Investment Rating - The report maintains a "Buy" rating for Zoomlion Heavy Industry Science and Technology Co., Ltd. (01157) and raises the target price from HKD 6 to HKD 6.6, an increase of 10% [1] Core Insights - The report indicates that real estate investment remains weak in the first four months of 2025, impacting Zoomlion's traditional business. It is expected that real estate investment will improve by the end of June [1] - Despite the current challenges, the report expresses optimism regarding the company's long-term overseas growth due to increased overseas production capacity [1] - Revenue growth is projected to be between 13% and 16% year-on-year for the years 2025 to 2027, with gross profit margins expected to be between 28.4% and 28.8% [1]

Financial Performance - In 2024, the company's operating revenue was approximately RMB 45.48 billion, a decrease of 3.39% compared to RMB 47.07 billion in 2023[17]. - The net profit attributable to shareholders was approximately RMB 3.52 billion, reflecting a slight increase of 0.41% from RMB 3.51 billion in the previous year[17]. - The net profit after deducting non-recurring gains and losses was approximately RMB 2.55 billion, down by 5.70% from RMB 2.71 billion in 2023[17]. - The net cash flow from operating activities decreased by 21.03% to approximately RMB 2.14 billion, compared to RMB 2.71 billion in 2023[17]. - The total assets at the end of 2024 were approximately RMB 123.75 billion, a decrease of 5.44% from RMB 130.86 billion at the end of 2023[17]. - The net assets attributable to shareholders increased by 1.29% to approximately RMB 57.14 billion, compared to RMB 56.41 billion at the end of 2023[17]. - The company achieved a revenue of RMB 45.478 billion in 2024, a decrease of 3.39% compared to 2023's RMB 47.075 billion[24]. - The net profit attributable to the parent company was RMB 3.521 billion, down 0.82% from RMB 3.550 billion in the previous year[24]. - The company's leverage ratio improved to 51.66% in 2024 from 54.80% in 2023[18]. - Non-current assets decreased to RMB 49.234 billion in 2024 from RMB 52.819 billion in 2023[19]. - Current assets also declined to RMB 74.478 billion in 2024 from RMB 78.006 billion in 2023[19]. Strategic Focus and Development - The company is focusing on accelerating the transformation and upgrading of its strategic industries, particularly in new energy and new materials[12]. - The company aims to enhance its global development strategy, emphasizing "end-to-end, digitalization, and localization" in overseas markets[12]. - The company plans to continue its digital transformation to improve core competitiveness in R&D, manufacturing, management, sales, and service[14]. - The company is committed to building a world-class advanced manufacturing hub to create greater value for customers and returns for shareholders[14]. - The company maintained a strong market position in traditional product lines such as concrete machinery and construction cranes, with a focus on risk management and resource optimization[26]. - The company expanded its product range in earthmoving machinery, achieving significant growth in the domestic market, particularly in the 100-ton and above excavator segment[27]. - The company led the domestic market in aerial work machinery, with a 90% penetration rate of electric products and a comprehensive product lineup[28]. - The agricultural machinery segment saw significant growth, with new products like corn and rice machines entering the market after successful upgrades[30]. - The company ranks first in the industry for patent applications related to big data and cloud computing, establishing a leading position in the industrial internet and embodied intelligence sectors[32]. International Expansion and Manufacturing - In 2024, overseas revenue grew by over 30% year-on-year, achieving a historic milestone where overseas income accounted for more than half of total revenue[33]. - The company has established 11 overseas production bases across 8 countries, enhancing its global manufacturing network and supporting continuous innovation[36]. - The company has launched 4 major intelligent factories and over 360 intelligent production lines, contributing to the development of a significant advanced manufacturing base[38]. - The company has completed over 200 key technologies for intelligent production lines, showcasing its strong capabilities in intelligent manufacturing technology[38]. - The company aims to achieve end-to-end digital transformation in manufacturing and supply chains, integrating AI, cloud computing, and digital twin technologies[40]. - The company has built a comprehensive overseas business system focused on end-to-end, digital, and localized operations, enhancing its competitive edge[33]. - The company has over 4,400 local employees and more than 210 service parts warehouses globally, covering over 170 countries and regions[36]. Innovation and Product Development - The company successfully developed 548 new products and overcame 355 key technologies during the reporting period, including 9 global bests and 15 industry-first products[41]. - The company launched the world's largest rated lifting torque crane with a capacity of 23,800 ton-meters, and a maximum lifting weight of 730 tons, which is currently in use for the construction of the Guangzhou Wanlong Bridge[42]. - The company introduced 40 new energy products, including the world's largest 150-ton distributed electric drive crawler crane and the industry's first modular electric direct drive concrete mixer truck[46]. - The company achieved a comprehensive energy saving of 15% with the development of a 300-ton hybrid electric drive dump truck, enhancing the green development of mining transportation