HSBC gives thumbs up to Zoomlion

Tom McGregor

Many economists are proclaiming a new era for China. They envision a transition from an agricultural and manufacturing-based economy towards a service-oriented and consumption-driven society. The land could become more urbanized as a growing middle class holds on to more white-collar employment and sales jobs.

Could this mean that blue-collar workers and farmers would get phased out? Well, that won't be the case. Although many low-waged manufacturing jobs will disappear as factories re-locate to Southeast Asia, people still need to eat. Farmers can maintain their job security and perhaps a construction boom could emerge as well.

As cities continue to expand, more skyscrapers and office building are likely to rise up and dot the landscape. Meanwhile, urban residents must go shopping and China can expect to see more supermarkets, shops and department stores opening up.

If this development does occur then construction equipment companies can reap the rewards. This could explain why the bank, HSBC, forecast a bright future for Zoomlion Heavy Industry Science & Technology Co in its recent Chinese stocks analyst report.

HSBC analysts identified seven sectors and selected seven publicly listed Chinese companies that appear headed for greater profitability in the near future. Researchers named: consumption, urbanization, innovation, environment, healthcare, culture and financial as the potential leading sector for the future of China's economy.

The Dow Jones MarketWatch, reports that, "amongst selected ways to invest in each theme, it laid out its respective picks: Henagen International Group Co HK:1044, Zoomlion Heavy Industry Science & Technology Development Co HK:1157, Lenovo Group Ltd HK:992, China Longyuan Power Group Corp HK:916, Sinopharm Group Co HK:1099, YoukouTudou Inc YOU, and China Construction Bank Corp HK:939."

Zoomlion offers some of the world's largest construction equipment machinery.

"In recent years, the giants of the world concrete pump industry have outdone each other, time and time again; on the way to the magical threshold. Scania was missioned by Zoomlion to provide a truck for the huge superstructure," according to Business Recorder.

It added, "to cope with the weight of the 7-section boom, a 7-axle chassis was required. Built by Scania in Sodertalje, Sweden, the chassis was plemented (built) by the Swedish company Laxa Special Vehicles. The 15.5 meter chassis, powered by a 620hp V8-engine, is probably the largest ever built by Scania."

The technical explanation sounds complex, but it actually reveals a significant event for the Chinese company.