[Weekend Money] "Construction Equipment Enters an Upcycle"... Which Stocks Are Securities Firms Recommending?

Shinhan Securities: "Construction Equipment Demand Expected to Increase"
Demand to Rise on Data Center, Infrastructure, and Mining Investment
Top Pick: HD Construction Equipment; Second Pick: Doosan Bobcat

A securities firm has said that the construction equipment industry has entered an upcycle, as demand grows, led by non-residential sectors such as AI data centers.

In a report on October 11, Lee Jihan, a researcher, and Lee Donghyeon, a research fellow at Shinhan Securities, said, "We believe the construction equipment industry has moved past a downcycle and entered an upcycle. Demand for construction equipment is expected to increase, driven by non-residential markets such as AI data centers, infrastructure investment, and mining investment in various countries."

The United States and China account for a large share of AI data centers, but countries such as India, Brazil, and Australia are also building data centers. Including operational data centers, those under construction, and those planned for the future, the regional shares by gigawatt (GW) capacity are 81.4% for the Americas, 8.2% for Europe, the Middle East and Africa (EMEA), and 10.4% for Asia-Pacific (APAC).

By country, data center capacity is expected to increase 3.3-fold in Australia, 2.9-fold in India, 2.5-fold in China, and 5.8-fold in Indonesia by 2030, suggesting that data center expansion will also be active outside the United States. Shinhan Securities said, "Investment in data centers and related infrastructure in each country is expected to drive demand for construction equipment."

Growth is also expected in resource-rich countries, particularly in Africa and Latin America. Prices for resources such as copper and gold remain high, so mining demand is expected to continue. Gold is currently priced at $4,200 per ounce, and Shinhan Securities considers mining economically viable because the price is above $3,500 per ounce. Copper is priced at $14,000 per ton, near its record high.

In Africa, diesel supplies essential to operating construction equipment are not readily available from the Middle East, so demand for construction equipment is expected to decline in the short term. However, Shinhan Securities said, "The increase in infrastructure investment budgets among African countries is also positive, so long-term and medium-term growth is expected to continue, alongside mining demand."

Based on this analysis, Shinhan Securities named HD Construction Equipment its top pick in the sector. The firm said, "We are lowering our near-term earnings expectations due to the diesel issue in the Middle East, a decline in unit sales caused by third-quarter seasonality, and tariffs and exchange rates, but we maintain our outlook for an upcycle. Expectations for its engines are also a differentiating factor."

It named Doosan Bobcat its second choice, saying, "The company has significant exposure to the North American housing market, and the impact of tariffs needs to be assessed following the start of operations at its plant in Mexico."

This content was produced with the assistance of AI translation services.