Shenwan Hongyuan released a research report forecasting that Zoomlion Heavy Industry Science And Technology Co.,Ltd. (01157) will achieve operating revenues of 53.264 billion yuan, 61.667 billion yuan, and 70.777 billion yuan for the years 2025 to 2027, representing year-on-year growth of 17.12%, 15.78%, and 14.77%, respectively. Net profit attributable to shareholders is projected to be 4.849 billion yuan, 6.300 billion yuan, and 7.841 billion yuan for the same period, with corresponding growth rates of 37.72%, 29.93%, and 24.46%. The bank selected comparable companies in the same industry—Sany Heavy Industry, XCMG Machinery, and Liugong—which have average price-to-earnings (P/E) ratios of 19x, 15x, and 12x for 2025-2027, respectively, and a current average price-to-book (P/B) ratio of 2.1x. In contrast, Zoomlion's P/E ratios for 2025-2027 are estimated at 12x, 9x, and 7x, with a current P/B ratio of 1.0x. The bank considers the company's valuation to be significantly undervalued. Applying a 2026 P/E ratio of 15x implies a market capitalization of 92.1 billion yuan, suggesting a 57% upside potential from the current market cap of 58.8 billion yuan. Consequently, Shenwan Hongyuan initiates coverage with a "Buy" rating. The main points of the report are as follows.
As a leader in the construction machinery whole-machine brand sector and a successful model of a mixed-ownership enterprise, the company originated from the Changsha Construction Machinery Research Institute. It was formally established in 1992, listed on the A-share market in 2000, and completed its A+H share structure in 2010. The company's core strengths lie in concrete machinery and hoisting machinery, with subsequent expansions into earthmoving machinery, agricultural machinery, aerial work platforms, mining machinery, and robotics. This has formed a diversified business system primarily focused on construction machinery, with synergistic development in agricultural machinery and financial services. Today, the company's main products span 15 major categories, 75 product series, and 745 model types, supported by 29 domestic industrial parks and 10 overseas R&D and manufacturing bases. Through a holistic listing strategy, overseas factory establishment, and the acquisition of high-quality assets, the company has accelerated onto a global fast track, establishing itself as a pioneer and leader in the internationalization of China's construction machinery industry.
The domestic construction machinery sector is experiencing a rotational recovery, while the overseas market holds significant potential. 1) Domestically: The area of new real estate construction starts has been declining for six years, and signals of a bottom may be emerging. Data from Pangyuan Tower Crane's ton-meter utilization rate showed significant improvement in the second half of 2025, indicating a recovery in equipment utilization rates for ongoing real estate projects. Considering the duration and magnitude of the decline, new construction starts are likely nearing their bottom. The year 2026 marks the beginning of the "15th Five-Year Plan" period; bolstered by policy support and the concentrated implementation of major projects, infrastructure investment growth is expected to stabilize and rebound. 2) Internationally: The North American construction machinery market is approaching the end of its destocking cycle, with new orders showing marked year-on-year improvement. Overall demand in Europe remains stable, with incremental demand coming from electrified products. Regions like Africa and Latin America are experiencing robust demand driven by mining, infrastructure, and real estate. From a product sales perspective, following a year of improvement in excavator data, crane sales are also showing signs of recovery. By 2026, a simultaneous recovery is anticipated for both excavator and non-excavator segments, alongside synchronized growth in domestic and international markets.
The company is pursuing a dual strategy focused on both products and markets to forge embodied intelligence as its third growth curve. 1) Products: The revenue contribution from its traditional core products, cranes and concrete machinery, is expected to decrease from over 75% to around 50%, while earthmoving machinery, agricultural machinery, aerial work platforms, and mining machinery continue to provide incremental contributions. 2) Markets: The strategy is evolving from simple exports to a comprehensive "going global" approach, constructing an "end-to-end, digitalized, localized" overseas strategy. The company has already established over 30 primary business hubs and more than 430 secondary and tertiary network points globally, employing approximately 5,000 local staff. 3) Future Industries: Leveraging the trend of general artificial intelligence and its own industrial technology accumulation, the company is proactively promoting the application of embodied intelligence in construction machinery, agricultural machinery, and special equipment, aiming to establish this as its third major growth trajectory.
Risk warnings include potential macroeconomic fluctuations, intensifying industry competition, defaults by end customers, and foreign exchange rate volatility.
