UBS And Goldman Sachs Raise Zoomlion’s Target Price But Daiwa Lowers It
UBS raised its target price for Zoomlion (Hong Kong Stock Code 01157) to HK$12.8 from HK$12.3, and maintained its “buy” rating. The house noted that Zoomlion is awarding senior management and key personnel share options on condition that the company meets its performance target, which it set for NPAT to grow not less than 12% pa in 2013-15. UBS believes the performance target in the incentive scheme helps remove uncertainties by giving clear guidance to the market. The house also expects a mild recovery in 2013.
Daiwa Research lowered its target price for Zoomlion Heavy Industry to HK$11.2 from HK$13.34, and maintained its “outperform” rating. The research house lowered its 2012 net profit estimate by 8% to RMB7.7bn given Zoomlion’s defensive strategy in 4Q2012. It also trimmed its 2013-14 net profit estimates to take into account the amortisation of RMB849m in non-cash expenses under the stock incentive plan. But Daiwa continues to favour Zoomlion in view of its strong balance sheet, operating scale and valuation discount based on 2013 PER. It believes the company will emerge from the ongoing industry consolidation as a stronger player, as weaker players eventually exit.
Goldman Sachs raised its target price for Zoomlion to HK$13.3 from HK$11.3, and maintained its “buy” rating. The research house said it visited Zoomlion early this week, and the company is now guiding 15%-20% top line growth in 2013 with RMB9bn net profit. Management also commented that 4Q2012 working capital management continued to improve. Goldman forecast more cautious +10%/+9% revenue/net profit growth in 2013 mainly due to a lower base in 2012. The house revised its 2012/13/14 EPS forecasts for Zoomlion by -8%/-9%/-9% from RMB1.16/1.28/1.49 to RMB1.07/1.16/1.36.
Zoomlion ended up 0.4% to HK$10.10.