ZHEJIANG DINGLI(SH:603338)2025-08-28 02:12Summary 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]