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In the recent rebound in the process of the market, the performance of the construction machinery sector can be used to describe the sound. From the recent revealed the construction machinery industry in 12th Five-Year plan to see, the reasons for supporting the construction machinery mainly in the following aspects. First, the whole industry will continue to achieve steady growth. “12th Five-Year” period, that is, 2015 construction machinery industry sales revenue will be expected to reach 900 billion yuan. Secondly, the development of core parts will be raised to a new level. The development of critical infrastructure components is the bottleneck restricting the long-term competitiveness of China’s construction machinery. With the intensification of competition in the industry of the “Twelfth Five Year Plan” period, the core components of the development work is expected to be promoted to new heights, and the formation of government led, industry association to take the lead, leading enterprises joint breakthrough of our, to achieve a qualitative leap. Moreover, the restructuring of the industry is expected to accelerate mergers and acquisitions. The next five years, industry leading enterprises, is expected to use their own advantages, through mergers and acquisitions to achieve expansion of product chain and the layout of the market, to market competition mechanism eliminated backward and low – level redundant construction, the industry concentration degree will significantly improve. The current share price, engineering machinery sector corresponding in 2011 and 2012 the price earnings ratio of 13.3 and 10.4 times, reasonable valuation or even on the low side, still maintain annual industry more than 15% of the overall growth of judgment. Therefore, we suggest investors bargain absorb the industry quality of leading company Liugong (000528).

The company’s main business is loaders, excavators and cranes. In the 1 quarter of this year, loaders, excavators and cranes industry sales data growth is faster, in which the excavator sales growth is up to 70%. Better operating results of the company in the 1 quarter is mainly to benefit from the industry’s high growth in sales. In the future, the company benefited from the investment in the construction of water conservancy, grab the future can still maintain a high sales growth, the company is currently excavator production capacity in the listed companies ranked second, second only to the Trinity, the future with the further release of the excavator production capacity, the performance of the company is expected to improve.
Second, Vietnam and other ASEAN countries are now vigorously promoting the construction of roads, railways, ports, airports, industrial zones and housing projects, there is a great demand for construction machinery. In recent years, Vietnam building construction contractors have begun to use from China’s imports of many construction machinery and equipment, and from China’s imports of digging machine, roller, the number of concrete mixer, tower bridge crane appeared increasing trend. China’s construction machinery products in the local has a good price advantage, and geographical advantages, but also reduce the cost of transport. Due to the convenience geographical location, in the company’s internationalization strategy, ASEAN is considered to be very important market, at present in Vietnam, Indonesia, Malaysia and other countries, company of the roller, loading machine sales accounted for more than 30% of the market share, which in Vietnam market share is more than 50%. With the increase in infrastructure investment in ASEAN countries in the future, the company loader and other related construction machinery overseas sales will be able to maintain a high growth.

Two market, the stock market in the early period of continuous adjustment to adjust the trend, a larger decline. In addition, the stock price earnings ratio is only 10 times, and thus has a higher margin of safety. Although the stock has risen, but still in a stage of low. It is expected that the stock market outlook is still a large space, it is worth the attention of investors.