Two major policies accelerate the concentration of the elevator industry
The forthcoming test tower and maintenance policy will increase the barriers to entry and accelerate the concentration of the industry, especially the acceleration of domestic concentration.
The test tower policy will be implemented nationwide on April 30, 2014. This policy requires elevator manufacturers to have test tower facilities. We believe that the test tower policy will directly raise the barriers to entry for the industry, which will make it difficult for domestic companies with annual sales below 700 units to survive, either withdraw from the market or be merged by companies with pilot towers to accelerate industry concentration, especially domestic investment. Increased concentration.
The maintenance policy will be implemented nationwide from January 2014 and has been piloted in Guangdong Province. This policy requires elevator maintenance to be carried out by the manufacturer or its entrusted unit. At present, about 60% of elevator accidents are caused by improper maintenance, and 70% of the maintenance market is occupied by low-cost competitive third-party maintenance. After the implementation of the maintenance code policy nationwide, we believe that:
(1) The proportion of self-sustaining maintenance of elevator manufacturers has been greatly improved, and a large number of third-party maintenance companies will withdraw from the market;
(2) The maintenance market will get rid of low-price competition, safety and quality first, maintenance prices will rise, the market space for maintenance insurance is expected to reach 39 billion yuan in 2015, and CAGR reached 24.9% in 2013-2015;
(3) The elevator enterprises with perfect network layout will benefit, and domestic enterprises without network and brand will be further shuffled.
At this point, the views of our previous elevator industry reports can be summarized as:
(1) The market overestimates the correlation between elevators and real estate. In fact, only about 60% of elevator demand is determined by real estate, and another 40% of elevator demand is determined by non-real estate factors such as elevator ratio increase, rail transit, affordable housing, renovation and export.
(2) The market underestimates the growth of the elevator industry. It is conservatively expected that the industry growth rate in 2013-2015 will be 15.1%, 13.3%, and 13.3%, respectively, and it is still in the booming stage.
(3) Compared with foreign capital, domestic elevators will grow faster and their share will continue to increase. Domestic-funded elevators have a strong competitive advantage, which is reflected in the mechanism and cost performance. It is conservatively expected to grow at 21.4%, 19.1%, and 18.8% respectively in 2013-2015, which is 5 or 6 percentage points higher than the industry.
(4) The two major policies of the test tower and maintenance insurance will accelerate the increase of industry concentration, especially the concentration of domestic capital.