S&p: the Chinese engineering machinery industry is poised for recovery

Right of s&p's global credit rating analysts achievers, said: "because of strong sales and engineering machinery utilization hours continue to rebound, China construction machinery industry needs improvement. We expect the industry over the next 24 months of sales will be 5% to 10% higher than in 2016, but still only about 50% of the 2011 peak."

Answer in the credit, the s&p to Zoomlion Heavy Industry Science and Technology Co., Ltd., XCMG Construction Machinery Co., Ltd., sany Heavy Industry Co., Ltd., Guangxi Liugong Machinery Co., ltd. and the Chinese dragon holdings Co., Ltd. Is a Industry representatives, through the analysis of them to reflect the status of the Industry as a whole.

Standard & poor's global rating says the credit strategy used by engineering machinery makers in the past to gain market share has now fallen sharply. Competition in the industry is becoming more rational, with large participants paying more attention to cash flows and liquidity levels to keep themselves out of the financial crisis.

, according to a report in the past few quarters, engineering machinery company's operating cash flow level is gradually improved, the main reason is that accounts receivable quality improvement, customer credit standards and credit control more strictly, and the company more cash rather than sales growth.

S&p predicted that the next 12 months of construction machinery manufacturers debt repayment ability (in debt to tax rates, depreciation and amortisation ratio) is 13.9 times in 2015 the history of the highest level improved slightly. If the engineering machinery company can continue to manage working capital, the larger deleveraging could happen after 2018.

Achievers right said: "the liquidity risk is one of the key risk to construction machinery company. We expect that most companies in the industry source of liquidity is not enough to meet its liquidity requirements, the main reason is the low level of its cash (although improved), and short-term debt levels high."