equipment[42]. - The company applied for 2,054 patents during the reporting period, ranking first in the industry for patent strength among Chinese enterprises[48]. - The company has developed a hybrid power distributed electric drive tractor with a low fuel consumption of 1.55L per mu, providing a comfortable driving experience with a noise level of 79dB[44]. - The company has completed over 20 key component and equipment R&D projects in the new energy sector, achieving industry-leading technology levels[46]. - The company has established a total of 210 new energy products for sale by the end of 2024, covering various leading product categories[46]. - The company led the release of 2 international standards and 4 national standards in 2024, becoming a dominant force in industry standard-setting[48]. Employee Engagement and Welfare - The company employs approximately 31,783 employees as of December 31, 2024[71]. - The company has a distributable reserve of RMB 26.442 billion as of December 31, 2024[74]. - The company aims to enhance employee cohesion and core combat capabilities through talent introduction, training, and incentives[194]. - The company maintains a 100% labor contract signing rate and provides comprehensive social insurance coverage for all employees[195]. - In 2024, the company provided assistance to 88 employees, distributing over 3.317 million yuan in aid, including support for 18 children of deceased employees[197]. - The company hired approximately 7,297 new employees during the reporting period, increasing total employment to over 31,783[200]. - Employees under 35 years old account for 55.63% of the workforce, indicating a sustainable employment structure[200]. - The company has implemented a satisfaction evaluation platform for employee dining, maintaining a satisfaction rate above 90%[197]. - The company actively engages in employee welfare programs, including marriage and childbirth benefits, and various forms of assistance[196]. Environmental and Social Responsibility - The ESG special team is responsible for identifying significant ESG issues impacting operations and stakeholders, reporting to the board regularly[158]. - The company has identified 23 key ESG issues for this year's importance analysis, based on guidelines from the Hong Kong Stock Exchange and the SASB[164]. - The board participates in the evaluation and prioritization of important ESG matters, ensuring comprehensive reflection of the company's sustainable development progress[163]. - In 2024, the company achieved a total greenhouse gas emission of approximately 187,949.80 tons, a decrease from 206,881.91 tons in 2023, resulting in a 6% reduction in emissions per million revenue[178]. - The company successfully launched 40 new products, including the world's largest distributed electric drive crawler crane, and now has 210 new energy products on sale[172]. - The company reduced diesel consumption in 2024 compared to the previous year, leading to a significant decrease in air pollutant emissions[178]. - The total amount of hazardous waste generated in 2024 was 3,876.30 tons, down from 4,172.38 tons in 2023, with a hazardous waste density of 0.85 tons per 10 million revenue[178]. - The company established two new A-level environmental performance parks and three B-level parks in 2024, becoming the first in the Shaanxi and Hunan engineering machinery industry to achieve A-level status[170]. - The company reported a sulfur dioxide emission of 0.14 tons in 2024, down from 0.17 tons in 2023, and nitrous oxide emissions of 19.31 tons, reduced from 24.19 tons[176]. - The company implemented advanced environmental management systems and technologies, including real-time air quality monitoring and dust reduction measures[171]. - The greenhouse gas emission density was recorded at 4.13 tons per million revenue in 2024, a decrease from 4.39 tons per million revenue in 2023[178]. - The company is committed to using water-based paints and energy-efficient, low-pollution dry spraying processes in its manufacturing operations[170]. - The company has strengthened its internal controls and cost reduction measures while accelerating its green transformation[178]. - The company aims to achieve carbon peak by 2030 and carbon neutrality by 2060, aligning with national strategic goals[190]. - The company has not identified any violations of significant environmental laws and regulations during the year[191].

Financial Performance - For the year ending December 31, 2024, the group's continuing operating revenue was RMB 45.478 billion, a decrease of RMB 1.597 billion (3.39%) compared to 2023[3] - The profit attributable to shareholders for the year was RMB 3.521 billion, a decrease of RMB 0.29 billion (0.82%) from 2023[3] - Basic and diluted earnings per share for the year were both RMB 0.41, down RMB 0.02 from 2023[3] - The operating profit for the year was RMB 4.327 billion, an increase from RMB 3.835 billion in 2023[4] - The company reported a total comprehensive income of RMB 3.579 billion for the year, compared to RMB 3.916 billion in 2023[7] - The total revenue from the company's main business segments in 2024 was RMB 45,478 million, down from RMB 47,075 million in 2023, indicating a decline of 3.4%[20] - The company reported a net profit of RMB 4,009 million for the year ending December 31, 2024, compared to RMB 3,521 million in 2023, showing an increase of 13.8%[12] - The total cash dividend declared for the fiscal year 2023 was RMB 2.777 billion, based on a total share capital of 8.678 billion ordinary shares[39] - The proposed final dividend for the fiscal year 2024 is RMB 0.30 per share, totaling approximately RMB 2.603 billion, pending shareholder approval[40] Revenue Breakdown - The revenue