Zoomlion (000157): High growth in line with expected dividend ratio of 97%

The 2018 results are in line with our expectations of the 2018 results announced by Zoomlion: operating income of 287.

0 ppm, an increase of 23 in ten years.

3%; net profit attributable to mother 20.

2 ‰, an increase of 51 in ten years.

6%, corresponding to a relative profit of 0.

26 yuan, in line with our expectations.

In the fourth quarter of 2018, the company’s operating income and net profit attributable to its parent were 76.

6/7.

1.7 billion, an annual increase of 41.

5% / 1,345.

杭州桑拿8%.

Construction machinery grew at a high speed, and gross profit margin improved significantly.

2H18’s crane machinery, concrete machinery, and financial services revenues were 68.

2/44.

5/3.

0 ppm, an increase of 84 in ten years.

8% / 20.

1% / 17.

0%, agricultural machinery business revenue fell 26 year-on-year.

5%, a decline of 13 narrower than 1H18.

5ppt.

Thanks to the clearing of second-hand equipment, optimization of product structure, and price increases of tower cranes and other products, lifting in 2H18, the gross margin of concrete machinery was 29.

7% / 26.

3%, an increase of 4 per year.

6/6.

4ppt.

In 2018, the company’s comprehensive gross profit margin was 27.

1%, an increase of 5 per year.

7ppt.

Cash flow from operating activities increased quarter by quarter.

In the fourth quarter of 2018, the company’s sales and management (including R & D) expense ratios decreased by 4 respectively.

5/1.

5ppt, the financial expense ratio increases by 2 every year.

0ppt, mainly due to the 4Q18 company’s short-term gains to repay medium-term notes due in 2019.

In 2018, the company’s total expense ratio decreased by 4 in total.

9ppt.

In 2018, the company’s net cash inflow from operating activities was 50.

6 billion, an increase of 77 in ten years.At 6%, the scale of net inflows in the first to fourth quarters increased quarter by quarter, mainly due to the significant decrease in accounts receivable and inventory turnover days.

Development trend In 2018, a high proportion of dividends will continue.

The company announced that the cash dividend distribution for 2018 was 19.

500 million yuan, the dividend payment rate reached 96.

65% (117% in 2017), the dividend yield of A / H shares is 5 respectively.

6% and 7.

3%.

The company currently has sufficient cash in hand, and we expect that a higher proportion of dividends in the future is still worth looking forward to.

Sales of construction machinery industry is expected to maintain rapid growth.

From January to February 2019, the concrete pump truck and truck crane continued the high growth since last year.

We predict that the sales growth rate of the concrete machinery industry in 2019 will be 20% -30%, and the growth rate of the crane machinery industry will reach 30%.

The company’s construction machinery business is expected to maintain higher growth.

Earnings forecast We maintain our 2018 / 19e earnings forecast of 0.

39/0.

47 yuan unchanged.

It is estimated and recommended that the current A-share merger corresponding to the company’s 2019 / 20e P / E is 11.

5x / 9.

5x, H shares sustainable correspondence 2019 / 20e P / E is 8.

8x / 7.

3 times.

Maintain recommended level and A / H share target price of 5.

RMB 46/5.

11 Hong Kong dollars, A shares correspond to 14x / 12x 2019 / 20e P / E, and H shares correspond to 12x / 10x 2019 / 20e P / E, which respectively implies 22% / 31% upside.

Risks Downstream demand improved less than expected.