Summary of Zhejiang Dingli Co Ltd. Conference Call Company Overview - **Company**: Zhejiang Dingli Co Ltd. (603338.SS) - **Industry**: Aerial Working Platforms (AWP) Key Points from the Conference Call 1. Sales Performance - **US Sales**: Stable year-over-year (flat yoy) in 1H25 despite US-China tariff escalation in April, with a temporary suspension of shipments for 1-2 months [1][6] - **EU Sales**: Relatively soft in 1H25 due to a high comparison base from the previous year, as shipments were front-loaded ahead of EU anti-dumping rulings [6] - **Emerging Markets**: Robust growth in non-US/Europe markets, with a double-digit percentage increase year-over-year in 1H25, contributing 25% to total sales [6] - **Domestic Sales**: Approximately 30% decline year-over-year in 1H25, primarily due to weak demand from large rental customers, although small-to-medium-sized customers saw a 20% increase in sales [7] 2. Profitability and Margins - **Gross Profit Margin (GPM)**: Declined by 0.8 percentage points year-over-year in 2Q25, attributed to a change in product mix and the impact of higher tariffs [8] 3. Tariff and Pricing Strategy - **Current Tariffs**: Dingli faces a 79% tariff in the US, which includes 24% anti-dumping/subsidy duties and 55% tariffs, approximately 10 percentage points higher than the previous year [10] - **Pricing Strategy**: Management indicated that they do not plan to pass on the additional tariffs this year but may negotiate prices for next year based on tariff clarity [10] 4. Market Outlook - **US Market**: Demand for AWP remains solid, with expectations of flat sales year-over-year in 2025. Current inventory levels are sufficient to support sales until year-end [10] - **EU Market**: Anticipated improvement in sales in 2H25 due to a low comparison base and ramp-up of high-end new products, with expectations for positive full-year growth [10] - **Capacity Expansion**: Plans for overseas capacity expansion are contingent on tariff changes [10] 5. Investment Thesis - **Long-term Potential**: The company is well-positioned in the under-penetrated Chinese AWP market, driven by rising labor costs, a construction worker shortage, and increasing safety awareness [13] - **Product Differentiation**: Focus on higher-ASP boom lifts and electrification technology, which provides a competitive edge [13][14] 6. Risks - **Key Risks**: Include weaker-than-expected global construction activities, intensifying competition in the AWP market, and potential escalations in US-China trade tensions that could lead to unfavorable tariffs [12] 7. Valuation - **Price Target**: The 12-month target price is set at Rmb64.0, reflecting a 10.0X 2026E DACF multiple, which is below the 3-year average due to uncertainties in global trade [11] 8. Financial Projections - **Revenue Growth**: Projected revenues for 2025E are Rmb8,949.4 million, with a core EPS CAGR of approximately 15% from 2025E to 2027E [16] Additional Insights - **Market Share**: Dingli has gained market share in the EU due to favorable anti-dumping duties compared to peers [10] - **Operational Resilience**: The company has demonstrated resilience under high-tariff environments, optimizing the competitive landscape against domestic peers [14]

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]