Incident: According to the company's official account, the Middle East market signed a new order of more than 200 million yuan and received an intended order of more than 500 million yuan.
Key points of investment
“End-to-end”, digitalization, and localization helped the Middle East market cut more big orders. Overseas business layout accelerated. In November 2023, Zoomlion Heavy Industries Overseas New Product Promotion Conference was successfully held in Dubai, UAE and Dammam, Saudi Arabia. About 40 leading local industry customers were invited to attend the conference. At the conference, the company launched a number of new customized cranes for the Middle East region. Among them, the ZRT850 and ZRT900V-1 off-road tire cranes built for oilfield operation scenarios attracted much attention. At the event site, 85 devices of various types were signed, the total order amount exceeded 200 million yuan, and intended orders for more than 200 units totaling more than 500 million units were received. The new overseas business system based on “end-to-end”, digitalization, and localization has achieved remarkable results. The company continues to increase its overseas business layout. Turkey added several new outlets in November, and subsidiaries in Qatar, Kuwait, and Iraq have been included in investment and construction plans.
The revenue side growth rate in the first three quarters was significantly superior to the industry, leading the industry to achieve revenue of 35.514 billion yuan in the first three quarters of 2023, up 15.87% year on year; net profit to mother of 2,855 billion yuan, up 31.65% year on year; revenue of 11.439 billion yuan, up 22.5% year on year, and net profit of 815 million yuan year on year, up 79.98% year on year. The market share of leading products, lifting machinery and concrete machinery, is progressing steadily, compounding emerging businesses and rapid expansion in overseas markets, supporting the company to buck the trend and exceed expectations.
Overseas market location advantage: Demand from the Middle East and Russian regions is expected to continue to be strong, supporting high export growth. 2023H1's overseas revenue will increase by 115%, and achieve explosive growth. It accounts for 35% of total revenue, accounting for an increase of 17pct. Overseas business grew strongly, and effective breakthroughs were made in key markets. Localization development in key countries such as the United Arab Emirates, Saudi Arabia, Turkey, Russia, Kazakhstan, and Brazil has achieved remarkable results, and sales performance increased by more than 200% year on year. The company's main export revenue comes from the Middle East, Russian-speaking regions, etc., and internationalization is expected to continue to break through. Oil-producing countries such as Turkey, Saudi Arabia, and the United Arab Emirates are vigorously promoting infrastructure construction. Demand is growing rapidly, and infrastructure demand is relatively sustainable. At the same time, the competitiveness of the company's products has improved, and engineering cranes have become the brand with the highest market share in the Middle East and Russian-speaking regions, and built products to maintain the top position in the Turkish, Indian and Korean markets.
As the market layout in Europe, Africa, Latin America, including Australia progresses, it is expected to continue to support the company's high export growth.
Product structure advantages: Demand for core products, automobiles and tower cranes, is expected to stabilize. According to statistics from the Construction Machinery Industry Association, the truck crane company sold 1,566 units in November, down 9.16% year on year, and the decline continued to narrow. Sales volume in January-November was 2,2763 units, down 6% year on year. The tower crane industry sold 1,069 units in November, down 39% year on year. January-November sales volume was 17,267 units, down 12% year on year. Demand in the automobile and tower crane industry is expected to gradually stabilize, and overall performance is significantly superior to excavators. In 2022, the company's revenue from cranes, concrete machinery, and earthmoving machinery accounted for 46%, 20%, and 8%. The product market share was further strengthened, and it was less affected by the decline in demand in the excavator industry. Excavators and high machinery are all emerging business segments of the company. In the first half of the year, CIDA's domestic market share doubled year on year, and overseas revenue increased 174% year over year. High-tech has the largest market share of domestic small and medium-sized customers. With the construction and commissioning of the Mexican plant, the overseas market for high-tech machinery is expected to expand rapidly.
Profit forecast: Net profit from 2023 to 2025 is expected to be 3.5 billion, 4.5 billion yuan, and 6 billion yuan, an increase of 52%, 29%, and 33% over the previous year. PE is 16, 13, and 9 times, maintaining the purchase rating.
Risk warning: 1) Infrastructure investment and housing commencement fell short of expectations; 2) Exports fell short of expectations