报告名称：Zoomlion Heavy(01157.HK)Safety margin strengthened investment value emerging
报告类型：港股研究
报告日期：2016-01-22
研究机构：招商证券(香港）
股票名称：中联重科
股票代码：000157,01157
页数：6
简介：Since declining raw material prices due to used machinery saleshave yet to reflect on cost side, we believe Zoomlion’s profitabilityis undervalued; gross margin to rebound upon inventory clearance
Operating cash flow turning positive and impairment losses writeback showing healthy declining trend of receivables and inventory
We remain neutral towards construction machinery industry, butthe stock’s value is already emerging after recent plunge. Trading at0.37x 2016E P/B, we see sufficient margin of safety; upgrade to BUY
Actual profitability level is being undervalued
The main reason why the declining raw material prices had not beenreflected on cost side was due to the sales of foreclosed machinery, whilethe raw material prices of used machinery would date back to a few yearsago and such sales would also slow down the pace of normal inventoryturnover. Though Zoomlion.s cost side will still be affected by usedmachinery sales in 2015-16, we believe its gross margin will graduallyrise in the long run with the clearance of inventory.
Receivables and inventory not optimistic yet, but withobvious signs of improvement
3Q15 adjusted (excluding CheryHM) total receivables and inventory fell4.9% YTD and 4.6% YoY. Though the decline was relatively mild, it wasthe first impairment losses write back since 2012 and the first positiveoperating cash flow over the past five quarters for the company.
Industry outlook remains neutral, but value emerging
We maintain the sales of construction machinery industry will be verydifficult to see substantial improvement in the next three years, but wealso see the company.s current profitability is being undervalued. Signs ofimprovement in cash flow and receivables have already emerged and theworst is over. The possibility for 2015 operational figures to surpassexpectation is rather high. We reiterate 0.5x P/B as a reasonable safetymargin. With the exchange rate volatility, TP is lowered to HK$3.15,implying 0.5/0.49/0.49x 2015-17E P/E. As the stock has already droppedto 0.38x P/B, we upgrade its rating to BUY.

下载地址：Zoomlion Heavy(01157.HK)Safety margin strengthened investment value emerging