20250326-招银国际-中联重科-000157.SZ-2024_results_below_expectation__Still_positive_on_the_structural_overseas_growth_trend_8页_1mb

Zoomlion (1157 HK/000157 CH) 2024 Summary and Outlook

Core Content

Zoomlion's 2024 financial results were weaker than expected, primarily due to a slowdown in overseas revenue growth, a decline in other income, and an increase in inventory turnover days. The company's overseas revenue growth was at 14% YoY in 4Q24, contributing to 52% of total revenue, a slight decrease from 57% in 3Q24. Despite this, the firm remains optimistic about its structural overseas growth strategy, particularly in emerging economies.

The company reported a 4% YoY drop in 4Q24 revenue to RMB11.1bn, with China revenue declining by 18% to RMB5.36bn, while overseas revenue increased by 14% to RMB5.74bn. The blended gross margin expanded by 0.6ppt YoY to 27.5%, driven by higher margins in overseas markets. However, the decline in non-operating income by 89% to RMB61mn led to a 19% YoY drop in EBIT to RMB519mn, and a 45% YoY decline in net profit to RMB382mn, mainly due to higher minority interest from non-wholly owned AWP business.

For the full year of 2024, revenue and net profit were down 1.2% and 0.8% YoY to RMB53bn and RMB3.5bn respectively. The company proposed a dividend of RMB0.3 per share, resulting in a pay-out ratio of 74%.

Zoomlion has limited exposure to the domestic property sector, with only 13% of total sales in 2024 attributed to property-related products. Tower cranes and truck cranes are primarily used in infrastructure, energy, and municipal projects rather than property development.

2025 Outlook

Management has not provided detailed quantitative guidance for 2025, but has outlined key strategic directions:

• Accelerated overseas market expansion.
• Continued growth in earth-working, mining, and agricultural machinery.
• A significant reduction in share-based expenses, expected to drop >50% from RMB866mn in 4Q24.
• A downtrend in other operating expenses.

Valuation and Target Price

The target price for Zoomlion A/H has been revised to RMB9.9 and HK$7.4 respectively, based on a 2025E target P/E multiple of 19.5x for A-share and a 30% discount for H-share compared to A-share. This revised valuation reflects a more conservative approach, using the five-year average historical P/E of 15x plus 1SD instead of the previous 22x P/E for 2024E.

The current price for Zoomlion A is RMB7.8, and for H is HK$6.1. The target price for A is 26.6% above the current price, while for H it is 20.9% above.

Key Financials

Key Risks

• Further weakness in property investment in China.
• A slowdown in overseas demand.
• Increase in freight rates due to uncertain US tariff policy.

Summary of Key Points

• Zoomlion's 2024 performance fell short of expectations.
• Overseas growth remains a structural driver despite the slowdown.
• The company has a low exposure to the domestic property sector.
• Management has outlined key growth areas for 2025.
• Target prices have been revised based on updated valuation assumptions.
• The firm is maintaining a BUY rating with a positive outlook on its overseas expansion strategy.