ZHEJIANG DINGLI(SH:603338)2025-08-29 02:19Summary 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]