Instrumentation Industry Trends in 2010

In June this year, the value of industry sales have been record high, "August 10, Special Adviser to the China Instrument Industry Association Xi Jiacheng told reporters, the industry's rapid growth during the first half-year sales, profits rebounded sharply.

In his office at No. 26 Hospital of Yuetan South Street, he explained to reporters in detail the operation of the industry in the first half of the year and predicted the trend in the second half of the year. “Although the year-on-year increase in production and sales, profits will gradually decline from the mid-year high, However, the annual increase is expected to reach 15%."

Operational articles: strong growth in production and sales exceeded expectations

“According to the statistical data since the beginning of this century, the increase in production and sales in the instrumentation industry around 30% year-on-year is a historically high area, and the data for May and June of this year have already entered the region, and the single-month sales value has reached a record high.” The Yan family became a reporter and listed several figures: In June, the production and sales value was 48.8 billion yuan and 47.9 billion yuan, which exceeded the historical peak of 44.1 billion yuan and 44.3 billion yuan in December 2009.

Regarding the strong growth in production and sales in the first half of the year beyond the forecast at the beginning of the year, he summed up the main reasons in three sentences: strong domestic demand, rising exports, and a very low base in the previous year.

It is worth noting that the growth trend of various sub-sectors is different, with strong demand for instruments and meters adapted to energy conservation and environmental protection , people's livelihood, and economic restructuring. For example, environmental monitoring equipment has maintained an increase of more than 40% for four consecutive years, and reached the first half of this year. up 70.31 percent; with the rise in vehicle production, the car reached 41.37 percent increase instrument use; industrial automation control system devices, although affected metallurgy, thermal power and other industries decline in demand, but because of energy conservation, technology transformation, emerging industry needs increase rise of such products and improve the level of scientific research and production laboratory analyzers, etc. are more than 30%; but by the infrastructure, real estate, export a greater impact of surveying instruments, for application instruments, timing devices such as the increase over the low.

"This precisely reflects the direction of the country's economic restructuring and the impact of its policies." Yan Jiacheng analyzed.

The sharp rise in profit margins to a high level is accompanied by rapid growth in production and sales, which is a sharp rise in industry profits and a significant increase in imports and exports.

According to Yan Jiacheng, the accumulated profits of the industry from January to May increased by 74.37% year-on-year, and the main-account profit rate reached 7.87%, which is close to the historic high level of 2007, and “more than 1 percentage point higher than the main industry's revenue profit margin”.

The profit recovery of the industry also showed three characteristics: the year-on-year growth rate of the industry with low or negative base growth was high. For example, the growth rate of optical instruments and analytical instruments was as high as 128% and 138% respectively; the foreign-funded enterprises with negative profit growth in the same period last year The growth rate of state-owned holding companies was high, at 108% and 89%, respectively; in addition, some companies with technological progress, structural adjustments, and the promotion of modern production management saw rapid growth in profits, such as Zhejiang Zhongcheng and Zhengtai Instrument. “These two companies have paid high-paying foreign experts to implement modern production management, reduce inventory, and increase capital utilization.”

It is understood that in the first half of the year, the year-on-year growth of imports and exports in the instrumentation industry was over 40%, and the import and export volume continued to rise in a single month, but the import growth rate in the first half of the year had turned a declining trend in June. “This indicates that the increase in imports and exports will slow down.” .

Yan Jiacheng told reporters that large quantities of imported products with high growth rates are products with strong demand but large domestic industry gaps, such as the import of program logic controllers (PLC) amounting to US$427 million, an increase of 96%; imports of semiconductor and component testing equipment 4.3 Billion U.S. dollars, an increase of 170%. Exports of large amounts and high growth rates are industrial automation systems and installations. In the first half of the year, exports amounted to 1.427 billion U.S. dollars, an increase of 49.4%. “This is a resumption of growth in the production of 'funded enterprises’ and Chinese investment. Enterprise's self-produced export competitiveness and comprehensive achievements in undertaking foreign OEM orders."

Foreign-funded enterprises ranked first in profit margin

In the interview, Yan Jiacheng also focused on the situation of foreign-funded enterprises.

The foreign-funded enterprises account for a relatively large proportion in the instrumentation industry. In the high-speed development period at the end of the “Tenth Five-year Plan” and the “Eleventh Five-Year Plan” period, its production and sales accounted for 45% of the entire industry and its profits exceeded 50%. Affected by the financial crisis and other factors, its production and sales ratio fell to 32.6% last year, and its profit ratio fell to 37.6%. In the first half of this year, foreign-funded enterprises came out of the bottom, with a production-to-sales ratio of 31.5%. However, from January to May, their profit growth was as high as 107.8%, accounting for 41.6% of the increase.

“Compared with domestic companies, the profits of foreign-funded enterprises accounted for 10% higher than the proportion of comparative production and sales, and the main-account profit rate reached 10%, which is much higher than that of private and state-owned enterprises. This reflects the fact that Exports accounted for a large proportion (43.5% of outbound/sales ratios). Production and sales did not pick up quickly, but they have the characteristics and advantages of high technology and management level and strong innovation capability."

