Fitch affirms Zoomlion

Fitch Ratings said it affirmed Zoomlion Heavy Industry Science and Technology Co. Ltd.'s long-term foreign currency issuer default rating, senior unsecured rating and the rating of its $600 million 6 1/8% senior notes due 2022 at B- with a recovery rating of RR4.

The outlook is stable.

Fitch said it expects Zoomlion to continue reporting strong operational performance in 2018.

“China's construction machinery sales increased strongly in 1H18, despite the government's deleveraging measures imposed since mid-2017,” the agency said in a news release.

“Zoomlion reported 1Q18 revenue growth of 21% when stripping out the contribution from its discontinued operations in 1Q17; like-for-like revenue increased by more than 50%.”

However, Fitch said it sees the current industry strength as cyclical rather than structural and believes it may not be sustainable on a multi-year basis.

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