenyang Machine Tool was stimulated by the preferential policies and rapid growth of performance, and the recent stock price performance clearly exceeded the general trend. According to the report of Everbright Securities, due to the rapid growth of investment in downstream industries and the scale effect, the company's performance is expected to increase by 30% in 2006, and the fundamentals will continue to improve.

The company's defects in governance structure and management are expected to be overcome as the fundamentals continue to improve, and the company's historical legacy issues will be gradually resolved, and the stock price will continue to outperform the broader market.

July 30, 2018