1Q23 earnings slightly below expectation but recovery trend largely on track_股票频道

（以下内容从招银国际《1Q23 earnings slightly below expectation but recovery trend largely on track》研报附件原文摘录）
中联重科(000157)
Zoomlion’s net profit in 1Q23 dropped 11% YoY to RMB810mn, below ourexpectation but due largely to fx loss. On the positive side, Zoomlion deliveredrevenue growth of 4% in 1Q23, the first YoY growth since 2Q21, driven by 123%YoY increase in overseas revenue. Besides, gross margin expanded 6.3pptYoY and 2.2ppt QoQ to 26.3%. We expect a gradual recovery of constructionmachinery demand over the coming months. Maintain BUY with TP of RMB7.30.
1Q23 results highlights. Revenue grew 4% YoY to RMB10.4bn. Grossmargin reached 26.4% (the highest level in two years), driven by the declinein raw material cost and improvement in production efficiency.Administrative expense ratio increased 0.6ppt YoY to 5.4%. R&D expenseratio increased 1.9ppt YoY to 6.2%. Net finance expense was RMB124mn,versus net finance income of RMB6mn in 1Q22, as a result of therecognition of fx loss. Effective tax rate dropped 1.1ppt to 9.1%. Net profitdropped 11% YoY to RMB810mn, representing 22% of our full year forecast(run rate in 1Q22: 39%). Operating cash inflow dropped 52% YoY toRMB286mn.
Maintain BUY. Our TP of RMB7.3 is based on 17x 2023E P/E (1SD abovethe average of 12.5x since the upcycle starting 2019; up from 0.5SDpreviously). We believe our target valuation is not excessive given (1) thepotential earnings recovery; (2) the peak valuation reached 23x in the past.
Major risk factors. (1) Unexpected slowdown on infrastructure spending;(2) Weaker-than-expected property construction; (3) Risks of new businessexpansion; (4) Rebound of steel price.