Zhan Chunxin: Construction Machinery and Sanitation Machinery Can't Have Both

In March this year, Zoomlion issued an announcement that it will transfer 80% of its subsidiary Zoomlion Sanitation Machinery Co., Ltd. (abbreviated as sanitation machinery). This move caused many disputes in the market. The sanitation machinery industry is recognized as a sunrise industry. Why did Zoomlion transfer this quality asset?

At the annual shareholder meeting of Zoomlion on June 29, the transfer of sanitation machinery also became the focus of many shareholders.

In the face of investors' concerns and concerns, Zhan Chunxin, chairman of Zoomlion, said that construction machinery is the real main business, and the transfer of sanitation machinery is due to the fact that “fish and bears cannot have both.”

Sanitation machinery has faced the "ceiling"

In Zhan Chunxin's opinion, there are three considerations in the transfer of sanitation machinery: First, the future of sanitation machinery needs to be bigger and stronger, and it also requires a long period of substantial financial and human investment; Second, Zoomlion currently has earthmoving machinery, concrete machinery and The three core businesses such as truck cranes also require capital investment for future development. The funds transferred from the sanitation machinery can be used just for this purpose. Third, although the sanitation machinery is transferred out, Zoomlion still holds 20% of the equity, and The transfer also does not include land assets, so the 4 billion transfer price is more appropriate.

According to the company’s introduction, the environmental sanitation machinery that Zoomlion is involved in has already faced the “ceiling” of development. The market share of road sweeping machinery, which is the leading product of environmental sanitation machinery, is nearly 60% in the country, and annual sales are only 3 billion yuan; the market share of garbage collection and transportation machinery is about 10%, and the national market size is about 8 billion. Yuan, a large number of manufacturers, most provinces have local manufacturing companies, competition is fierce, and product gross margin is low.

To further expand the environmental sanitation sector, it has faced a transition from single equipment manufacturing to new areas such as engineering services and investment operations, and the key to transformation is to make high investments.

It is understood that the investment for a waste incineration power plant with a daily processing capacity of 1,000 tons is about 400 million yuan, and the investment for a sludge treatment plant with a daily processing capacity of 200 tons is about 70 million yuan, which does not include the investment in fixed assets such as workshops. On the other hand, more investment is needed in R&D, marketing, and marketing.

Construction machinery is the real main business At present, Zoomlion has become the world's largest concrete equipment manufacturer, the world's largest manufacturer of tower cranes, and China's second largest manufacturer of truck cranes. In the next 5 to 10 years, Zoomlion’s main engineering machinery industry will participate in international competition. It will also need to invest sufficient funds and resources to achieve breakthroughs in key components and assemblies such as chassis, engines, and hydraulic transmission systems. The complete closed loop of the value chain of construction machinery is reversed by the situation of a few multinational corporations.

"By using the theory of fish and bear's paws, the two can not have both." Zhan Chunxin said that sanitation machinery is a sunrise industry, development prospects are good, but construction machinery is not a "sunshine", but also accounted for a significant share of Zoomlion revenue The real main business.

“In the future, Zoomlion will develop its own heavy-duty truck business.” Zhan Chunxin finally stated that taking into account 2015, Zoomlion’s own heavy-duty truck demand was at the level of 50,000-70,000 units. Therefore, the company decided to develop. Your own heavy truck business. However, Zhan Chunxin denied that he would cooperate with Mercedes-Benz.