from concrete machinery in 2024 was RMB 8,004 million, a decrease of 6.6% from RMB 8,571 million in 2023[20] - The revenue from agricultural machinery significantly increased to RMB 4,646 million in 2024, up from RMB 2,089 million in 2023, representing a growth of 122%[20] - The total revenue for the engineering machinery segment in 2024 was RMB 44,849 million, a decrease of 2.3% from RMB 46,391 million in 2023[25] - Revenue from agricultural machinery increased significantly to RMB 4,650 million in 2024, up 122.5% from RMB 2,092 million in 2023[25] - Revenue from external customers in mainland China decreased to RMB 22,164 million in 2024, down 23.5% from RMB 29,026 million in 2023[29] - Revenue from external customers outside China increased to RMB 23,314 million in 2024, up 29.4% from RMB 18,049 million in 2023[29] Expenses and Costs - Research and development expenses decreased to RMB 2.769 billion from RMB 3.441 billion in 2023[4] - The total employee costs rose to RMB 6,503 million in 2024, an increase of 19.1% from RMB 5,460 million in 2023[32] - Sales and service costs fell by 4.22% from RMB 34.109 billion in 2023 to RMB 32.668 billion in 2024[85] - Gross profit decreased by 1.20% from RMB 12.966 billion in 2023 to RMB 12.810 billion in 2024, while the gross profit margin increased from 27.54% to 28.17%[86] Assets and Liabilities - Total assets as of December 31, 2024, were RMB 123.712 billion, down from RMB 130.825 billion in 2023[9] - Current liabilities decreased to RMB 42.987 billion from RMB 49.996 billion in 2023[10] - The net asset value increased to RMB 59.802 billion from RMB 59.131 billion in 2023[10] - The company's total equity as of December 31, 2024, was RMB 59,802 million, an increase from RMB 59,131 million at the end of 2023[12] - The group's accounts receivable decreased to RMB 31.108 billion in 2024 from RMB 35.494 billion in 2023, a reduction of 12.3%[54] - The total amount of accounts payable was RMB 8,830 million in 2024, down from RMB 11,215 million in 2023, a decrease of 21.3%[68] Investments and Shareholder Returns - The company repurchased ordinary shares worth RMB 1,085 million during the year 2023[11] - Cash dividends paid out in 2023 amounted to RMB 2,641 million, reflecting a significant return to shareholders[11] - The company repurchased a total of 10,710,200 H-shares at a total cost of HKD 57,890,629, with the highest price per share at HKD 5.70 and the lowest at HKD 5.21[125] Research and Development - The company has developed 548 new products and tackled 355 key technologies during the reporting period, including 9 global bests and 15 industry-first products[108] - The company has launched 40 new energy products, including the world's largest 150-ton distributed electric drive crawler crane and the industry's first modular electric direct drive mixer truck[111] - The company is committed to strengthening research and innovation, focusing on developing high-quality, high-value, and high-safety products, while enhancing its international patent protection network[119] Market Position and Strategy - The company aims to enhance its competitive edge by optimizing its industrial structure and promoting the development of both traditional and emerging industries[96] - The company maintains a solid market position in traditional product lines such as concrete machinery and construction cranes, with ongoing improvements in overseas market presence[97] - The company achieved a comprehensive product matrix covering 1.5 to 400 tons in earthmoving machinery, with a significant market share increase in the over 100-ton mining excavator segment, ranking among the top three in the industry[99] - The company has established 11 overseas production bases across 8 countries, forming a production system covering 8 categories and 32 series[105] Governance and Management - The audit committee has held four meetings to review the company's financial performance and internal control systems for the year ending December 31, 2023[128] - The company is committed to transparency in its financial reporting and governance[129] - The board of directors includes Dr. Zhan Chunxin as the executive director and Mr. He Liu and Mr. Wang Xianping as non-executive directors[129] - Independent non-executive directors include Mr. Zhang Chenghu, Mr. Huang Guobin, Mr. Wu Baohai, and Ms. Huang Jun[129] Future Outlook - Future outlook includes potential market expansion and new product development[129] - The government is expected to increase fiscal spending significantly in 2025, which will positively impact industry demand and drive sales in the engineering machinery sector[116] - The agricultural machinery market is anticipated to grow due to national policies promoting agricultural development and the replacement of old machinery, leading to increased demand for smart agricultural equipment[116]

Financial Performance - Operating revenue for the third quarter was CNY 9,850,240,131.91, a decrease of 13.89% compared to the same period last year[5]. - Total revenue for the current period is RMB 34,385,739,092.48, a decrease of 3.19% from RMB 35,514,132,109.66 in the previous period[13]. - Net profit attributable to shareholders was CNY 850,968,940.78, an increase of 4.42% year-on-year[5]. - Net profit for the current period is RMB 3,492,352,149.85, up 14.06% from RMB 3,062,661,152.45 in the previous period[14]. - Operating profit for the current period is RMB 3,849,982,011.80, an increase of 15.7% compared to RMB 3,326,573,029.08 in the previous period[14]. - Total comprehensive income for the period was RMB 3,154,266,690.45, slightly up from RMB 3,135,707,274.50 in the previous period[15]. - Net income attributable to the parent company was RMB 2,800,930,403.25, down from