The appreciation of the renminbi will have a negative impact on the equipment manufacturing industry as a whole. However, as the domestic cost advantage remains obvious, the negative impact is relatively limited. At the same time, the booming of shipbuilding and other industries has also effectively mitigated the negative impact of the appreciation.
Overall negative effect
Bohai Securities researcher Gao Xiaochun believes that, as a whole, the appreciation of the renminbi has a negative impact on the equipment manufacturing industry, but due to obvious domestic cost advantages, the negative impact can be greatly reduced, “the appreciation of RMB 3%-5% and the domestic equipment manufacturing industry 30 Compared with the cost advantage of %, it is not enough to cause great harm to the entire industry."
Although the overall impact is negative, the various sub-sectors are still affected to varying degrees. The industries with a relatively large export share are naturally affected by relatively large impacts, and the cultural and office equipment, containers and shipbuilding industries have a relatively high proportion of exports, and the negative impact is relatively large; while the agricultural machinery, internal combustion engines and construction machinery industries with a relatively small export proportion are The negative impact is small.
Industrial Securities researcher Long Hua believes that the appreciation of the renminbi has a significant negative impact on some industries in the equipment manufacturing industry, among which the low value-added products have a relatively large impact, and the more obvious one is the container manufacturing industry. Since January of this year, the national container export volume and prices have both shown a downward trend. Data show that the national container export volume has continued to decline year-on-year since January of this year, and the average price of product exports has also dropped, from the highest of 2876.7 USD/ton last year to 2594 USD/ton in July. The semi-annual report of the CIMC Group, a leading company in the container industry, showed that the profit rate of the company's main container business was 11.43%, which was a decrease of 7.43 percentage points from the same period of last year.
Advantages of importing key components
Although the appreciation has a negative impact on the industry as a whole, some companies have also benefited from the appreciation of their industries. Industrial Securities researcher Long Hua pointed out that the appreciation of the import of accessories is relatively large, basically sold to the domestic machine tool companies will have benefits, such as G Shen machine and G Qin development.
In addition, the appreciation of the renminbi is very beneficial to companies with significant imported parts and accessories, which has promoted the import of these industries. Data show that in the first four months of this year, the cumulative amount of engine and generator imports reached US$741 million, a year-on-year increase of 9.3%, and the import volume also increased by 1.3%. The total import amount of the liquid pump and liquid hoist in the first four months was 513 million U.S. dollars, a year-on-year increase of 14.7%, and the figure was up 33.6% year-on-year.
Industry insiders believe that China's current overall level of equipment manufacturing industry is not very high, high-value, high-tech key components (such as marine crankshaft, electronic control equipment) also need to import, appreciation will lead to lower import costs, this part of Businesses are good.
Shipbuilding industry responds cautiously to appreciation
In the equipment manufacturing sub-sector, the shipbuilding industry is considered to be the industry most affected by the appreciation of the renminbi because more than 70% of its products are exported. According to sources, the appreciation from the beginning of last year has caused a loss of 7-8 billion yuan to a Dalian shipyard. The larger the value of exports, the greater the impact of the appreciation of the company and the greater the risk of exchange rate risks.
However, the shipbuilding industry in the first half of this year has achieved the best results in history. According to data from the China Shipbuilding Industry Association, in the first half of this year, China exported 358,800 ships, an increase of 294.16% year-on-year; the export value was US$3.396 billion, a year-on-year increase of 66.80%. At the same time, the operation of the industry continues to improve and the quality of profitability has steadily improved. In the first half of the year, a total of 349 metal shipbuilding enterprises in China achieved a total profit of 1.529 billion yuan, an increase of 201.01% year-on-year; gross margin was 8.29%, an increase of 2.3 percentage points over the same period last year; during the period, the rate was 5.62%, a year-on-year decrease of 1.75 percentage points.
Century Securities researcher Hu Kunming pointed out in this connection that the most important reason for the huge increase in profits of the domestic shipbuilding industry is that the entire industry is in the best period of historical development. This positive factor has effectively resolved the negative impact of the appreciation, and at the same time, the domestic steel price this year The decline will reduce the production costs of shipbuilding companies.
Due to concerns about declining industry sentiment and judgments on the long-term appreciation of the renminbi, the domestic shipbuilding industry has maintained sufficient vigilance against the appreciation.
More than 60% of ship's ancillary equipment, such as decks, instrumentation, and anchor chain equipment, rely on imports, which can save a certain amount of cost. However, as most of the domestic marine equipment is purchased from Europe, the appreciation of the euro since last year also offsets the positive factors of RMB appreciation. Therefore, the positive factors for the appreciation of goods are not obvious. In addition, due to the relatively long payment cycle for ship production, payment is generally taken in installments, and the exchange rate risk of shipyards remains high. The shipowner pays 2%-10% of the ship's price for the first time after the signing of the construction contract, pays about 10% after the start of construction, and pays the remaining amount after launching. Most of the expenses for shipbuilding, including manpower, materials, and equipment, need to be paid by the shipbuilder. Once it is appreciated, the shipyard will suffer losses if it receives payment under a contract signed two years ago.
The gross profit rate of shipbuilding companies is about 8%. If the RMB appreciates by 5%-10%, most shipyards have almost no profit margin.
Currently, Guangzhou Shipyard International has taken measures to offset the adverse effects of appreciation. According to the relevant national support policies, the company can apply for a loan of no more than US$400 million to a designated bank, convert it to RMB, and return the bank loan in US dollars received by the customer in installments, thereby effectively alleviating the pressure of RMB appreciation.
The 3%-5% appreciation of the renminbi and the 30% cost advantage of the domestic equipment manufacturing industry are not enough to cause excessive damage to the entire industry. On the contrary, the appreciation will be of great benefit to imported machine tools that have a significant ratio of imports and are sold to domestic machine tools.
