Summary of Zhejiang Dingli Co Ltd. (603338.SS) 2Q25 Results Company Overview - **Company**: Zhejiang Dingli Co Ltd. - **Industry**: Aerial Working Platforms (AWP) - **Ticker**: 603338.SS Key Financial Results - **Net Profit (NP)**: Rmb 623 million, up 19% year-over-year (yoy) [1] - **Topline Revenue**: Rmb 2.44 billion, up 1% yoy, marking the highest quarter in history [1][4] - **Gross Profit Margin (GPM)**: 32.0%, down 0.8 percentage points yoy, below expectations [1][4] - **Operating Expenses (Opex)**: Rmb 249 million, up 41% yoy, primarily due to high selling expenses [4] - **EBIT**: Rmb 531 million, down 13% yoy, below expectations [4] - **Net Profit Margin (NPM)**: 25.6%, up 3.9 percentage points yoy, inline with expectations [4] Sales Performance - **Overseas Sales Growth**: +21% in 1H25, despite US-China trade tensions and tough comparisons in Europe [1][4] - **Domestic Sales**: Implied decline of -30% yoy, but better than the industry average decline of -42% yoy [4] Cash Flow and Balance Sheet - **Operating Cash Inflow**: Rmb 338 million, a recovery from -Rmb 472 million in 1Q25 [4] - **Capital Expenditures (Capex)**: Down 19% yoy to Rmb 43 million [4] - **Free Cash Flow (FCF)**: Positive at Rmb 295 million [4] - **Net Cash Position**: Increased slightly to Rmb 3.69 billion from Rmb 3.61 billion [5] Investment Thesis - **Long-term Adoption Potential**: The AWP market in China is under-penetrated, with rising labor costs and increasing safety awareness driving demand [8] - **Product Mix Upgrade**: Transition towards higher-ASP boom lifts, where Dingli has a technology advantage [8] - **Competitive Positioning**: Strong resilience under high-tariff environments, optimizing competitive landscape against peers [9] Price Target and Valuation - **12-month Price Target**: Rmb 64.00, implying a 19.4% upside from the current price of Rmb 53.60 [13] - **Valuation Metrics**: Target EV/DACF multiple of 10.0X, reflecting uncertainties around global trade [11] Risks - **Global Construction Activity**: Weaker-than-expected construction activities could impact sales [12] - **Competition**: Intensifying competition in the global AWP market [12] - **Trade Tensions**: Escalating US-China trade tensions could lead to unfavorable tariffs [12] Conclusion - **Recommendation**: Maintain Buy rating as Dingli is well-positioned to leverage the machinery cycle inflection in developed markets [1][8]