Sluggish overseas revenue growth in 3Q26 due to wars

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR <GO> OR http://www.cmbi.com.hk 1 MN 30 Oct 2026 CMB International Global Markets | Equity Research | Company Update Zoomlion (1157 HK/000157 CH) Zoomlion (1157 HK/000157 CH) - Sluggish overseas revenue growth in 3Q26 due to wars Sluggish overseas revenue growth in 3Q26 due to wars China Capital Goods 12-mth Price Performance Source: FactSet Related reports: Capital Goods - Decent export growth of earth-moving machinery in Sep; Domestic excavator sales improved – 13 Oct 2026 (link) Capital Goods - Key takeaways from investor calls after sector pullback – 17 Sep 2026 (link) Zoomlion’s net profit in 3Q26 declined 26% YoY to RMB859mn, due to weak revenue growth (+5% YoY), lack of other gains and the increase in selling expenses. Based on our understanding, the sluggish revenue growth was due to weak overseas growth (+1% YoY in 3Q26) arising from the wars in the Middle East and Ukraine. We trim our earnings forecasts in 2026E/27E/28E by 9%/5%/3%, due to lower sales volume and higher cost assumptions. Accordingly, our TPs for Zoomlion A/H are reduced to RMB10.7/HK$8.2, based on an unchanged 2026E target P/E multiple of 18.6x for A-share and 30% discount for H-share. We maintain our target P/E as we expect the potential ending of wars will help Zoomlion resume growth. Zoomlion will host investor call at 15:00 (HKT) today.  3Q26 earnings highlights: Revenue in 3Q26 grew 5% YoY to RMB12.9bn (China +10% YoY; Overseas +1% YoY). Gross margin contracted 0.2ppt YoY to 27.8%. Given the lack of other gains in 3Q26 (~RMB388mn in 3Q25) and a 28% YoY increase in S&D expenses, EBIT dropped 32% YoY to RMB1bn. Net profit declined 26% YoY to RMB859mn.  Valuation: Our A-share target P/E (18.6x unchanged) is based on the five-year average historical P/E of 13.7x plus 1SD. Our above-average target multiple intends to reflect Zoomlion’s emerging market expansion story. Our H-share TP is based on a 30% discount to A-share.  Key risks: (1) weaker-than-expected demand in China; (2) slowdown of overseas growth due to regional conflicts; (3) input cost pressure. Earnings Summary - 1157 HK (YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 45,478 52,107 57,988 65,321 73,722 YoY growth (%) (3.4) 14.6 11.3 12.6 12.9 Adjusted net profit (RMB mn) 3,521.0 4,779.0 4,746.8 5,550.5 6,363.4 EPS (Reported) (RMB) 0.42 0.57 0.58 0.67 0.77 YoY growth (%) (1.3) 33.6 1.4 16.9 14.6 Consensus EPS (RMB) na na 0.61 0.75 0.89 P/E (x) 10.0 7.5 7.4 6.3 5.5 P/B (x) 0.6 0.6 0.6 0.6 0.6 Yield (%) 7.0 9.3 9.2 10.8 12.4 ROE (%) 7.1 8.8 8.6 9.7 10.8 Net gearing (%) 18.9 29.5 30.3 30.4 33.3 Source: Company data, Bloomberg, CMBIGM estimates 30 Oct 2026 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE 2 Figure 1: 3Q26 results highlights Source: Company data, CMBIGM estimates Figure 2: Changes in key assumptions for