Overall negative effect
Bohai Securities researcher Gao Xiaochun believes that, as a whole, the appreciation of the renminbi has a negative impact on the equipment manufacturing industry, but due to obvious domestic cost advantages, the negative impact can be greatly reduced, “the appreciation of RMB 3%-5% and the domestic equipment manufacturing industry 30 Compared with the cost advantage of %, it is not enough to cause great harm to the entire industry."
Although the overall impact is negative, the various sub-sectors are still affected to varying degrees. The industries with a relatively large export share are naturally affected by relatively large impacts, and the cultural and office equipment, containers and shipbuilding industries have a relatively high proportion of exports, and the negative impact is relatively large; while the agricultural machinery, internal combustion engines and construction machinery industries with a relatively small export proportion are The negative impact is small.
Industrial Securities researcher Long Hua believes that the appreciation of the renminbi has a significant negative impact on some industries in the equipment manufacturing industry, among which the low value-added products have a relatively large impact, and the more obvious one is the container manufacturing industry. Since January of this year, the national container export volume and prices have both shown a downward trend. Data show that the national container export volume has continued to decline year-on-year since January of this year, and the average price of product exports has also dropped, from the highest of 2876.7 USD/ton last year to 2594 USD/ton in July. The semi-annual report of the CIMC Group, a leading company in the container industry, showed that the profit rate of the company's main container business was 11.43%, which was a decrease of 7.43 percentage points from the same period of last year.
Advantages of importing key components
Although the appreciation has a negative impact on the industry as a whole, some companies have also benefited from the appreciation of their industries. Industrial Securities researcher Long Hua pointed out that the appreciation of the import of accessories is relatively large, basically sold to the domestic machine tool companies will have benefits, such as G Shen machine and G Qin development.
In addition, the appreciation of the renminbi is very beneficial to companies with significant imported parts and accessories, which has promoted the import of these industries. Data show that in the first four months of this year, the cumulative amount of engine and generator imports reached US$741 million, a year-on-year increase of 9.3%, and the import volume also increased by 1.3%. The total import amount of the liquid pump and liquid hoist in the first four months was 513 million U.S. dollars, a year-on-year increase of 14.7%, and the figure was up 33.6% year-on-year.
Industry insiders believe that China's current overall level of equipment manufacturing industry is not very high, high-value, high-tech key components (such as marine crankshaft, electronic control equipment) also need to import, appreciation will lead to lower import costs, this part of Businesses are good.
Shipbuilding industry responds cautiously to appreciation
In the equipment manufacturing sub-sector, the shipbuilding industry is considered to be the industry most affected by the appreciation of the renminbi because more than 70% of its products are exported. According to sources, the appreciation from the beginning of last year has caused a loss of 7-8 billion yuan to a Dalian shipyard. The larger the value of exports, the greater the impact of the appreciation of the company and the greater the risk of exchange rate risks.
However, the shipbuilding industry in the first half of this year has achieved the best results in history. According to data from the China Shipbuilding Industry Association, in the first half of this year, China exported 358,800 ships, an increase of 294.16% year-on-year; the export value was US$3.396 billion, a year-on-year increase of 66.80%. At the same time, the operation of the industry continues to improve and the quality of profitability has steadily improved. In the first half of the year, a total of 349 metal shipbuilding enterprises in China achieved a total profit of 1.529 billion yuan, an increase of 201.01% year-on-year; gross margin was 8.29%, an increase of 2.3 percentage points over the same period last year; during the period, the rate was 5.62%, a year-on-year decrease of 1.75 percentage points.
Century Securities researcher Hu Kunming pointed out in this connection that the most important reason for the huge increase in profits of the domestic shipbuilding industry is that the entire industry is in the best period of historical development. This positive factor has effectively resolved the negative impact of the appreciation, and at the same time, the domestic steel price this year The decline will reduce the production costs of shipbuilding companies.
Due to concerns about declining industry sentiment and judgments on the long-term appreciation of the renminbi, the domestic shipbuilding industry has maintained sufficient vigilance against the appreciation.
More than 60% of ship's ancillary equipment, such as decks, instrumentation, and anchor chain equipment, rely on imports, which can save a certain amount of cost. However, as most of the domestic marine equipment is purchased from Europe, the appreciation of the euro since last year also offsets the positive factors of RMB appreciation. Therefore, the positive factors for the appreciation of goods are not obvious. In addition, due to the relatively long payment cycle for ship production, payment is generally taken in installments, and the exchange rate risk of shipyards remains high. The shipowner pays 2%-10% of the ship's price for the first time after the signing of the construction contract, pays about 10% after the start of construction, and pays the remaining amount after launching. Most of the expenses for shipbuilding, including manpower, materials, and equipment, need to be paid by the shipbuilder. Once it is appreciated, the shipyard will suffer losses if it receives payment under a contract signed two years ago.
The gross profit rate of shipbuilding companies is about 8%. If the RMB appreciates by 5%-10%, most shipyards have almost no profit margin.
Currently, Guangzhou Shipyard International has taken measures to offset the adverse effects of appreciation. According to the relevant national support policies, the company can apply for a loan of no more than US$400 million to a designated bank, convert it to RMB, and return the bank loan in US dollars received by the customer in installments, thereby effectively alleviating the pressure of RMB appreciation.
The 3%-5% appreciation of the renminbi and the 30% cost advantage of the domestic equipment manufacturing industry are not enough to cause excessive damage to the entire industry. On the contrary, the appreciation will be of great benefit to imported machine tools that have a significant ratio of imports and are sold to domestic machine tools.
ChongQing ChangHui Automotive parts Co.,ltd , https://www.cqchauto.com