China Specialist, Auto and Industrial Specialist

Victoria Li

20 years experience as sell side analyst focusing on China's Industrial and Auto sectors

Zoomlion (1157.HK): Tailwinds Towards Year End

Zoomlion (1157.HK): Buy on Flow Through of Construction Strength into Late Cycle Products

Zoomlion (1157.HK): Time to Switch from Sany into Zoomlion

Thematic (Sector/Industry)

China Machinery / Thematic (Sector/Industry)

We expect China construction machinery sector sales go down further in 2022E.Demand from infrastructure sector would be limited by reduced financial support from local governments on infrastructure investment. Demand from property sector would remain weak, due to tighten regulation for loans to real estate sector and weakening market demand on new properties.Demand from mining sector would be weak as well, with commodity capacity control policy. Demand from coal mining could go up in the next few months with coal mine restarts but will trend down once coal prices stabilize in line with China's carbon-neutrality strategyAlthough share prices of Zoomlion (1157.HK) and Sany Heavy (600031.CH) have been halved from their highs in 1H2021 and have priced in the down cycle, they would be under pressure with sector fundamental remaining weak in 2022E.

We expect China construction machinery sector sales go down further in 2022E.Demand from infrastructure sector would be limited by reduced financial support from local governments on infrastructure investment. Demand from property sector would remain weak, due to tighten regulation for loans to real estate sector and weakening market demand on new properties.Demand from mining sector would be weak as well, with commodity capacity control policy. Demand from coal mining could go up in the next few months with coal mine restarts but will trend down once coal prices stabilize in line with China's carbon-neutrality strategyAlthough share prices of Zoomlion (1157.HK) and Sany Heavy (600031.CH) have been halved from their highs in 1H2021 and have priced in the down cycle, they would be under pressure with sector fundamental remaining weak in 2022E.

China Construction Machinery Outlook 2022E