BofA Raises Zoomlion's HK Target Price 19% to HK$10.1
Bank of America Securities reiterated its "Buy" rating for Zoomlion Heavy Industry on March 10, increasing its price target for the company's Hong Kong-listed stock (01157.HK) by nearly 19% to HK$10.1, up from HK$8.5. The bank attributed the more optimistic forecast to Zoomlion's robust export sales and an attractive valuation. Analysts also slightly raised the target for the company's A-shares (000157.SZ) to 11.1 RMB from 10.9 RMB. The positive revision reflects a bullish outlook on China's entire construction machinery sector, with leading manufacturers like Zoomlion positioned as primary beneficiaries.
Earnings Forecast Lifted as Target P/E Jumps to 14x
Underpinning the new price objective is an adjustment to Zoomlion's valuation model. BofA Securities raised its target price-to-earnings (P/E) multiple from 12x to 14x, a level that is 1.5 standard deviations above the company's five-year historical average. This rerating is justified by the firm's solid progress in developing its small excavator, mining machinery, and robotics divisions. In conjunction with the multiple expansion, the bank increased its earnings per share forecasts for Zoomlion by 3% for fiscal year 2026 and 2% for fiscal year 2027, citing upward revisions to revenue projections.
China's Machinery Sector Benefits from Exports and Policy
Bank of America's positive view extends to the broader Chinese engineering and machinery industry. The report highlights several key growth drivers, including supportive central government policies and consistent domestic demand for equipment upgrades and replacements. A crucial factor is the accelerating expansion of Chinese manufacturers into overseas markets, where they are capturing greater market share. Zoomlion's strong export performance is a direct result of this trend, positioning it to capitalize on global demand.
