Sales Forecast Zoomlion’s chairman and chief executive officer, Zhan Chunxin, said in a Nov. 15 interview in Hong Kong that slower expansion in Chinese demand for building equipment will continue next year because of waning economic growth and cutbacks in railway building. Meeting a 50 billion yuan ($7.9 billion) sales target this year will be “challenging,” he said. Policy makers in Beijing are taking steps to support growth in the second-largest economy, which may improve investor sentiment toward the construction industry, according to Manulife Asset Management. The People’s Bank of China cut the amount of cash banks must keep in reserve for the first time since 2008 on Nov. 30, to 21 percent from a record 21.5 percent. Zoomlion shares have dropped 42 percent this year, bringing its market capitalization to HK$70.9 billion ($9.1 billion), data compiled by Bloomberg show.
Yields Rise The company’s 6.5 percent yuan-denominated bonds due in April 2016 yield 6.09 percent, up from 5.7 percent at the end of 2010, according to data compiled by Bloomberg. The yield on JPMorgan Chase & Co.’s index of corporate debt in emerging markets has climbed to 6.25 percent from 5.8 percent. Zoomlion is rated AA- by Beijing-based Dagong Global Credit Rating Co., the fourth-highest investment grade, according to data compiled by Bloomberg. It isn’t rated by Standard & Poor’s, Moody’s Investors Service or Fitch Ratings, data compiled by Bloomberg show. Zoomlion’s valuation in the stock market is low relative to its history and peers, according to data compiled by Bloomberg. The company’s Hong Kong-listed shares trade for 5.6 times profits, compared with a historical average of 11 times, the data show.
Sany Heavy, Caterpillar Sany Heavy Industry Co. (600031), China’s biggest maker of construction equipment, trades at 10 times earnings in Shanghai and has a market value of $14 billion. Peoria, Illinois-based Caterpillar Inc. (CAT), the world’s largest construction and mining- equipment maker, is valued at 13 times profit in New York and has a market capitalization of $60 billion. Short sales of Zoomlion slipped to 20 percent of shares outstanding on Dec. 8 from a high of 22 percent on Nov. 22, according to New York-based Data Explorers, which makes estimates by analyzing securities lending data from custodian banks and fund managers. Bets against Caterpillar are about 1.4 percent of shares outstanding, the data show. Short selling of Sany Heavy’s shares isn’t allowed in Shanghai. The company said it delayed plans for a Hong Kong stock sale in September.
2011 Media Report Villanova School of Business Page 246