20230428-招银国际-中联重科-000157.SZ-1Q23_earnings_slightly_below_expectation_but_recovery_trend_largely_on_track_6页_1mb

Zoomlion (000157 CH) 1Q23 Earnings Analysis

Financial Highlights

• Revenue: Grew 4% year-on-year to RMB10.4 billion, the first annual growth since 2Q21, driven by a 123% year-on-year increase in overseas revenue.
• Net Profit: Dropped 11% year-on-year to RMB810 million, primarily due to an FX loss.
• Gross Margin: Expanded 6.3 percentage points year-on-year and 2.2 percentage points quarter-on-quarter to 26.3%, the highest level in two years, supported by lower raw material costs and improved production efficiency.

Analyst Recommendation

• Maintain BUY rating with a target price of RMB7.30 (unchanged from previous), based on a 17x 2023E P/E ratio (1 standard deviation above the 2019-upcycle average).

Key Risks

• Unexpected slowdown in infrastructure spending.
• Weaker-than-expected property construction.
• Risks associated with new business expansion.
• Rebound in steel prices.

Summary Insights

• Despite a slightly below-expectation profit due to FX losses, the company shows a recovery trend with solid revenue growth, particularly abroad. Analysts expect gradual demand recovery in construction machinery over the coming months. Overall, the outlook remains positive, with earnings potential offsetting valuation concerns.