Zoomlion (1157 HK) Summary
Core Content
Zoomlion has announced an agreement to inject its 100% interest in Zoomlion Aerial Machinery into Shenzhen RoadRover Technology (002813 CH, NR). This transaction is at the preliminary stage and involves RoadRover issuing shares to existing shareholders of Zoomlion Aerial Machinery as consideration. The spin-off aims to unlock value for Zoomlion's AWP (Aerial Work Platform) business and potentially improve its valuation, which would help reduce future funding costs for capacity expansion.
Zoomlion is currently the controlling shareholder of RoadRover, holding 53.82% of its shares, while it owns 61.43% of Zoomlion Aerial Machinery. The spin-off would reduce its effective interest in the AWP segment, allowing for better focus and valuation for the business.
Estimated Valuation of Zoomlion Aerial Machinery
- 2022E Consolidated Revenue Forecast: RMB5bn
- Valuation Assumption: 4x 2022E P/S (Price-to-Sales ratio)
- Estimated Total Valuation: RMB20bn
Key Financial Highlights
Earnings Summary (2019A–2024E)
| Metric |
2019A |
2020A |
2021A |
2022E |
2023E |
2024E |
| Revenue (RMB mn) |
43,307 |
65,109 |
67,132 |
40,419 |
43,970 |
47,885 |
| Adjusted Net Profit (RMB mn) |
4,381 |
7,296 |
6,303 |
2,824 |
3,598 |
4,118 |
| EPS (Reported) (RMB) |
0.97 |
0.76 |
0.33 |
0.41 |
0.47 |
0.51 |
| P/E (x) |
7.3 |
6.5 |
9.4 |
11.7 |
9.2 |
8.0 |
| P/B (x) |
0.9 |
1.1 |
1.1 |
0.6 |
0.6 |
0.5 |
| Yield (%) |
0.0 |
8.5 |
4.5 |
3.8 |
4.8 |
5.5 |
| ROE (%) |
11.1 |
17.2 |
12.4 |
5.1 |
6.5 |
7.1 |
Revenue Growth (2019A–2024E)
| Metric |
2019A |
2020A |
2021A |
2022E |
2023E |
2024E |
| YoY Growth (%) |
50.9% |
50.3% |
3.1% |
(39.8%) |
8.8% |
8.9% |
Profitability Metrics
| Metric |
2019A |
2020A |
2021A |
2022E |
2023E |
2024E |
| Gross Profit Margin |
30.0% |
28.6% |
23.6% |
21.1% |
22.3% |
22.8% |
| EBITDA Margin |
15.9% |
14.5% |
12.1% |
9.6% |
11.5% |
11.8% |
| Adjusted Net Profit Margin |
10.1% |
11.2% |
9.4% |
7.0% |
8.2% |
8.6% |
| ROE (%) |
11.1% |
17.2% |
12.4% |
5.1% |
6.5% |
7.1% |
Key Financial Ratios
| Ratio |
2019A |
2020A |
2021A |
2022E |
2023E |
2024E |
| Net Debt to Equity (x) |
0.3 |
0.1 |
(0.0) |
0.1 |
0.1 |
0.1 |
| Current Ratio (x) |
1.6 |
1.4 |
1.5 |
2.2 |
1.4 |
2.1 |
| Receivable Turnover Days |
240.0 |
190.6 |
235.3 |
340.0 |
325.0 |
316.0 |
| Inventory Turnover Days |
128.4 |
103.7 |
100.2 |
125.0 |
125.0 |
120.0 |
| Payable Turnover Days |
245.6 |
256.7 |
274.0 |
270.0 |
270.0 |
270.0 |
Stock Data
| Metric |
Value |
| Market Cap (HK$ mn) |
38,356.8 |
| Avg 3 mths t/o (HK$ mn) |
3.4 |
| 52w High/Low (HK$) |
5.80/2.53 |
| Total Issued Shares (mn) |
8,678.0 |
Analyst Recommendations
- Rating: BUY
- Target Price: HK$5.24
- Previous TP: HK$5.24
- Up/Downside: 18.6%
- Current Price: HK$4.42
Shareholding Structure
| Holder |
Percentage |
| SASAC of Hunan Province |
15.0% |
| Management team |
8.0% |
Summary of Key Points
- Spin-off Plan: Zoomlion is planning to spin off its AWP business into RoadRover.
- Valuation Potential: If the spin-off is successful, Zoomlion Aerial Machinery could be valued at RMB20bn based on a 4x 2022E P/S.
- Financial Performance: Revenue growth has been volatile, with a significant drop in 2022E, but profitability metrics show improvement in recent years.
- Investment Recommendation: The analyst recommends a BUY rating with a target price of HK$5.24.
- Risk Disclosure: The report includes disclaimers and disclosures regarding the potential risks and conflicts of interest.
