Fitch rates Zoomlion notes BBB-

Fitch Ratings said it assigned Zoomlion Heavy Industry Science and Technology Co. Ltd. a BBB- long-term foreign-currency issuer default rating with stable outlook, as well as a BBB- foreign-currency senior unsecured rating.

The agency also assigned an expected rating of BBB- to the proposed dollar senior unsecured bonds to be issued by Zoomlion H.K. SPV Co., Ltd., which will be unconditionally and irrevocably guaranteed by Zoomlion.

Zoomlion's ratings are supported by its scale, market leadership and profitability, the agency said.

Zoomlion's strong brand name, technology leadership, commitment to research and development, and efficient distribution and service networks have contributed to EBITDA margins consistently higher than 16% over the past five years, the agency added.

In addition, Zoomlion's low operational and financial leverage lend it significant flexibility to mitigate demand cyclicality, Fitch said.

The company's adjusted gross leverage was below 2.0x.

The ratings are constrained by Zoomlion's exposure to the highly cyclical construction industry, lack of diversification away from China and negative free cash flow generation, the agency noted.

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