Morningstar

Morningstar, Inc.

Equity Bottom-Up

Despite Zoomlion’s stronger than expected preliminary first-half 2019 results, we think the firm remains overvalued, as we expect a gradual slowdown in China’s infrastructure and construction activities in the long run. Zoomlion guided that first-half 2019 net profit is expected to increase by 172%-212% year over year to CNY 2.4 billion to CNY 2.7 billion from CNY 0.86 billion during the same period last year, above our expectations. This implies that for second-quarter 2019, net profit will…

Following a strong first-quarter 2019 performance, we raised Zoomlion’s fair value estimate to HKD 3.70 (CNY 3.18) from HKD 3.40 (CNY 2.90) driven by higher growth assumptions mainly in 2019 and 2020. Our no-moat and stable moat trend ratings on the firm remain intact. Zoomlion announced first-quarter 2019 results with net profit increased by 166% year over year to CNY 1 billion from CNY 0.38 billion during the same period last year, in line with preliminary net profit of between CNY 0.85…

Zoomlion announced preliminary first-quarter 2019 results with net profit expected to increase by 126%-179% year over year to CNY 0.85 billion to CNY 1.05 billion from CNY 0.38 billion during the same period last year, above our expectations. Management attributed the strong first-quarter 2019 performance to continuous strong demand for its construction machinery, which includes concrete, crane and other construction machinery that is underpinned by robust end demand from the infrastructure…

We raise Zoomlion’s fair value estimate to HKD 3.40 (CNY 2.90) from HKD 3.00 (CNY 2.62), following minor adjustments to our valuation model and rolling forward of our estimates. The lower net debt due to stronger-than-expected cash flow generations in 2018, the appreciation of CNY against HKD and slightly higher growth assumptions resulted in the increase of our fair value estimate. Our no-moat and stable moat trend ratings on the firm remains intact
Zoomlion announced full-year 2018 results…

<p>Zoomlion announced preliminary full-year 2018 results with net profit expected to increase by 46%-61% year over year to CNY 1.95 billion to CNY 2.15 billion from CNY 1.332 billion in 2017. The results were above our expectations and imply that Zoomlion’s net profit for fourth-quarter 2018 was around CNY 647 million to CNY 847 million, a huge increase from CNY 50 million during the same period last year. Management attributed the strong full-year 2018 performance to robust demand for its…</p>

China

Zoomlion Heavy Industry Science and Technology Co., Ltd.manufactures and markets construction machinery.  The Company's products include concrete machinery, cranes, road machinery, drilling equipment, and other heavy construction equipment.  Zoomlion also produces environmental machinery and satellite navigation products.