RMB 2,928,102,551.39 year-over-year[15]. - Basic earnings per share increased to 0.38 from 0.34, while diluted earnings per share rose to 0.37 from 0.34[15]. Assets and Liabilities - Total assets at the end of the reporting period were CNY 128,665,701,749.82, a decrease of 1.68% from the end of the previous year[5]. - Total assets decreased to RMB 128,665,701,749.82 from RMB 130,862,389,408.99, a decline of 1.68%[12]. - Non-current assets totaled RMB 51,067,264,055.30, down from RMB 52,891,229,519.13, a decrease of 3.45%[12]. - Current liabilities decreased to RMB 48,034,817,770.30 from RMB 49,996,417,695.98, a reduction of 3.93%[10]. - The company reported a decrease in total liabilities to RMB 68,511,644,427.31 from RMB 71,695,112,198.09, a decline of 4.06%[11]. - Long-term receivables decreased significantly to RMB 13,008,723,910.16 from RMB 17,001,984,894.22, a decline of 23.41%[9]. Cash Flow - The company's cash flow from operating activities for the year-to-date was CNY 1,207,754,698.86, an increase of 5.74% year-on-year[5]. - Cash inflow from operating activities was RMB 41,976,601,703.23, compared to RMB 40,625,561,453.48 in the previous period[16]. - Cash outflow for purchasing goods and services was RMB 31,660,744,758.48, up from RMB 28,689,111,090.38[16]. - Net cash flow from investing activities was negative RMB 1,630,477,046.13, slightly worse than negative RMB 1,591,582,884.73 in the previous period[16]. - Cash flow from financing activities showed a net outflow of RMB 505,061,294.18, compared to a smaller outflow of RMB 46,946,891.03 last year[17]. - The ending balance of cash and cash equivalents was RMB 12,632,527,356.56, down from RMB 13,321,010,483.88[17]. - The company received RMB 2,683,197,338.31 in tax refunds, significantly higher than RMB 1,697,983,722.58 in the previous period[16]. Revenue Breakdown - Domestic revenue for the year-to-date was CNY 16,742,164,337.17, down 25.54%, while overseas revenue was CNY 17,643,574,755.31, up 35.42%[5]. Shareholder Information - The number of shareholders at the end of the reporting period was reported, with the top ten shareholders holding significant stakes[6]. Construction and Expenditures - The company's construction projects and expenditures increased, leading to a 37.36% rise in construction in progress[7]. - Short-term borrowings decreased by 36.03% due to repayment of maturing short-term loans[7]. - The company reported a significant increase of 3539.74% in asset disposal gains, primarily from the disposal of park storage[7]. Research and Development - Research and development expenses for the current period were RMB 1,857,376,162.39, down from RMB 2,567,568,014.85, a decrease of 27.6%[13]. Capital and Reserves - The capital reserve increased to RMB 19,413,036,051.13 from RMB 18,725,104,258.74, an increase of 3.68%[12].

Financial Performance - Revenue for the first half of 2024 reached RMB 24,535,498,960.57, representing a 1.91% increase compared to RMB 24,075,171,438.22 in the same period last year[12] - Net profit attributable to shareholders was RMB 2,288,046,921.87, marking a 12.15% increase from RMB 2,040,104,177.20 year-on-year[12] - The net profit excluding non-recurring gains and losses decreased by 12.35% to RMB 1,479,991,356.91 from RMB 1,688,492,820.41 in the previous year[12] - Basic earnings per share increased to RMB 0.28, up 12.00% from RMB 0.25 in the same period last year[12] - The total comprehensive income for the period was RMB 2,020 million, compared to RMB 2,256 million in the previous year[16] - The company reported a diluted earnings per share of RMB 0.27, an increase of 8.00% from RMB 0.25 in the same period last year[12] - The company achieved operating revenue of RMB 24.535 billion in the first half of 2024, representing a year-on-year increase of 1.91%[21] - Net profit attributable to shareholders reached RMB 2.288 billion, an increase of 10.94% compared to the previous period[19] - The total comprehensive income reported under Chinese GAAP for the six months ended June 30, 2024, is RMB 2.028 billion, compared to RMB 2.239 billion for the same period in 2023[164] Assets and Liabilities - Total assets at the end of the reporting period were RMB 130,690,024,506.75, a slight decrease of 0.13% from RMB 130,862,389,408.99 at the end of the previous year[13] - Net assets attributable to shareholders decreased by 1.00% to RMB 55,842,461,346.07 from RMB 56,407,020,348.19 at the end of the previous year[13] - The company’s leverage ratio was reported at 55.00% as of June 30, 2024, slightly up from 54.80% at the end of 2023[18] - The total equity attributable to shareholders was RMB 55,807 million, a decrease from RMB 56,371 million at the end of 2023[81] - The company’s total equity as of June 30, 2024, was RMB 58,788 million, a decrease from RMB 59,131 million at the start of the year[86] Cash Flow - Cash flow from operating activities was RMB 824,534,396.52, down 11.45% from RMB 931,174,530.98 in the previous year[12] - The net cash generated from operating activities for the six months ended June 30, 2024, was RMB 676 million, primarily due to a pre-tax profit of RMB 2.857 billion after adjustments for interest expenses of RMB 320 million and depreciation and amortization of RMB 679 million[46] - The net cash used in investing activities for the same period was RMB 1.441 billion, which included proceeds from the disposal of financial assets at fair value of RMB 1.061 billion and interest income of RMB 149 million[47] - The net cash generated from financing activities was RMB 758 million, mainly from new bank borrowings of RMB 5.952 billion and repayment of bank borrowings of RMB 4.801 billion[48] Market Performance - The company’s overseas revenue grew significantly by over 39.2% in