UBS raises target price and earnings forecast for Zoomlion and LONKING for this year and next year

UBS published a research report stating that its current outlook on the Chinese construction machinery industry is more optimistic than market expectations. It believes that the current upward cycle in the industry will continue until it peaks in 2029, rather than the commonly predicted 2028 to 2029. The growth potential and strong profit resilience of companies' mining-related businesses have not yet been fully reflected in stock price performance. It is currently estimated that the global market share of Chinese equipment manufacturers in mining trucks and mining excavators will exceed 20% by 2030, and mining-related businesses may become another growth driver for companies.

The firm has given a "Neutral" rating to Zoomlion (01157.HK) and Lonking (03339.HK), with earnings per share growth forecasts for 2025 to 2026 raised to 49%, 27%, and 21%, 17%, respectively. It has listed XCMG (000425.SZ) as the industry favorite, giving it a "Buy" rating, optimistic about its high proportion of mining-related business, strong growth, and attractive valuation. UBS has also raised the target prices for Zoomlion and Lonking from HKD 6.4 and HKD 2.2 to HKD 7.8 and HKD 3.2, respectively