The capacity utilization rate of manufacturing enterprises has reached a high level. After five years of capacity adjustment and more than a year of economic recovery, manufacturing enterprises’ income and profitability have shown a marked recovery. Relatively speaking, manufacturing fixed assets investment is slightly lagging behind. In the first 10 months of 2017, the main business income of manufacturing enterprises increased by 9% year-on-year, which was significantly faster than the low digit growth in 2015~2016 years, while the total profit increased by 16% over the same period, and it was also significantly higher than that of the 2015~2016 year. At the same time, the growth rate of fixed asset investment in manufacturing industry has been down all the way, and has dropped to a historical low of about 4%. Therefore, the capacity utilization rate of manufacturing enterprises has been greatly improved since 2017, and has increased by 3.6ppt to 76.8% from September. We are optimistic about the accelerated growth of manufacturing investment in 2018. Considering that the return on net assets of most manufacturing enterprises since 2017 has been substantially rebounded and the balance sheet has been restored, we believe that the investment in fixed assets in manufacturing industry has a large upward space. From the historical point of view, the growth of fixed assets of non-financial enterprises is often lagging behind the growth of net profit for about half a year. Considering the rapid growth of net profit of non financial enterprises in 2017, we expect to accelerate the growth of fixed assets investment in the 2018.
The investment in fixed assets of manufacturing industry is significantly lower than that of income and profit growth.
Data sources: public data consolidation
Non financial enterprises, fixed assets growth lag, net profit growth
Data sources: public data consolidation
We hope that the capacity recovery of the cycle plate and the capacity expansion of the emerging sector will be enhanced. In the lower reaches of the industry, the growth rate of net profit in 2017 is far greater than the growth rate of fixed assets, including non-ferrous metals, petroleum and petrochemical, coal, port and shipping, optical optoelectronics, general machinery, basic chemical industry, building materials, light industrial manufacturing, household appliances, instruments and food and beverages, and so on. There is a lot of space. Comparatively speaking, the growth of fixed assets investment in automobile, electronics, electricity, gas, textile and clothing and semiconductor is faster than net profit growth. But considering that semiconductors and electronics are in the emerging industries, the demand is expanding, and it is in the period of industrial development. We are still optimistic about the growth of investment in these emerging fields. To sum up, we are optimistic about the lower downstream boom and the capacity to continue to expand, including: 1) new industrial chains, such as OLED equipment, semiconductor equipment, lithium electric equipment, and 2) industries such as injection machines, textile machinery and woodworking machinery, which have benefited from the recovery of traditional plate capacity.
Net profit growth and fixed asset investment growth in various industries
Data sources: public data consolidation
China has the foundation of the upgrading of the manufacturing industry. We believe that the rise of China’s manufacturing industry has four advantages and will be more obvious in the next 3~5 years. 1) the vast domestic market: China’s domestic demand market will be the largest domestic demand market in the world, China’s population accounts for 19% of the world’s population, and its consumption accounts for ~11% of the global consumption. This will create favorable conditions for the scale effect of standardized production enterprises to minimize the cost of the single product, which has been reflected in the industry and other industries, and is expected to be more obvious in the future. 2) engineer bonus: China has abundant high-quality labor force. In China, nearly 8 million undergraduate students graduate each year. If they consider the masters and doctoral graduates, the number will exceed 10 million. This has provided a large number of relatively inexpensive R & D personnel for China’s manufacturing industry. We expect Chinese manufacturers to enjoy very large engineer bonuses. At the same time, a large number of high-level talents superimposing China’s huge population base will create more convenient conditions for low end specialization. 3) has the world’s largest transport network and mobile Internet. These two networks, on the one hand, help China to excavate and release the potential demand, on the other hand, to improve the production and living efficiency from the supply side, reduce the cost of logistics and enhance the overall competitiveness of China. 4) industrial chain clusters, which provide advantages for procurement, logistics, R & D and so on. Based on the vast local market and the manufacturing costs that still have relative advantages, many industries can be in China from the upper reaches of the industrial chain to the most downstream, even in a region and a city in China, which will bring a full range of advantages to the manufacturing industry. Focus on advanced manufacturing enterprises with core technology. In 2015, Premier Li Keqiang put forward the grand plan of “China made 2025” for the first time in the “report on government work”, and put forward ten years to enter the ranks of manufacturing power and put forward five major projects, which are manufacturing engineering, intelligent manufacturing engineering, industrial base engineering, green manufacturing project, and high-end equipment, respectively. Innovation project. At the same time, it was pointed out that by 2020, 40% of the core components and key basic materials were guaranteed, and by 2025, 70% of the core components and key basic materials were guaranteed. And the implementation of large aircraft, aero engines and gas turbines, marine vessels, high-end CNC machine tools, nuclear power equipment and other advanced manufacturing industrialization projects. At present, China’s manufacturing industry already has the foundation of industrial upgrading, and has made significant breakthroughs in various fields. It is expected that the upgrading of the industry will further deepen in the future.
With the new generation of labor force represented by the 80 and the 90’s become the backbone of the society, the “bonus of engineers” has gradually emerged and become a push.
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