Machinery & HDT: June update: Demand upcycle broadens; AIDC, CAT/CMI, Ceres, and Kion read-throughs; 2Q26 preview

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Machinery & HDT: June update: Demand upcycle broadens; AIDC, CAT/CMI, Ceres, and Kion read-throughs; 2Q26 preview

Karen Li, CFA Asia Pacific Equity Research

(852) 2800-8589 08 July 2026

karen.yy.li@jpmorgan.com

2Q26 preview: Weichai Power is poised for a back-end-loaded earnings

delivery in 2026, with 2Q26 earnings likely to show reported net profit

growth in the low- to mid-teens Y/Y. Sany Heavy and XCMG are also

likely to report flattish 2Q26 earnings on a reported basis, due to continued

(though reduced) FX drag, but we expect both to deliver solid recurring

profit growth likely to exceed 20% Y/Y, underpinned by strong core

operations and improved mix. For Hengli Hydraulic, we expect to see

recurring profit rising >20% Y/Y as well.

June excavator and loader sales sustained strong Y/Y growth, with 2Q26 and 1H26

confirming the upcycle remains intact

June and 2Q/1H aggregates show the upcycle is broad-based, with exports

and electrification improving the quality of growth. With 1H running ahead

of plan, 2H is poised to normalize, making pricing discipline and mix more

important than headline volumes.

• June excavator demand stayed robust, with domestic recovery and

exports both contributing. June excavator industry sales reached

25,445 units (+35% Y/Y), with domestic at 10,898 (+34% Y/Y) and

exports at 14,547 (+36% Y/Y). The print reinforces that demand is not

purely seasonal: domestic recovery remains steady on infrastructure

activity and replacement-driven purchases, while exports remain a

sustained growth engine. The domestic mix is also improving, with mid-

sized excavators gaining share, consistent with property-related drag

fading at the margin and downstream construction activity becoming

more supportive.