|
|
|
|
|
HONG KONG, June 10, 2013 - (ACN Newswire) - Fitch Ratings issued its latest rating report a few days ago. On the back of recent universal downgrading, even rating outlook of Swireproperties (019) was lowered to "Negative" from "Stable" despite its Long-Term Issuer Default Rating (IDR) of A. On the other hand, Zoomlion (1157), though recently ridden with negative news, was still able to obtain Long-Term Issuer Default Rating (IDR) of 'BBB-' with its rating outlook remained "Stable". Zoomlion was one of those very few non state-owned enterprises as Tecent (700), Baidu, etc which have obtained ratings from Fitch Ratings, demonstrating Fitch's confidence in Zoomlion.
Fitch states in its report, that, Chinese machinery industry was sluggish in recent years, and the Chinese capital goods industry experienced a tough year in 2012 and many construction equipment manufacturers witnessed a substantial decline in sales and as a result, fixed asset investment (FAI) activities slowed and destocking continued. Yoy growth rate of fixed assets investment (FAI) dropped to 20.6% from that of 24% in 2012. However, insiders believe that, beginning late 2012, the industry started recovering due to a recovery in infrastructure spend, led to improved sales of early-stage machinery such as excavators and bulldozers. Fitch also points out that sales of later-stage machinery such as concrete equipment and cranes will recover later in 2013.
Fitch Ratings has affirmed Zoomlion's Long-Term Issuer Default Rating (IDR) of 'BBB-', outlook remained "Stable" and foreign-currency senior unsecured rating of 'BBB-', which is a reassuring news for both the Company and investors. Beginning early this year, Zoomlion has been exposed to constant suspicions of financial fraud. The Company suffered despite its efforts made on clarifications, resulting in its relatively weak stock price. However, the rating has cleared up the rumors. During the first half of 2012, Zoomlion aggressively countered industry forces by offering generous sales terms to some of its customers. The company was able to employ this strategy as it has very low financial leverage. The strategy, in conjunction with the Company's affluent cash flows, allowed the company to grab market share in a sluggish industry environment and increase its sales by 21% for the 1H2012 over the same period. However, Zoomlion started tightening its sales terms in 2H12 and as a result, sales contracted by 31.2% and 48.4% yoy in Q412 and Q113 respectively. Furthermore, Fitch emphasizes that Zoomlion's intact balance sheet is very impressive.
Fitch forecasts that Zoomlion's sales will recover gradually in 2014, slow but not a concern. However Fitch expects the company to stay disciplined on its tougher sales terms to avoid further delinquencies on its receivables, in view of the Company's receivables increased to RMB29 billion as at end-2012 from RMB20.6 billion (the same below) as at end-2011, and delinquency rate of receivables under finance lease increased to 9.25% from 2.1% over the same period. However, as noted above, its balance sheet and profitability will likely remain intact. On the other side, gross margin for Q113 was 35.6% (2012:32.3%; 2011: 32.4%), expected to maintain over the long term.
As a matter of fact, earlier its management stepped up their investment in the Company by a total of 1,937,900 shares, totaling accumulated amount of over RMB140 million, which vindicated their confidence in the Company's future. Due to volatile financial environments in recent years, failure to recovery of US economy and enduring unresolved European debt crisis, ratings of many institutions and countries have been turned down. Whereas Fitch's rating is a positive response to the management's move.
Topic: Press release summary
Source: Zoomlion Heavy Industry Science & Technology Development Co., Ltd
Sectors: Daily Finance
https://www.acnnewswire.com
From the Asia Corporate News Network
Copyright © 2024 ACN Newswire. All rights reserved. A division of Asia Corporate News Network.
|
|
|
|
|
|
|
|
