Machine tool: high growth in future demand for machine tools

1. National policy strongly supports the development of machine tools

China has gradually realized the key role of the machine tool industry in revitalizing the equipment manufacturing industry, and has raised the development of machine tools, especially CNC machine tools, to an unprecedented strategic level. The policy support for CNC machine tools is gradually increasing. From the speech of Premier Wen Jiabao in revitalizing the Northeast Symposium in 2004 to the national “Eleventh Five-Year Plan”, the medium- and long-term scientific development plan and the “Several Opinions”, the CNC machine tools were highly valued at the national policy level; In the adjustment, the machine tool maintains a high tax rebate rate and returns 50% after the value-added tax on CNC machine tools. All of them have given real support to the development of the machine tool industry in terms of specific taxation and fiscal policies.

We believe that the state's support policy for CNC machine tools will further increase its efforts to continue to implement. After the expiration of the VAT refund and retreat policy for CNC machine tools in 2008, it is expected to continue to be postponed. The reform of the income tax policy is just around the corner, and industrial concessions will replace the regional concessions as a distinctive feature of the new tax law preferential policies. The machine tool industry, especially CNC machine tools, will enjoy more favorable policy support as an industry that needs to be vigorously revitalized.

2. New downstream demand: the rapid growth of machine tool demand in the future

China is in the stage of heavy industrialization, and the equipment manufacturing industry will achieve rapid development. In the next few years, industries such as automobiles and parts, construction machinery, railway equipment, heavy mining machinery, petrochemical equipment, aerospace, shipbuilding, and defense and military industries are the focus of national investment.
It will maintain a relatively fast growth rate in the next few years.

The output of our national steel ship has reached an average annual growth rate of 18.25% in the past 10 years. In the first eight months of this year, the output reached 9.106 million comprehensive tons, an increase of 27.80%. Under the background of the continuous prosperity of shipping and the transfer of shipbuilding industry, the world share of China's ships has increased rapidly year by year, and the orders of domestic major shipyards are generally scheduled to be after 2010. In the next few years, China's shipbuilding output will also maintain a relatively fast growth rate.

During the "Eleventh Five-Year Plan" period, construction machinery will also maintain a relatively fast growth rate. Domestic large-scale basic implementation investment has steel characteristics, which brings strong demand for construction machinery. At the same time, since 2004, the export network of domestic construction machinery leading enterprises has gradually improved, and in the case of greater cost advantage, exports will remain Very high growth rate.

The automotive industry, aerospace, information technology, defense industry and traditional machinery industry are all major demanders of machinery. The rapid development of these industries in the next few years will inevitably lead to a rapid increase in the fixed asset investment of the industry, which will bring demand for machine tools, especially CNC machine tools.

3. Import substitution requirements

China needs to import a large number of machine tools every year. From 1998 to 2006, the import volume of metal processing machine tools in China increased by 5.89% annually, but the annual import value increased by 22.91%. In the first eight months of this year, 70,082 metal processing machines were imported, valued at $4,498 million. The huge deficit began to decline, and the import substitution space was huge. Although the amount of imports has increased year by year, the growth rate has declined since 2004. In addition, the export growth rate has accelerated year by year, China's machine tool import and export deficit growth rate began to decline, and this year for the first time realized a year-on-year decline in the amount of deficit, import substitution is underway.

Under the prospect of increasing domestic demand for machine tools, half of domestic machine tool consumption needs to be imported. This huge deficit is being replaced, so the rapid growth of domestic machine tools in the next few years is guaranteed.

4, stock upgrade requirements

Although the numerical control machine tools in China have achieved rapid growth in recent years, the numerical control rate and output numerical control rate of metal processing machine tools have been greatly improved. However, the numerical control rate of machine tools produced in China is less than 20%, and the output value is less than 20%. The numerical control rate is less than 40%, which is quite different from the numerical control rate of about 70% of the output of the developed countries and the numerical control rate of the output value of about 90%. As a result of accumulating, the overall numerical control rate of China's stock machine tools is even lower. These backward machine tools are in urgent need of upgrading and upgrading from ordinary machine tools to popular and economical CNC machine tools. We expect that the current CNC machine tool rate will be around 10%, and the level is still very low. Therefore, the upgrading of stock machine tools will also bring greater growth to the demand for CNC machine tools.