Core viewpoints
Lu Chang Technology plans to purchase a 100% stake in Zoomlion, a holding subsidiary of the company, by issuing shares, so as to realize the spin-off and listing of Zoomlion.
We believe that in the short term, the spin-off listing will bring about changes in the shareholding ratio of the parent company to Zoomlion, and the contribution of the high-tech business to the return net profit may have an impact. In the medium and long term, the spin-off listing of Zoomlion can directly connect with the capital market, improve the financing efficiency, realize the "bigger and stronger" of the high-tech business, and the spin-off listing will also bring good investment income for the company. it is also one of the measures for the company to achieve diversified platform layout.
Event
The company signed a "significant asset restructuring intention agreement" with Lu Chang Technology, and Lu Chang Technology plans to purchase 100% of the company's holding subsidiary Zoomlion by issuing shares and raise supporting funds. The agreement signed this time is only an intentional agreement, and the specific transaction plan and terms are subject to the formal transaction agreement finally signed.
Brief comment
The spin-off and listing of Zhonglian High Machinery is conducive to the expansion and strengthening of the company's high machine business, which is a growing variety of construction machinery, and the market space continues to expand. according to the statistics of the Construction Machinery Industry Association, the cumulative sales of high machines from January to November in 2022 were 183712, an increase of 21.7% over the same period last year, significantly better than other construction machinery. The company's high-speed business is developing rapidly, and its revenue is expected to be about 5 billion yuan in 2022, of which the overseas market is about 1 billion yuan, which is in the forefront of the industry. The spin-off and listing of Zoomlion can directly connect with the capital market, improve the financing efficiency and realize the "bigger and stronger" of the high-tech business. In addition, it can also promote the reasonable valuation of the company's different businesses in the capital market. In the short term, the spin-off listing will bring about changes in the proportion of shares held by the parent company in Zoomlion, and the contribution of the return net profit of the high-tech business may be affected. In the medium and long term, spin-off listing will also bring a good return on investment for the company, and it is also one of the measures for the company to achieve diversified platform layout.
The construction machinery industry is expected to achieve small growth in 2023, and the company may have higher performance flexibility. In 2022, the construction machinery industry experienced a relatively large adjustment. Taking excavators as an example, the sales volume of excavators in 2022 was 261324, down 23.8% from the same period last year. From a market point of view, the domestic market was 151889, down 44.6% from the same period last year, and exports were 109457 units, up 59.8% from the same period last year. The domestic market declined significantly and the overseas market maintained rapid growth. Looking forward to 2023, we judge that the industry is expected to achieve small growth, in which the domestic market is still in a downward cycle, but considering the recent frequent real estate policies, marginal improvement is expected to be achieved in 2023, and the decline of the domestic market will be greatly narrowed; the prosperity of overseas markets is expected to be maintained, the competitiveness of domestic construction machinery is constantly highlighted, the market expansion of developed countries in Europe and the United States is smooth, and the share is expected to continue to increase. With the continuous improvement of the competitiveness of the company's core products, the rapid growth of new products, the overseas market layout has entered the harvest period, and it is expected that the performance elasticity will also be higher than the industry average.
Investment suggestion
It is estimated that from 2022 to 2024, the company's net profit will be 24.71,40.25 and 6.093 billion yuan respectively,-60.59%, + 62.88% and + 51.39% respectively compared with the same period last year, corresponding to PE 20.33x, 12.48x and 8.25x respectively, maintaining the "buy" rating.