the first half of 2024, indicating a diversification in international market presence[28] - The sales scale of agricultural machinery increased by over 112% year-on-year, with the company maintaining a leading position in the domestic market for certain products[26] - The concrete machinery, engineering hoisting machinery, and construction hoisting machinery segments maintained a solid domestic market position while enhancing overseas market scale[23] - The sales scale of earthmoving machinery grew by over 16% year-on-year, supported by a comprehensive product lineup[24] - Emerging businesses, including mining machinery and emergency equipment, saw sales growth exceeding 26% in the first half of 2024[27] Digital Transformation and Innovation - The company is focusing on digitalization, intelligence, and green transformation to enhance its competitive edge and foster new growth points[21] - The company has launched 361 new main products, with 114 achieving domestic leading and international advanced technical levels, including 22 new energy products[34] - The company has implemented 71 digitalization projects, with 11 achieving prototype validation, enhancing product competitiveness through digital technology[36] - The company is accelerating its digital transformation by adopting internet thinking to reshape management and business models[200] - The digital system enables the company to directly address the real needs of global customers, enhancing R&D innovation and product iteration[200] Shareholder Information - The total number of shares as of the reporting date was 8,677,992,236, with 99.71% being unrestricted shares[58] - The largest shareholder, HKSCC NOMINEES LIMITED, holds 18.19% of the shares, totaling 1,578,273,711 shares[59] - Hunan Xingshang Investment Holding Group Co., Ltd. owns 14.48% of the shares, amounting to 1,256,337,046 shares[59] - The employee stock ownership plan (Phase II) holds 4.89% of the shares, equivalent to 423,956,766 shares[61] - The total number of shares held by the top five shareholders represents approximately 51.70% of the total issued shares[59] Employee and Governance - As of June 30, 2024, the total number of employees was 31,430, with no significant changes in employee numbers or compensation policies compared to the 2023 annual report[49] - The board of directors did not recommend the distribution of an interim dividend for the period[50] - The company has complied with the Corporate Governance Code and has no significant deviations from the applicable provisions during the reporting period[54] Research and Development - The company applied for nearly 900 global patents during the reporting period, a 26.1% increase year-on-year, with 463 invention patents accounting for 56.3% of the total[40] - Research and development expenses were RMB 1,306 million, a decrease of 17.6% from RMB 1,585 million in the same period of 2023[97] Financial Instruments and Risks - The company has strengthened risk control measures, implementing an end-to-end management system to monitor risks at every customer and order level[41] - The company monitors the credit status of customers receiving loans and advances to mitigate risk concentration[122] - The maximum loss exposure related to bank acceptance bills endorsed to suppliers was RMB 1.266 billion as of June 30, 2024, down from RMB 1.998 billion as of December 31, 2023[120]

Financial Performance - For the six months ended June 30, 2024, the group's revenue was RMB 24.54 billion, an increase of RMB 460 million (1.91%) compared to the same period in 2023[3]. - The profit attributable to shareholders for the six months ended June 30, 2024, was RMB 2.28 billion, an increase of RMB 225 million (10.94%) compared to the same period in 2023[3]. - The basic earnings per share for the six months ended June 30, 2024, was RMB 0.28, an increase of RMB 0.03 compared to the same period in 2023[3]. - The gross profit for the six months ended June 30, 2024, was RMB 6.95 billion, compared to RMB 6.72 billion in 2023[6]. - The total comprehensive income for the six months ended June 30, 2024, was RMB 2.02 billion, compared to RMB 2.26 billion in 2023[7]. - The profit before tax for the six months ended June 30, 2024, was RMB 2,857 million, up 15% from RMB 2,485 million in 2023[25]. - The company reported a total segment profit of RMB 6,946 million for the first half of 2024, compared to RMB 6,716 million in the same period of 2023, reflecting a 3.4% increase[17]. - In the first half of 2024, the company achieved operating revenue of 24.535 billion yuan, a year-on-year increase of 1.91%, and net profit attributable to shareholders of 2.281 billion yuan, up 10.94% year-on-year[54]. Assets and Liabilities - As of June 30, 2024, the total assets of the group amounted to RMB 130.65 billion, a decrease of RMB 1.71 billion (-0.13%) compared to December 31, 2023[3]. - The total liabilities as of June 30, 2024, were RMB 71.86 billion, compared to RMB 71.69 billion as of December 31, 2023[9]. - The net asset value as of June 30, 2024, was RMB 58.79 billion, a slight decrease from RMB 59.13 billion as of December 31, 2023[9]. - The company reported a loss provision of RMB 817 million for overdue receivables as of June 30, 2024, slightly down from RMB 829 million as of December 31, 2023[43]. - Total receivables as of June 30, 2024, amounted to RMB 34.786 billion, a slight decrease from RMB 35.494 billion as of December 31, 2023, representing a decline of about 2%[36]. - The total investment in finance lease receivables as of June 30, 2024, was RMB 10.599 billion, down from RMB 12.364 billion as of December 31, 2023, reflecting a decrease of approximately 14.3%[39]. - The goodwill balance as of June 30, 2024, was RMB 2.605 