Jinwu Financial News | CCB International Development Research Report believes that under the impetus of globalization and product diversification, Zoomlion Heavy Industries (01157) is entering a period of strong profit growth for many years. Looking ahead, the bank believes that global business opportunities will remain adequate. By utilizing its technical knowledge, flexible supply chain and cost leadership, Zoomlion Heavy Industries is expected to maintain strong overseas development momentum and achieve strong growth in profitability.
According to the bank, infrastructure spending will continue to support construction activities in China, and the real estate market is likely to remain sluggish for some time. China's “equipment renewal” policy should generate positive but gradual demand. The bank's basic situation is that Zoomlion Heavy Industries's sales in China will decline by a low single digit in 2024 and then resume growth in 2025. However, benefiting from effective cost reduction and industry consolidation, Zoomlion Heavy Industries's domestic profits may improve.
The bank gave it an “better than market” rating, predicting that Zoomlion Heavy Industries will achieve a compound annual profit growth rate of 22% in 2024-2026. The bank's initial target price was HK$6.90. Based on the bank's forecast of earnings per share in 2024 and a price-earnings ratio of 11 times, which is higher than the five-year average of 9 times the share, the bank believes that as the overseas growth record of Zhonglian Heavy Industries continues to extend, its prospects are brighter, and this valuation is reasonable.