Zhejiang Dingli Co Ltd. （603338.SS）：Read~across from US AWP OEMs/rental companies’ 2Q24： Softened fleet utilization； rental capex cadence continued to normalize

Investment Rating - The report maintains a "Buy" rating for Zhejiang Dingli Co Ltd. (603338.SS) with an upside potential of 56.2% to a target price of Rmb51.85 [1][3][21]. Core Insights - The investment thesis for Zhejiang Dingli is based on several factors including the accelerating adoption of aerial working platforms (AWPs) in China, a significant under-penetrated market, driven by rising labor costs, a construction worker shortage, and increasing safety awareness [21]. - The company is expected to benefit from a product mix upgrade towards higher-ASP and higher-barrier-to-entry boom lifts, where it has established a substantial technology gap compared to domestic peers [21]. - Despite the challenges posed by US-China trade tensions and anti-dumping duties, Dingli's competitiveness is expected to grow due to product differentiation, particularly in electrified boom technology [21]. Financial Projections - Revenue projections for Zhejiang Dingli are as follows: Rmb6,312.0 million for 2023, Rmb7,435.9 million for 2024E, Rmb8,421.7 million for 2025E, and Rmb9,548.8 million for 2026E [3][21]. - EBITDA is projected to grow from Rmb1,912.8 million in 2023 to Rmb3,198.1 million by 2026E [3][21]. - The report anticipates a core EPS CAGR of +22% from 2023 to 2025E, with EPS expected to be Rmb3.69 in 2023, increasing to Rmb5.47 by 2026E [3][21]. Market Context - The report highlights a normalization in the rental market, with softened fleet utilization and cautious demand from rental companies, indicating a potential peak in the cycle [1][10]. - The AWP segment in North America saw a growth of 6-7% year-over-year, but there were declines in other regions, particularly Europe [14][16]. - The overall market dynamics suggest a cautious outlook for the construction sector, with uncertainties related to interest rates impacting demand [11][21]. Valuation Metrics - The target price of Rmb81.0 is based on a 16.5X 2024E DACF, reflecting a ~45% discount to its long-term historical average [22]. - The report projects a P/E ratio of 20.2X for 2024E and 16.8X for 2025E, justified by the expected growth in core EPS [22]. Competitive Landscape - The report notes that Zhejiang Dingli is one of the largest suppliers of AWPs in China, with significant growth potential in both domestic and international markets [21]. - The company faces competition from both local and international players, but its focus on product differentiation and technology leadership is expected to provide a competitive edge [21].