billion, down from RMB 2.641 billion as of December 31, 2023, indicating a decrease of approximately 1.4%[31]. Research and Development - Research and development expenses for the six months ended June 30, 2024, were RMB 1.31 billion, a decrease from RMB 1.59 billion in 2023[6]. - Research and development expenses for the first half of 2024 were RMB 1,306 million, a decrease of 17.6% from RMB 1,585 million in 2023[17]. - A total of 1,684 research projects are underway, with 361 new products launched, including 114 products that meet domestic leading and international advanced standards[68]. - The company applied for nearly 900 global patents during the reporting period, a year-on-year increase of 26.1%, with 463 invention patents accounting for 56.3% of the total[73]. Cash Flow - As of June 30, 2024, the company had cash and cash equivalents of RMB 13.572 billion, primarily consisting of cash and bank deposits[79]. - The net cash generated from operating activities for the six months ended June 30, 2024, was RMB 676 million, influenced by a pre-tax profit of RMB 2.857 billion[80]. - The net cash used in investing activities during the same period was RMB 1.441 billion, including proceeds from the disposal of financial assets at fair value of RMB 1.061 billion[82]. - The net cash generated from financing activities for the six months ended June 30, 2024, was RMB 758 million, primarily from new bank borrowings of RMB 5.952 billion[83]. Market Performance - The concrete machinery, engineering hoisting machinery, and construction hoisting machinery maintained a solid domestic market position, while overseas business scale and market position continued to improve[56]. - The earthmoving machinery segment saw sales growth exceeding 16% year-on-year, focusing on major clients and mining sectors domestically, while expanding into emerging markets overseas[58]. - The aerial work machinery segment experienced over 17% year-on-year sales growth, with over 90% penetration of electric products and the introduction of innovative technologies[59]. - Agricultural machinery sales grew over 112% year-on-year, with the company launching new products such as corn and rice machines, and maintaining leading positions in drying machines and wheat machines[60]. - Other emerging businesses, including mining machinery and emergency equipment, achieved over 26% year-on-year sales growth, leveraging brand and platform advantages[61]. - Overseas revenue grew by over 39.2% year-on-year, with a more diversified market structure as sales in traditional regions decreased to around 36%[64]. Digital Transformation and Innovation - The company is enhancing its digital transformation, implementing end-to-end management for overseas operations, and optimizing resource sharing across global manufacturing bases[65]. - The company has established 12 smart factories and over 230 intelligent production lines, contributing to the development of a significant advanced manufacturing hub in the country[67]. - The company has completed over 140 key technologies for intelligent production lines, with 70 of them being industry-first innovations, showcasing its strong capabilities in smart manufacturing technology[67]. - The company has launched 22 new energy main engine products, including a 100-ton pure electric telescopic boom crane and a 55-ton electric excavator, enhancing its presence in the new energy machinery market[71]. - The company has developed a complete ecosystem for new energy engineering machinery, focusing on key components such as three electric systems, hydrogen energy, and refueling technologies[71]. - The company has implemented 71 digitalization projects, with 11 prototypes validated, enhancing product competitiveness through digital technology[69]. - The company has launched 88 green projects, with 28 prototypes validated, promoting energy-saving and emission-reduction technologies[70]. Corporate Governance and Reporting - The company's interim financial report for the six months ending June 30, 2024, has been reviewed by the audit committee[88]. - The interim results announcement will be published on the Hong Kong Stock Exchange and the company's website[89]. - The company will issue a mid-term report to H-share holders containing all information required by the Listing Rules[89].

Investment Rating - The report assigns an "Outperform" rating for Zoomlion Heavy Industry (1157 HK) with an expected return of over 10% in the next 12 months [9]. Core Views - The company is entering a strong profit growth phase driven by globalization and product innovation, with a compound annual growth rate (CAGR) of 67% in overseas revenue over the past three years [2]. - The outlook for the company remains positive, with expectations of a 22% profit CAGR from 2024 to 2026 [2]. - The initial target price is set at HKD 6.90, based on a forecasted earnings per share (EPS) of HKD 0.57 for 2024 and a price-to-earnings (P/E) ratio of 11 times [2]. Financial Projections - Revenue (in million RMB): - 2022: 41,631 - 2023: 47,075 - 2024F: 56,593 (20.2% YoY growth) - 2025F: 64,192 (13.4% YoY growth) - 2026F: 73,089 (13.9% YoY growth) [3] - Net Profit (in million RMB): - 2022: 2,306 - 2023: 3,506 - 2024F: 4,722 (34.7% YoY growth) - 2025F: 5,608 (18.8% YoY growth) - 2026F: 6,422 (14.5% YoY growth) [3] - Diluted EPS (in RMB): - 2022: 0.27 - 2023: 0.42 - 2024F: 0.57 (34.7% YoY growth) - 2025F: 0.68 (18.8% YoY growth) - 2026F: 0.78 (14.5% YoY growth) [3] - Dividend (in RMB): - 2024F: 0.33 - 2025F: 0.39 - 2026F: 0.44 [3] Market Performance - The stock has shown strong performance with a 12-month expected return of 18% [6]. - Absolute performance over the last 12 months is 40%, outperforming the Hang Seng China Enterprises Index by 52% [8].

