Zhao Yin Guo Ji·2025-03-26 08:23Investment Rating - The investment rating for Zoomlion is maintained as BUY, despite a downward revision of the target price to RMB9.9 for A-shares and HK$7.4 for H-shares [1][5][6]. Core Views - The 2024 results of Zoomlion were below expectations, primarily due to a slowdown in overseas revenue growth, a reduction in other income, and an increase in inventory turnover days. The company is still viewed positively for its structural overseas growth strategy, particularly in emerging economies [1][4]. - The management is confident in reducing inventory levels in 2025, and there are buying opportunities following the post-results pullback [1][4]. Financial Performance Summary - For FY24, revenue decreased by 3.4% YoY to RMB45.478 billion, while adjusted net profit slightly declined by 1.3% YoY to RMB3.521 billion. The forecast for FY25 and FY26 earnings has been revised down by 7% and 8% respectively [2][4]. - The revenue breakdown for 4Q24 showed a 4% YoY decline to RMB11.1 billion, with domestic revenue dropping by 18% YoY, while overseas revenue grew by 14% YoY [4][7]. - The blended gross margin improved by 0.6 percentage points YoY to 27.5%, driven by higher margins in overseas markets [4][7]. Revenue and Profitability Outlook - The revenue forecast for FY25 is set at RMB52.999 billion, with expected growth of 16.5% YoY, followed by RMB61.848 billion in FY26 and RMB69.277 billion in FY27 [2][10]. - The adjusted net profit is projected to increase to RMB4.177 billion in FY25, RMB4.705 billion in FY26, and RMB5.229 billion in FY27, reflecting a growth trajectory despite recent challenges [2][10]. Market Position and Strategy - Zoomlion has low exposure to the domestic property sector, with only 13% of total sales in 2024 related to property. The company is focusing on infrastructure, wind power installation, and chemical plant construction for growth [4][6]. - Management plans to accelerate overseas market expansion and continue focusing on earth-working, mining, and agricultural machinery as growth drivers [4][6]. Valuation Metrics - The target price for A-shares is based on a 2025E P/E multiple of 19.5x, reflecting a historical average, while the H-share target price incorporates a 30% discount [5][6]. - The P/E ratio is projected to decrease from 13.5x in FY24 to 11.3x in FY25, indicating a more attractive valuation for investors [2][5].