Zoomlion Warns on Huge Profit Decline as it Battles for Terex

Zoomlion, HK 1157, issued a profit warning today for a 12-month drop in profit from (83%) to (92%).

zoomlion profit warn

Despite this, it has suspended trading as it tries to outbid Finland’s Konecranes, KCR1V:FH,  with a $3.3B cash offer for US based Terex, TEX.  Zoomlion, with a market cap of $4.8B, has been hit hard by the China construction slowdown despite attempts to diversify into other areas including environmental and agricultural equipment.  I’d agree with skepticism presented in this Reuters article,  by analyst William Blair and Konecranes’ chairman regarding Zoomlion’s internal ability to finance the all cash deal. The market is also skeptical, with TEX at $22.4 for a market cap of $2.4 billion; well below the offer by Zoomlion.

None of these three stock have had stellar returns – Terex with a 12 month return of .68% due mainly to the takeover battle. Zoomlion down 28% over the last 12 months vs. the Hang Seng’s drop of 16.9%.  Konecranes dropped 22% while the omx Helsinki index rose 2%. Konecrane’s last reported market cap was about $1.4B US.

 

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