Financial Performance - For Q1 2024, Zoomlion reported operating revenue of RMB 11,773,145,944.65, a 12.93% increase compared to RMB 10,425,507,345.20 in the same period last year[11]. - Net profit attributable to shareholders reached RMB 915,819,266.53, reflecting a growth of 13.06% from RMB 810,064,655.82 year-on-year[11]. - The net profit after deducting non-recurring gains and losses was RMB 777,492,556.78, which is a 19.45% increase from RMB 650,914,784.87 in the previous year[11]. - Operating profit for the current period reached RMB 1,169,999,504.05, an increase of 25.4% compared to RMB 932,750,887.64 in the previous period[32]. - Total comprehensive income for the current period was RMB 708,224,924.45, a decrease of 22% from RMB 906,862,178.50 in the previous period[34]. - Basic and diluted earnings per share both increased to RMB 0.11 from RMB 0.10 in the previous period[34]. Cash Flow and Investments - Cash flow from operating activities showed a net increase of 7.36%, amounting to RMB 307,030,468.77 compared to RMB 285,973,243.10 in the same quarter last year[11]. - Cash flow from investing activities resulted in a net outflow of RMB 971,086,637.97, an improvement from a net outflow of RMB 1,222,069,953.66 in the previous period[39]. - Cash flow from financing activities showed a net outflow of RMB 1,373,411,774.19, compared to a net inflow of RMB 137,133,656.38 in the previous period[39]. - The company reported a significant increase in cash received from sales, totaling RMB 10,178,701,315.21, down from RMB 11,777,322,372.82 in the previous period[37]. - The ending cash and cash equivalents balance decreased to RMB 11,545,478,661.80 from RMB 13,004,327,457.18 in the previous period[41]. Assets and Liabilities - The company’s total assets at the end of the reporting period were RMB 132,991,760,629.60, up 1.63% from RMB 130,862,389,408.99 at the beginning of the period[14]. - Total liabilities rose to RMB 72,945,330,233.31 from RMB 71,695,112,198.09, representing a growth of 1.74%[29]. - Long-term borrowings increased to RMB 16,822,900,877.72, up from RMB 14,944,417,590.31, indicating a growth of 12.55%[29]. - Total non-current assets reached RMB 53,902,013,475.89, compared to RMB 52,891,229,519.13 at the beginning of the period, marking an increase of 1.91%[27]. - The total equity attributable to shareholders increased to RMB 57,199,305,880.98 from RMB 56,407,020,348.19, reflecting a growth of 1.40%[29]. Revenue Breakdown - Revenue from domestic operations decreased by 9.32% to RMB 6,070,573,879.33, while overseas revenue increased by 52.85% to RMB 5,702,572,065.32, with export revenue rising by 60.95%[14]. - Total operating costs amounted to RMB 10,583,718,135.84, reflecting a rise of 10.45% from RMB 9,582,147,601.15 in the prior period[31]. Research and Development - Research and development expenses for the current period were RMB 665,436,138.10, slightly up from RMB 645,455,754.47 in the previous period, indicating a 3.73% increase[31]. Other Financial Indicators - The basic earnings per share increased by 10.00% to RMB 0.11 from RMB 0.10 in the previous year[11]. - The weighted average return on net assets improved to 1.62%, up from 1.48% year-on-year[11]. - Significant changes in financial indicators included a 81.04% increase in accounts receivable notes due to an increase in commercial acceptance bills[20]. - The company reported a net investment loss of RMB 11,751,143.95, compared to a gain of RMB 25,707,566.07 in the previous period[31]. - Deferred income tax assets rose to RMB 2,427,047,891.36 from RMB 2,302,752,231.66, an increase of 5.42%[29]. - Other comprehensive income after tax for the current period was negative RMB 312,252,847.98, compared to positive RMB 48,112,438.70 in the previous period[32]. Future Plans - The company plans to continue expanding its overseas market presence and enhance its product development capabilities[14].

Financial Performance - In 2023, the operating revenue reached RMB 47.07 billion, an increase of 13.08% compared to RMB 41.63 billion in 2022[9]. - The net profit attributable to shareholders was RMB 3.51 billion, reflecting a significant growth of 52.04% from RMB 2.31 billion in the previous year[9]. - The net profit after deducting non-recurring gains and losses surged by 109.51% to RMB 2.71 billion, up from RMB 1.29 billion in 2022[9]. - The cash flow from operating activities amounted to RMB 2.71 billion, an increase of 11.87% compared to RMB 2.42 billion in 2022[9]. - The total assets at the end of 2023 were RMB 130.86 billion, representing a 5.92% increase from RMB 123.55 billion at the end of 2022[9]. - The net assets attributable to shareholders increased by 3.04% to RMB 56.41 billion, compared to RMB 54.74 billion at the end of 2022[9]. - The basic earnings per share rose to RMB 0.43, a 59.26% increase from RMB 0.27 in 2022[9]. - The diluted earnings per share also increased by 55.56% to RMB 0.42 from RMB 0.27 in the previous year[9]. - The weighted average return on equity improved to 6.41%, up from 4.13% in 2022, marking a 2.28% increase[9]. Market Position and Product Development - The company achieved a significant increase in market share for large excavators, with domestic market share doubling year-on-year[16]. - The company is accelerating the development of electric products and expanding its product range in the large excavator segment[16]. - The construction machinery market position remains strong, with concrete machinery and engineering cranes leading in market share[15]. - The company achieved a market share of over 90% in the domestic electric aerial work platform segment, with a full product range covering heights from 4 to 72 meters[17]. - The company launched the world's highest 72-meter straight arm product, setting a new global record, and has achieved international leading levels in key technologies for electric aerial work platforms[17]. - The company has successfully developed and launched several new products, including a 5-meter electric boat bottom rust removal robot and a 26-meter high-altitude