Zhongtai Securities: Domestic and foreign market demand resonates, and the revenue scale and profitability of the liquid packaging machinery industry are increasing simultaneously

The Zhitong Finance App learned that Zhongtai Securities released a research report saying that in recent years, emerging categories such as sugar-free drinks, tea drinks, and energy drinks have developed rapidly, and new products from second- and third-tier brands have continued to be launched/capacity construction has accelerated, driving a significant recovery in equipment demand. On the overseas side, with significant cost performance advantages and after-sales service, the export boom is accelerating. The share of Chinese manufacturers in overseas markets is still low, and there is still plenty of room for growth in the future. Against the backdrop of resounding domestic and foreign market demand, the industry as a whole showed a healthy development trend where revenue scale and profitability increased simultaneously.

The main views of Zhongtai Securities are as follows:

Liquid packaging machinery is the core production equipment for FMCG industries such as food and beverages, daily chemicals, condiments, etc. The industry mostly sells full-line sales, that is, full-line solutions such as “all-in-one blow-filling machines”. China and other countries with more developed beverage markets mainly focus on the transformation and upgrading of production lines, and demand for ultra-clean lines/sterile lines is strong. However, developing markets such as Asia, Africa, and Latin America are still in the stage of new expansion, and product demand is relatively elementary. The economic life of domestic liquid packaging machinery is usually around 10 years.

According to iMarcGroup's forecast, the compound growth rate (CAGR) of the global packaging equipment market from 2025 to 2032 is 3.8%. During the “14th Five-Year Plan” period, the average annual growth rate of China's packaging machinery industry is expected to be around 8%. The average profitability growth rate of enterprises in the industry has reached about 7%, the export value is expected to reach 12 billion US dollars, and the international competitiveness of the industry has improved markedly.

Domestic market: In recent years, domestic beverage consumption has undergone significant structural changes. Benefiting from the popularization of the concept of healthy consumption and the rapid development of emerging categories such as sugar-free beverages, tea, and energy drinks, the continuous launch of new products from second- and third-tier brands and accelerated capacity construction, driving a significant recovery in equipment demand. After 19 years, the overall domestic growth of listed companies has entered an expansion cycle, and competition in the domestic market is intense. The bank is expected to increase steadily in the future.

Overseas markets: Overseas emerging markets have generally been in a growth range in the past 10 years, and growth accelerated after the pandemic. The increase in consumer consumption capacity in emerging economies such as India, Southeast Asia, and Latin America has contributed to a continued increase in consumption of bottled water and sugary drinks. After the epidemic, in global industrial investment and supply chain restructuring, emerging countries grew significantly, entering the dual logic of increasing consumption and upgrading equipment. With significant cost performance advantages and after-sales service, the export boom accelerated. Chinese manufacturers still had a low share of overseas markets, and there is still plenty of room for growth in the future. In the Asia-Pacific market, deliveries from German companies declined in 24, and domestic imports continued to rise.

Against the backdrop of resounding domestic and foreign market demand, the industry as a whole showed a healthy development trend where revenue scale and profitability increased simultaneously.

China's liquid packaging machinery overseas has the advantage of multiple factors. After years of development in the domestic market, domestic manufacturers have formed strong support for overseas competition in many areas. In expanding overseas markets, Chinese companies have the following advantages:

Cost and delivery: The bank believes that domestic equipment is lower than European, American and Japanese brands in terms of purchase costs and long-term maintenance. The logistics from China to Southeast Asia and South Asia are smooth and production delivery is fast, which accurately matches the needs of emerging market customers for high cost performance and rapid commissioning;

Technical service stability: The automation line integration and filling speed of domestic enterprises are sufficient to meet the needs of emerging markets, and Chinese enterprises have the will and ability to provide highly customized products and provide immediate after-sales through technical guidance in cooperation with local dealers;

Macro trends: Global industrial investment is trending in emerging countries and in the context of supply chain restructuring, the payment capacity of leading beverage companies in emerging countries may continue to improve, and the wave of upgrading the food and beverage industry in Vietnam, Indonesia, India and other countries along the route creates room for continuous demand for packaging equipment;

This trend has been substantially confirmed on the corporate side. Domestic companies, such as Dailong and Xinmeixing, have grown several times in the scale of their overseas business over the past ten years. The share of overseas orders has continued to increase, customer repurchases have continued, and the industry has entered a new stage where the penetration rate continues to increase.

Risk warning: Changes in the international political situation; the performance of relevant targets falls short of expectations; there is a risk that the information used in the research report will not be updated in a timely manner; market size estimates are biased.