Wayne Fung, an analyst from CMB International Securities, maintained the Hold rating on Zoomlion Heavy Industry Science & Technology Co (ZLIOF – Research Report). The associated price target is HK$5.50.
Wayne Fung has given his Hold rating due to a combination of factors surrounding Zoomlion Heavy Industry Science & Technology Co. The company’s 2023 net profit growth of 51% year-over-year, aligning with its pre-announced profit range, and a generous dividend payout ratio of 78% with a 7% yield based on the current price, demonstrate financial stability. However, Fung notes that the stock’s recent rally may have already factored in much of this positive financial performance, suggesting limited upside potential in the near term.
Furthermore, while Zoomlion’s aggressive overseas expansion strategy led to a substantial revenue increase, especially in the Middle East and Middle Asia, Fung believes that the current valuation adequately reflects this growth. The company’s overseas revenue, which now constitutes a significant portion of total revenue, benefits from a higher gross margin compared to its domestic business. Despite these promising developments and upward revisions of future earnings forecasts, Wayne Fung maintains a Hold rating, indicating that the current share price may already encompass the optimistic outlook he has for the company’s future performance.
In another report released on March 28, Morgan Stanley also maintained a Hold rating on the stock with a HK$5.10 price target.
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Zoomlion Heavy Industry Science & Technology Co (ZLIOF) Company Description:
Zoomlion Heavy Industry Science & Technology Co. Ltd. engages in the research and development, manufacture and sale of construction machineries and agricultural machineries. It operates through the following segments: Construction Machinery, Agricultural Machinery, and Financial Services. The Construction Machinery segment consists of concrete machinery sub-segment, crane machinery sub-segment, and others. The Agricultural Machinery offers a range of agricultural machineries, including tractors, grain harvesters, and drying machines. The Financial Services comprises of finance lease services to customers for purchasing machinery products of the group, and from other vendors. The company was founded by Chun Xin Zhan in 1992 and is headquartered in Changsha, China.