spraying robot, filling industry gaps[17]. - The company has made significant progress in the agricultural machinery sector, with the first hybrid wheat harvesting machine launched and a complete coverage of basic models in the domestic market[19]. Innovation and Digital Transformation - The company is focusing on innovation and digital transformation to enhance management efficiency and effectiveness, aiming for sustainable competitive advantages[7]. - The company is focusing on digitalization, intelligence, and green transformation to enhance growth and operational quality[14]. - The company is accelerating its digital transformation, leveraging IoT, cloud computing, big data, and generative AI to enhance operational efficiency and support business expansion[23]. - The company has established a total of 11 smart factories by 2023, with ongoing construction of 8 additional smart factories, enhancing its position in advanced manufacturing[24]. - The monthly production capacity of the "Excavator Intelligent Manufacturing Demonstration Factory" has exceeded 1,200 units, showcasing the effectiveness of its smart manufacturing initiatives[24]. - A total of 394 new products were launched during the reporting period, with 289 technology developments, of which 77.5% were related to digital, intelligent, and green innovations[28]. Corporate Governance and Employee Engagement - The company is implementing a second employee stock ownership plan to align the interests of core management with the company's long-term health, with details available in the annual report[35]. - The company plans to enhance its corporate governance structure and establish a profit-sharing mechanism for employees, aiming to improve employee cohesion and core competitiveness[57]. - The company has a 100% labor contract signing rate and provides comprehensive social insurance coverage for all employees[140]. - The company has not reported any violations of significant environmental or labor-related laws in the current year[138][147]. - The company actively engages in employee welfare programs, including marriage and maternity benefits, to enhance employee well-being[141]. Environmental, Social, and Governance (ESG) Initiatives - The ESG report is prepared in accordance with the Hong Kong Stock Exchange's guidelines and covers the period from January 1, 2023, to December 31, 2023[116]. - The company has established an ESG task force under the company secretary's office to manage and publish ESG policies, enhancing sustainable business development[118]. - The company emphasizes digitalization, intelligence, and green transformation to achieve high-quality development and enhance operational quality beyond industry standards[119]. - The company has implemented a comprehensive environmental management system, ensuring compliance with all relevant environmental laws and regulations[126]. - The company has committed to integrating energy conservation and environmental protection into its business decision-making processes[126]. - The company aims to achieve carbon peak by 2030 and carbon neutrality by 2060, aligning with national strategic goals[137]. Safety and Training - The company achieved a 100% dynamic rectification rate for major accident hidden dangers, effectively eliminating significant safety risks[151]. - A total of 30,563 employees participated in training programs in 2023, achieving a training coverage rate of 100% with an average of 45.85 training hours per employee[158]. - The company organized 761 safety awareness events, with 17,278 participants, enhancing overall safety consciousness among employees[152]. - The company has not reported any violations of occupational health and safety laws and regulations that significantly impact its operations in the current year[155]. Social Responsibility - The company invested over RMB 10 million in various social responsibility initiatives, focusing on rural revitalization, emergency rescue, and charity[190]. - The company donated RMB 2 million to the "Love Changes Destiny" charity education program in 2023, bringing the total donations over 21 years to RMB 34 million, assisting nearly 10,000 students from disadvantaged families[194]. - The company has established over 400 social service stations and 16 parts centers nationwide to provide 24/7 service guarantees to agricultural machinery users[193].

Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Views - The company reported its 2023 annual results, which met expectations, with traditional business segments showing stable quality improvements and rapid growth in emerging businesses. The outlook for the company's performance is positive [3]. - In 2023, the company achieved revenue of 47.08 billion RMB, an increase of 13.1%, and a net profit of 3.51 billion RMB, up 52.0%. The gross profit margin was 27.5%, an increase of 5.7 percentage points, and the net profit margin was 8.0%, up 2.3 percentage points [3]. - The company plans to distribute a cash dividend of 3.20 RMB per 10 shares (including tax), totaling over 2.7 billion RMB, with a dividend payout ratio of approximately 80% and a dividend yield of 3.99% [3]. - All major segments of the engineering machinery business achieved positive growth, with significant success in expanding overseas markets. The company has established over 350 secondary outlets globally and has product coverage in over 140 countries/regions, with market share rapidly increasing in countries like Saudi Arabia, Malaysia, Vietnam, and Kenya [3]. - The report is optimistic about the recovery of the domestic market in 2024, supported by various policy measures, including the issuance of a trillion RMB in government bonds and the acceleration of key projects in the real estate sector [3]. Financial Summary - Revenue (million RMB): 2023 - 47,075 (+13.08% YoY) [2] - Net Profit (million RMB): 2023 - 3,506 (+52.04% YoY) [2] - Gross Profit Margin: 2023 - 27.5% (+5.7 percentage points YoY) [3] - Net Profit Margin: 2023 - 8.0% (+2.3 percentage points YoY) [3] - PE Ratio: 2023 - 11.28 [2] - PB Ratio: 2023 - 0.75 [2]