Since the second half of last year, the gross profit margin of the machinery industry has rebounded month on month, and the turning point of the industry has begun to emerge. Against the backdrop of China's economic recovery and the continuous promotion of high-end manufacturing, intelligent manufacturing and other manufacturing upgrades by the country, opportunities for general equipment in the machinery industry are highlighted, with some leading enterprises such as cutting tools and machine tools expected to usher in a new round of growth< Br/>
&Nbsp< Br/>
Economic recovery benefits general equipment

&Nbsp< Br/>
Tools and machine tools benefit first

&Nbsp< Br/>
From the current perspective, the PMI index is expected to gradually strengthen in 2023, and the recovery of downstream demand may drive an increase in capital expenditure. General equipment in the machinery industry will be the first to enter the update cycle. In addition, with technological progress and the gradual implementation of relevant support policies, the market share of mid to high end products may increase, and domestic leading enterprises are expected to fully benefit from domestic substitution< Br/>
&Nbsp< Br/>
For this sector, the seller's institution predicts that with the arrival of the industry's business cycle and the controllable promotion of domestic production, the general equipment industry is expected to experience a bottoming out rebound. However, there are many specialized industries in the field of general equipment, among which cutting tools and machine tools will be the first to benefit from economic recovery and domestic substitution< Br/>
&Nbsp< Br/>
Specifically, industrial cutting tools belong to consumables and are the first to benefit from industrial restocking. In recent years, there has been a strong demand for domestically produced cutting tools, and the process of replacing industrial cutting tools domestically has continued to advance. According to data from the China Machine Tool Industry Association, since 2015, China's dependence on tool imports has been decreasing year by year, from 37.2% that year to 28.9% in 2021. The technology iteration of the cutting tool product itself is not fast, and domestic enterprises have mastered the advantage of latecomers. Currently, it is a good time window for domestic substitution. Investors can pay attention to related companies with low Chinese production ratio, high technical level, and high gross profit margin. For example, Company A in the sector has a high level of technology, high R&D investment, and a compound net profit growth rate of over 30% in the past five years, with a continuous operating gross profit margin of around 30%< Br/>
&Nbsp< Br/>


&Nbsp< Br/>
For example, Shenzhen Jingdiao CNC Equipment Co., Ltd. has seen an average net profit growth rate of over 40% in the past four years, except for last year. The company's high-end cutting tools have excellent performance and are gradually catching up with Japanese and Korean products, with a high cost performance ratio. They will benefit from domestic substitution in the future< Br/>
&Nbsp< Br/>
And machine tools are the basic equipment of all industrial manufacturing, known as "; Industrial motherboard;. According to data, China's machine tool industry is large but not strong, making it the world's largest producer and seller of machine tools. In 2021, the consumption was about 170.4 billion yuan, accounting for 33.6% of the world's total; The output value is 157.4 billion yuan, accounting for 30.8% of the global market. However, in 2021, China's machine tool imports amounted to approximately 31.2 billion yuan, with an import dependency of approximately 35.3%. High end CNC machine tools are particularly dependent on imports.