Project: Heavy Machinery - Reciprocusreciprocus.com/sites/default/files/2017 Heavy Machinery...
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Project: Heavy Machinery Prepared by: Reciprocus International Date: January 2017
Transcript of Project: Heavy Machinery - Reciprocusreciprocus.com/sites/default/files/2017 Heavy Machinery...
Project:HeavyMachineryPreparedby:ReciprocusInternationalDate:January2017
TableofContents
ExecutiveSummary 2
MacroeconomicOutlookoftheIndustry 3
IndustryOutlook andAnalysis 4
RegionalLandscapeandAnalysis 5
OpportunitySpotlightandAnalysis 6
1StrictlyPrivate&Confidential
ExecutiveSummary
ReciprocushasrecentlycompletedastudyonexpecteddemandgrowthforheavymachineryintheGulfregion(specificallywithintheGCCmarkets).Thishigh-levelsnapshotsummarizessomeaspectsofourfindingsandinsights.
• Insightshavebeenformedbasedonbothprimaryandsecondary,publiclyavailableinformationaswellasourfirsthandknowledgeofheavyequipmentintheGCCregion.
• TheGCCregionhasanoverallstrongdemandforheavymachinery withanestimatedUSD128bnworthofprojectstobecompletedannuallybetween2016and2019.Thisshowsasignificantpipelineevenafteryearsofsubstantialinfrastructurespending.
• ExportsofheavymachineryfromASEANtotheGCCregionhasgrownsignificantlyataCAGRof12.7%,whichissupportedbythekeydrivers,primarilyspurredbytheheavyinvestmentinconstructionprojectsintheGCCregion.
• ThreeexamplesofhighgrowthopportunitiesintheGCCregionareSaudiArabia,BahrainandtheUAE,amongothers.
• Basedonourresearch,amongtheGCCcountries,SaudiArabiaiscurrentlyisthesecondlargestdestinationforexportsofheavymachineryfromASEANcountriesandhasbeengrowingatthefastestratewithaCAGRof25.1%.
• Ontheotherhand,therewasadeclineinimportsofheavymachineryfromASEANamongtheremainingGCCcountries(Kuwait,OmanandQatar).
• OuranalysisofthetradeflowsbetweenASEANandtheGCCregionshowedageneralgrowthinexportsofallbuttheliftingmachinerycategory.
• FurtheranalysisoftheliftingmachinerycategoryintheGCCsawgrowthinASEANexportstoOman.• GiventheamplegrowthopportunitiesintheGCCheavymachinerymarketthatSingaporecompaniesmay
havemissed,wewouldrecommendthatcompaniesexploreandexpandintoothercountriesintheGCCregion,SaudiArabia,BahrainandtheUAEinparticular.
2StrictlyPrivate&Confidential
MacroeconomicOutlookoftheIndustry
BusinessOverview
3StrictlyPrivate&Confidential
Ø TrendAnalysis:TheglobalmarketforheavymachineryisprojectedtogrowatasteadyCAGRof7.9%overtheperiod2014- 2019andreachamarketvalueofUS$229billionby2019.TherecentheavyinvestmentininfrastructuredevelopmentintheGCCregionasameansofdiversifyingawayfromrelianceonoil-exportdriveneconomyalsodrivedemandfortheheavymachinerymarket.
Ø KeyDrivers: Thedemandforheavymachineryismainlydrivenbyglobalconstructionandengineeringactivity,whichwasseverelyimpactedbytheeconomicclimatein2009,resultingintheglobalconstructionindustrycontractingbyover25%.Sincetherecession,constructionhasrecovered,withtheAPACregionaccountingfornearlyhalfoftheglobalconstructionvalue.Assuch,themarketforheavymachineryisexpectedtocontinuetoexperiencesignificantgrowthintheAPACregion,MiddleEastandAfricaduetotheincreaseininfrastructureactivitiesinemergingeconomieswhileEurope’sshareofthemarketisexpectedtodecline.
