03.04.2024

Horizon expands out of China

Chinese rental company Horizon has posted strong results for 2023 and is expanding rapidly overseas.

The company added outlets in Malaysia, Indonesia, Thailand and Vietnam last year and is now in discussions to move into the Middle East and Africa. It may even open its first branch in Europe this month.

But first the results for 2023.

Revenues in 2023 were RMB 9.6 billion ($1.33 billion) up 22 percent on 2022, with a pre-tax profit of RMB 1,226,523 ($135 million) an increase of 37.2 percent. The company says that the number of units it has in its aerial lift fleet now numbers 176,600 units - of which 56,696 are on operating leases as it focuses on creating an "asset-light" business model. In total it achieved a utilisation rate of 80 percent on its platform fleet, which are available from 489 locations in mainland China, one in Hong Kong and the four new ones overseas - 494 in total. Capital expenditure in 2023 was cut by 37 percent to RMB2 billion ($281 million).

The move into Turkey

The company is now reported to have leased two rental yards/facilities in Istanbul, Turkey. One on the European side of the Bosporus and another on the Anatolian side, with the first batch of equipment expected to arrive in the area this Friday. The new venture is said to be a greenfield start up, rather than an acquisition.

We asked Horizon last week if it would confirm these details but have not yet received a response.

Vertikal Comment

The growth of Horizon over the past 10 to 11 years has been nothing but phenomenal, going from nothing to 176,000 machines, including some telehandlers, with 494 outlets with more on the way. The growth was encouraged by a number of finance companies that threw money at China’s emerging sector a couple of years, or so, ago when it was one of the hottest, fastest growing bets in town. The investment levels also fuelled the expansion of Chinese aerial work platform manufacturers.

One thing to look out for though is the ongoing capital expenditure, last year the Chinese economy slowed rapidly, and Horizon cut its fleet renewal programme by more than a third, at a time when it must be reaching the stage where ongoing renewal and updating is critical.
It is also one thing moving into Southeast Asia, and even Africa where Chinese contractors might be working on major projects - but moving further westwards is a very different prospect.

Although Turkey’s economy and exchange rate is said to be bouncing back a little and is likely to offer a range of opportunities for inward investors this year. Europe and even the Middle East are, however, very tough battle grounds for new entrants, with well-established quality players firmly ensconced.

The next couple of years look interesting.