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XCMG Construction Machinery Co., Ltd. (000425.SZ) Still a Stock to Own?

$000425.SZ #China #Shenzen #Stocks #Construction #ShayneHeffernan

From “manufacturing” to “smart manufacturing”, XCMG ranks fourth place on the Yellow Table 2020

XCMG Construction
Ticker: 000425.SZ
Price: CNY6.11
Recommendation: Buy
Target Price: CNY6.84

Company News

On May 18th, British publisher KHL Group released the Yellow Table 2020. The top 50 companies listed in the Yellow Table 2020 represent a total revenue of over US$200 billion in 2019. The total sales of China-based companies on the list reached nearly USD 36 billion, accounting for 17.7% of total revenue from 50 brands. With a revenue of USD 11.162 billion, XCMG has moved up to 4th place in the ranking of the world’s top 50 construction equipment manufacturers, once again leading the Chinese manufacturing companies on the list.

The Belt and Road Initiative has built an important platform for the globalization of Chinese construction machinery enterprises. The Chinese construction machinery enterprises represented by XCMG have been put to the test, continuously enhancing their global competitiveness and strengthening their influences in product and technology research and development.

Recently, the internationalization process of XCMG has once again obtained a new breakthrough. XCMG has currently set up four overseas R&D centers, 15 manufacturing bases, KD factories or joint ventures and has over 300 dealers. XCMG products make up the largest export market share in 30 countries along the “One Belt and One Road” route.

XCMG products have also achieved brilliant results in international construction projects. They have participated in a series of major projects all over the world including the construction of the FIFA World Cup Qatar 2022™ stadium, the 480-kilometer Mombasa Nairobi Railway and Africa’s largest Dangote refinery project.

In recent years, China’s construction machinery industry has developed by leaps and bounds. From scale expansion to quality enhancement, XCMG has seized each of its opportunities, investing full efforts into high-end product innovation and market internationalization. Whether it is for the construction of “the world’s first crane” ——XCMG 4000t crawler crane XGC88000 or “China’s first excavator”——XCMG 700t hydraulic excavator, XCMG has always relied on the development strategy of “high quality, high efficiency, high value and sustainability”. XCMG continuously strengthens its management transformation, breaks through high-end technology, and takes root in the global layout, portraying the charm and elegance of products “made in China” through contributing to the world a series of top-notch products.

2020 is the first year of the “Three-Year Strategy towards the Top of Mount Everest”. XCMG has been actively catching up with the global benchmark enterprises and products in the high-end equipment development field, and continues to take the leading position in the domestic industry. XCMG now holds nearly 1,000 core technologies, 32 percent of which are breakthrough technologies.

A world-class company has to compete on top battlefields. As Wang Min, chairman of XCMG once said, only by transforming “manufacturing” to “smart manufacturing” and realizing “advanced and endurable” technology, can the name of XCMG shine brighter in the world.

Business Summary

XCMG Construction Machinery Co., Ltd. is a China-based company principally engaged in the manufacture of civil engineering machineries.

The Company’s main products consist of engineering cranes, earth moving machinery, compaction machinery, concrete machinery, road machinery, pile machinery, fire fighting machinery, other construction machinery and spare parts of engineering machinery, among others.

The Company distributes its products within domestic market and to overseas markets.

Shayne Heffernan Trade Idea

“Our current price target of XCMG Construction will come in around CNY6.84 giving the stock a price increase of +12.13%.”

Price Performance

Relative Valuation

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 6.49.

The projected lower bound is: 5.76.

The projected closing price is: 6.13.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.

During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 23 white candles and 24 black candles for a net of 1 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 51.6854. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 56.36. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 32 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 59. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.

Rex Takasugi – TD Profile

XCMG MACHINERY closed up 0.210 at 6.120. Volume was 14% above average (neutral) and Bollinger Bands were 58% narrower than normal.

Open     High     Low     Close     Volume
5.930    6.180    5.920   6.120     131,740,792
Technical Outlook
Short Term:        Neutral
Intermediate Term: Bearish
Long Term:         Bullish
Moving Averages: 10-period     50-period     200-period
Close:           5.98          5.97          5.21
Volatility:      35            38            44
Volume:          80,299,000    104,077,024   95,732,032

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

XCMG MACHINERY is currently 17.4% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods.

Our volume indicators reflect volume flowing into and out of 000425.SZ at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on 000425.SZ and have had this outlook for the last 7 periods.

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