Ø MarketLeaders:ThelargestmanufacturersofconstructionheavymachineryareDeere&Company,Caterpillar,CNHIndustrialN.V,andKomatsu,withDeereaccountingfor22.4%ofthemarketshareandCaterpillaraccountingforafurther20.3%
-4% -2% 0% 2% 4% 6% 8% 10%
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2008 2009 2010 2011 2012
$billion %Growth
GlobalConstruction&EngineeringIndustryValueDeere&Company,22.4%
Caterpillar,20.3%
CNHIndustrialN.V.,13.6%
Komatsu,11.0%
Other,32.7%
MachineryManufacturersGlobalMarketShare
IndustryOutlookandAnalysis
AnalysisBreakdown
4StrictlyPrivate&Confidential
Porter’s5ForcesAnalysisØ PowerofBuyers:Alargenumberofend-buyers,
primarilyconstructioncompanies, havestrongbargainingpowerduetotherelativelylowswitchingcostsandthelackofdifferentiationofproducts.HoweverstrongbrandreputationsuchasCaterpillarandNewHollandcanbeaninfluencingfactorwhichmayweakenpowerofbuyers.
Ø PowerofSuppliers:Suppliershavefairlylowdifferentiationofrawmaterialsandthereisoftenlittletodistinguishbetweenthem,resultinginmanufacturershavingrelativelylowsupplierswitchingcosts.
Ø DegreeofRivalry:Theglobalconstructionandheavymachinerymarketischaracterizedbyintensecompetitiondueinparttohighfixedcosts,exitbarriers,andthedominanceoflargemultinationalplayersnamelyCaterpillar,CNH,Deere&Company,andKomatsu.
Ø SubstituteThreat:Substitutesassuchdonotexistinthismarketduetothespecificfunctionofvarioustypesofequipment.
Ø LikelihoodofNewEntry:Therearerelativelyhighbarrierstoentryinthisindustryduetofactorssuchashighcapitalexpenditure,longset-uptimeandlargeeconomiesofscale.However,duetothelowvolume,highcomplexitynatureofheavymachinery,smallscaleentryasshortline orspecialtymanufacturersispossible.
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Power of Buyers
Power of Suppliers
Degree of Rivalry
Substitute threat
Likelihood of new entry
RegionalLandscapeandAnalysis
APACSaudiArabia,theUAEandBahrainareexamplesof
potentialgrowthopportunitiesintheGCCregion
AmericasEMEA
BubbleChart
Ø Growingdemandforheavymachinery: ThefallinoilpricesfromapproximatelyUSD110/bbl in2010toUSD50/bbl in2015hascreatedfiscalpressureontheoil-basedeconomiesintheGCCregion.Despitethis,theGCCinfrastructurestillhasaprojectpipelineof USD2trillion tobeawardedfrom2016-2020,creatingahugeopportunityforheavymachinery.
Ø EmergingopportunitiesinASEANexportmarket:SingaporeiscurrentlythelargestexporterofheavymachinerytotheGCCcountriesamongtheASEANcountries.However,thereisstillopportunityforgrowthastheGCCcountries’importvolumefromSingaporeisrelativelysmallcomparedtolargerplayerssuchastheUSandJapan.
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ASEANExportstoGCC:GrowthandVolumebyCountry
Negative Growth
High Export Volume
Low Export Volume
Philippines
Singapore
Malaysia
Indonesia
Thailand
Positive Growth
Population:9.1millionTotalGDP(2015):US$370.3billionHeavyMachineryImport(2014):US$416.5million10-YearCAGR:7.4%UAE
Vietnam
Population:31.5millionTotalGDP(2015):US$646.0billionHeavyMachineryImport(2014):US$382.2million10-YearCAGR:7.0%SaudiArabia
Population:1.3millionTotalGDP(2015):US$31.1billionHeavyMachineryImport(2014):US$13.1million10-YearCAGR:6.9%
Bahrain
OpportunitiesSpotlightandAnalysis
WhyUAE?
SaudiArabiaØ AmongtheGCCcountries,SaudiArabiaisthefastestgrowingdestination
forexportsofheavymachineryfromASEAN,witha3yearCAGRof25.1%.Ø SaudiArabiahasledthetransformationintheGCCconstructionmarket
withthedevelopmentofthesixeconomiccities.Ø Itcurrentlyhasapipelineofmegaprojects,suchastheKACARERenewable
EnergyProgram(worthUSD150billionalone)withmorethan80%oftheinvestmentflowingthroughthesemulti-billiondollarprojects,creatingdemandforheavymachinery.