Prediction: Production and sales growth from year-on-year drop from the high point For the second half of the year, Ju Jiacheng judged that due to the increase in uncertainty in the chain, the year-on-year increase in production and sales will fall from the high point of the year, but it will not drop substantially.

Based on the cumulative year-on-year growth rate in the second quarter and the monthly production and sales value that have entered historically high levels, as well as the country’s efforts to strengthen economic restructuring, “the year-on-year decline in the year-on-year growth in the production and sales of the industry can be determined, but due to the decline in impact and the As the factors of change increase, the uncertainty of the trend will increase."

In this regard, he further explained that this uncertainty first includes the impact of economic restructuring on the demand for instrumentation. For example, measures such as suppression of “double heights” and overcapacity industries and excessive increases in house prices lead to industrial automation control devices, The traditional demand for on-site meters, supply meters, and surveying and mapping instruments has dropped. "The degree of decline is still difficult to determine."

Second, it includes the industry's adaptability to economic restructuring. China's industrial sector is facing an upsurge of corporate technological transformation driven by the implementation of energy-saving emission reductions and enhancement of independent innovation capabilities. The resulting large demand for measurement and control equipment will continue in the second half of the year. At the same time, the demand for monitoring and control equipment in new industries such as new energy has been or is being formed, but most of this type of equipment is still dependent on imports. Although some companies have made progress and breakthroughs, their capabilities and fitness are yet to be tested .

In addition, it also includes the status of the international market and exchange reform efforts. Yan Jiacheng told reporters that in addition to affecting imports and exports, some foreign-funded enterprises also use foreign exchange reform to further reduce price competition. While maintaining the advantage of the high-end market, they also try to expand the market share in the mid-range and even low-end markets.

"Although the above uncertainties will cause the instrument and meter industry to slow down in the second half of the year, there is little chance of a sharp and sharp drop," Yan Jiacheng said with certainty.

The profit growth rate is still higher than the increase in sales. “Although the base number, the year-on-year growth rate of the industry's profits will continue to fall, but the industry's profit growth can still maintain a good state, the average monthly profit value will continue to rise, the annual profit growth It will still be higher than the increase in production and sales. The profit rate of main income will exceed 7.5%."

For the above judgment, Yan Jiacheng gave three reasons:

First of all, although the demand will be levelled off in the second half of the year, the effectiveness of technological progress, economies of scale, and enhanced management will continue. He gave an example: In 2008 and 2009, the output value of new products increased by 11.5% and 7.5% year-on-year, respectively. In the first half of this year, the increase has risen to 43.46%, and the proportion of new products has reached 16.04%; from January to May this year, the industry The increase in production and sales reached 30%, but the increase in product inventory was only 7.31%. The balance of liquidity, accounts receivable, liabilities, management fees, and financial expenses were all lower than the increase in sales.

"In the second half of the year, the above data will turn flat, but it will not rise quickly and lead to a substantial drop in profits."

Second, foreign-funded enterprises have already bottomed out. "Three capitals" is a large profit in the instrumentation industry. Although its profit growth in 2008 was -2.68% year-on-year, the first negative profit growth since the reform and opening up took place, and the growth rate in 2009 was only 1.3%, showing a stagnant state. However, in the first half of this year, the increase has increased rapidly. And more than 100%.

Xi Jiacheng told reporters, multinational companies have expressed their subsidiaries in China is the best company in the whole world situation; also expects its business in China is rising across the company does not fall into the "deficit" business, keep the "black" an important factor Therefore, "unless the international market deteriorates sharply in the second half of the year, the operating conditions of foreign-funded enterprises will remain unchanged compared to the previous year."

In addition, there is little pressure to increase costs. There was a rise in raw materials and components at the beginning of the year, but it has slowed down in the middle of the year, and it is expected that there will be little chance for another rise in the second half.

Annual increase of around 15%

Affected by the previous year's base number and seasonal factors, the year-on-year increase in sales and sales and the single-month value will both drop significantly. The key to the chain's trend depends on the operating conditions in September.

Yan Jiacheng told reporters that according to historical statistical analysis, if the data in September is higher than the high point in the middle of the year, the monthly growth rate in the fourth quarter could be expected to reach a period of more than 25% in the whole year; if the data in September is close to Mid-year highs, then the monthly rate in the fourth quarter will fluctuate upwards, and the annual increase will be above 15% or 20%. If the September data is much smaller than the mid-year high, there will be a weaker chain growth in the four seasons, and the annual production sales will be lower than the end of the year. In the middle of the year, the growth rate will also fall below 13% in the weak state of the middle-year high, and the impact of its trend will be delayed until the first half of next year.

Due to the high operating data in the first half of the year, this has laid a good foundation for the whole year. According to the current operating conditions of the majority of key enterprises, although the demand is slowing down, but the decline is not significant, “the expected year-on-year growth in production and sales, profits, although gradually decreased, but all The annual production and sales increase will be about 15%, and the profit growth will be higher than 15%.” Yan Jiacheng said.