Zoomlion’s Overseas Revenue Versus Total Revenue
Zoomlion’s earnings have declined consecutively over the past three years, largely due to a substantial drop in revenue from its construction machinery business. We expect 2015 to mark a trough, with its bottom-line falling into negative territory (we estimate a net loss of Rmb1,095m) due to a continued drag from construction machinery sales.
In 2016 and 2017, we estimate the company’s environmental machinery and agricultural machinery sales growth will offset the decline from its construction machinery segment鈥攖his could lead to 5-6% YoY revenue growth. As environmental machinery’s GPM is higher than that for construction machinery, the company’s overall GPM could improve from 17.8% in 2015E to 18.9% in 2017E. Accordingly, we forecast Zoomlion’s net loss will narrow to Rmb622m in 2016 and recover to a net profit of Rmb64m in 2017.
