Zhejiang Dingli Co Ltd. (.SS)_ HK NDR Takeaways_ Increased confidence about 2025 outlook; reiterate Buy

Company and Industry Overview * Company: Zhejiang Dingli Co Ltd. (603338.SS) * Industry: Aerial Work Platforms (AWP) manufacturing * Focus: The report discusses Dingli's business outlook, earnings visibility, and key developments in trade restrictions and market dynamics. Key Takeaways 1. Positive Outlook and Earnings Visibility * Increased Confidence: The report expresses increased confidence in Dingli's business outlook and earnings visibility into 2025E, based on positive feedback on order intakes and favorable trade investigation outcomes. * Upside to Earnings Forecasts: The report sees upside to its earnings forecasts due to strong order intakes, particularly during the Bauma China 2024 trade fair. * Favorable Trade Investigation Outcomes: The final results of the EU anti-dumping investigation and the US anti-dumping duty administrative review were more favorable than expected, benefiting Dingli's profitability. 2. Trade Restrictions and Tariffs * US Tariffs: The final US anti-dumping duty rate was reduced by approximately 20ppt, providing a buffer against potential tariff hikes and margin expansion opportunities. * EU Tariffs: The final EU anti-dumping duty rate was lower than the preliminary results and the lowest among all producers, benefiting Dingli's competitiveness. * Response Plan: Dingli has a response plan for potential additional US tariffs, including passing on the increased costs to customers and distributors. 3. Market Dynamics and Growth * North America: Dingli expects 2024E CMEC sales to exceed USD500mn and 2025E sales to see 20%+ growth, driven by market share expansion and increased sales of boom lifts. * Europe: Dingli expects 2024E Europe sales to decline by approximately 10% YoY but to see growth of +10% YoY in 2025E, driven by demand from electrification and replacement. * Emerging Markets: Dingli expects sales in emerging markets to double YoY in 2025E, driven by strong order intakes during the Bauma trade fair. * China: Dingli expects flat domestic sales in 2025E, driven by sluggish demand, but sees potential growth from differentiated new products in niche markets. 4. Capacity and Investment * Boom Lifts: Dingli's annual capacity for boom lifts is currently 7,0008,000 units, with plans to increase capacity to 8,00010,000 units next year. * Scissor Lifts: Dingli plans to roll out Phase VI capacity for scissor lifts in two years, with a total investment of Rmb1bn. 5. Investment Thesis and Risks * Investment Thesis: The report maintains a Buy rating on Dingli, based on its positive outlook, favorable trade investigation outcomes, and growth opportunities in key markets. * Key Risks: The report identifies several key risks, including weaker-than-expected construction activities globally, intensifying competition in the Chinese AWP market, and potential trade tensions between the US and China. Conclusion The report presents a positive outlook for Zhejiang Dingli Co Ltd., highlighting its strong order intakes, favorable trade investigation outcomes, and growth opportunities in key markets. However, the report also identifies several key risks that could impact Dingli's performance.