6StrictlyPrivate&Confidential
WhileSaudiArabia,BahrainandtheUAEshowpromisingsignsofgrowth,weseepotentialforheadwindsfortheheavymachinerymarketinKuwait,OmanandQatar.ASEANexportsofheavymachinerytothesecountrieshavedeclined,withKuwait ataCAGRof-4.1%,Omanat-7.5% andQatarat-8.1%.WewouldthereforerecommendthatSingaporecompaniesfocusonothercountriesforgrowth.
WhySaudiArabia?
WhyBahrain?UAEØ ExportsofheavymachineryfromASEANtotheUAEalsogrewatasteady
ratewitha3yearCAGRof7.8%.Ø TheUAEgovernmenthassetasideDH47.3bn (USD12.8bn)inthe2017
budgetforinfrastructuredevelopmentwhichisa27%increaseoverthepreviousyear,creatinggreaterdemandforheavymachinery.
Ø Thehighestgrowthintheconstructionindustryisexpectedtobebetween2016and2019,asDubai'spreparationforWorldExpo2020isdrivingsignificantmomentumintocommercialbuildingandtransportinfrastructure.
BahrainØ Bahrainhasthesecondhighest3yearCAGRof13.5%forASEANexports
ofheavymachineryamongtheGCCcountries.Ø ItsconstructionmarketisexpectedtocontinuegrowingataCAGRof
8.75%overtheperiod2015-2025andindustryoutlookappearstobeimproving,followingtheannouncementofseveralmajornon-residentialconstructionprojects.
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10.0%
15.0%
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2011 2012 2013 2014 2015Value,USDbn Growth,%y-o-y
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2011 2012 2013 2014 2015
Value,USDbn Growth,%y-o-y
-10.0%
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2011 2012 2013 2014 2015
Value,USDbn Growth,%y-o-y
SaudiArabiaConstructionIndustryValue
BahrainConstructionIndustryValue
UAEConstructionIndustryValue
0m1m1m2m2m3m3m4m4m5m5m
0m
10m
20m
30m
40m
50m
60m
2011 2012 2013 2014
Qatar
SaudiArabia
UnitedArabEmirates
Oman
OpportunitiesSpotlightandAnalysis
7StrictlyPrivate&Confidential
Ø Theanalysisindicatedthatthewinches,fork-liftsandmoving,levellingorboringmachinerycategorieshadsmalltradeflowsoflessthan$20millioneachin2014,relativetothe$536millionoftotalheavymachineryexports.
Ø WhileASEANexportsofmostproductcategoriesofheavymachineryhaveseenpositivegrowth,exportsoftheliftingmachinerycategoryintheGCCregionshrankata3yearCAGRof-9.0%.
Ø UponcloseranalysisoftheliftingmachinerycategoryexportstotheGCCregion,exportsspecificallytoOman havegrownataCAGRof20.5%.ThisindicatesanopportunityforgrowthoftheliftingmachinerycategoryinOman.
HeavyMachineryProductCategorySegmentation
ASEANExportstoGCCbyProductCategory
AnalysisBreakdown
260m
270m
280m
290m
300m
310m
320m
330m
340m
0m
10m
20m
30m
40m
50m
60m
70m
80m
90m
2011 2012 2013 2014
Derricks,cranes,workstrucksfittedwithacrane
Lifting,handling,loadingorunloadingmachinery
Bulldozers,graders,levellers,excavators,roadrollers
Heavymachineryparts
ASEANExportsofLiftingMachineryCategorytoGCCcountries
Pulleytackle,winchesandjacks1%
Derricks,cranes8% Lifting,handling,loadingor
unloadingmachinery9%
Bulldozers,graders,levellers,excavators,road
rollers16%
Moving,levelling,scraping,compactingorboring
machinery3%Fork-lifts
0%
Heavymachinery
parts63%
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ReciprocusInternationalInternationalPlaza10AnsonRoad#10-22Singapore079903
Tel:+65-6225-9986Fax:+65-6225-8223
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Tel:+41564704270Fax:+41564704272
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