1、The prosperity of the industry continued, performance continued high growth.

There are 332 stocks in the first-level sub-industry of shenwan's mechanical equipment. Excluding those with large volumes such as CPC capital and whose main business has no relation with the mechanical sector, as well as the double-counting subjects such as zhenhua B shares and electromechanical B shares, we analyzed the remaining 323 stocks. Revenue in 2018Q1 reached 240.03 billion yuan, +22.3% compared with the same period last year. Net profit of mother return totaled 11.51 billion yuan, +29.9% compared with the same period last year. A total of 207 companies achieved positive year-on-year growth (accounting for 64.1%), among which 69 companies achieved performance growth of more than 100%, accounting for 21.4%.

2、Management expense ratio, asset impairment loss reduction reflects asset quality optimization, driving performance growth.

Affected by raw material price increase and other factors, the industry's overall gross profit rate is 21.5%, -0.42 PCT compared with the same period last year. The rate of three expenses in the industry was maintained at 15.7%, -0.27 PCT year on year. It is worth noting that due to scale effect, asset quality optimization and other factors, the management expense ratio of 2018Q1 was 8.5%, which was -0.79 PCT compared with the same period last year. The asset impairment loss totaled 820 million yuan, which was less than the asset impairment loss of 970 million yuan in 2017Q1. The industry net interest rate was 4.8%, +0.28 PCT year on year. Industry ROE was 1.3%, +0.16 PCT year on year.

Cycle and advanced manufacturing has its own characteristics, the middle - stream recovery leading plate highlights

1、1. The income performance of advanced manufacturing segments in high boom has increased double.

Benefit from consumption upgrading and technological innovation, dividends, income, earnings growth is top of the bottom of the plate are: intelligent equipment (21.7%, 672.2%) (49.7%, 121.2%), semiconductor equipment, new energy equipment (116.1%, 84.8%), among them, the new energy equipment leading leading intelligence (150.6%, 90.8%), semiconductor equipment sector leading jing sheng mechanical and electrical (53.2%, 122.8%) on the plate is leading role is obvious.

2. Large elastic space for periodic plate net profit improvement.

Engineering machinery, metallurgy, mining, heavy equipment, such as plate elasticity of benefit from the economic cycle upward, infrastructure, real estate and export recovery, net profit significantly improved, the growth rate of the top plate: engineering machinery (42.5%, 114.3%), mining equipment (76.0%, 104.1%), heavy equipment (12.6%, 94.7%), growth is on the plate for the machine tool (10.3%, 94.4%), the internal combustion engine (9.2%, 53.5%).

Balance sheet improvement in progress, the cash flow position to repair

Q1 2018the sectors with the highest asset-liability ratio decline are: new energy equipment (-3.5 PCT), construction machinery (-3.3 PCT), and intelligent equipment (-1.9 PCT). The net cash flow from operating activities totaled 20.65 billion yuan, + 14.8% year on year, of which the operating cash flow of CRRC improved from -15.5 billion yuan in 2017Q1 to -9.4 billion yuan in 2018Q1. Excluding the influence of CRRC, the net cash flow of operating activities in 2018Q1 was -11.26 billion yuan, which was -29.3% compared with the same period last year. Among them, the heavy equipment, machine tool, building equipment, light industrial equipment and mining equipment sectors were -497.2%, -489.2%, -245.7%, -236.6% and -227.3% respectively compared with the same period last year, showing great room for improvement.

Investment advice: growth sector, semiconductor equipment recommended [jingsheng electromechanical], [precision electronics], [changchuan technology], focus on [north China huachang]; New energy equipment recommended [pilot intelligence], [tianqi shares], [pu tai lai]; Recommend new materials [dongmu stock], pay attention to [guangwei complex material]; Intelligent equipment recommended [double ring transmission], [tuosida], etc. Periodic plate, construction machinery recommended [sany heavy industry], [zhejiang ding li], [hengli hydraulic], [eddy precision], etc., oil service recommended [cnooc engineering], [jerry stock]