Zhejiang Dingli Machinery Co.Ltd(603338) (603338)
Increase and expand the production of large-scale intelligent high-level aerial work platform, and focus on high-end products for differentiated competition
The company’s fixed increase was successfully issued, and all the raised funds were used for the project of expanding the production of 4000 large-scale intelligent high-altitude working platforms per year. This expansion focuses on high-end products with deep technical barriers such as insulating ARM technology, spider type, high arm type and scissor type, which helps to optimize the product structure, realize differentiated competition with peers and meet the needs of customers in special industries; Accelerate the occupation of medium and high-end aerial work platform market and maintain the company’s leading position in the industry.
The company applies the “double anti” tax rate of far lower peers, and once again obtains the window period of in-depth layout in the United States
The countervailing tax rate is finally determined, and the countervailing tax rate of the company is 11.95% (temporary work 18.34%, unresponsive company 448.7%, and other enterprises 12.93%); According to the preliminary ruling of anti-dumping tax rate, the company tax rate is 17.78%, and the effective tax rate after deducting the overlapping part of anti-dumping and countervailing is 7.07% (275.06% for temporary workers and other Chinese peers, and 274.86% after deducting the overlapping part of anti-dumping and countervailing). The company’s “double reverse” tax rates are lower than those of its Chinese counterparts. Considering the company’s average high gross profit margin of 40% in five years overseas, the impact of the “double reverse” tax increase on the development of the U.S. market is limited, and the company once again has a window period for in-depth layout of the U.S. market.
The short-term margin of raw materials and freight is improved, and the arm gross profit margin is expected to be greatly improved in 2022
1) In the first three quarters of 2021, the prices of raw materials related to steel, aluminum, tires, chains and castings increased significantly year-on-year, and the sea freight also increased significantly year-on-year; Since November, the comprehensive steel price index has decreased by 12%, the ring ratio of sea freight has also decreased, and the impact of cost side on gross profit margin has improved in the short term; 2) It is estimated that the proportion of revenue of arm products will increase by more than 10 PCT in 2021, and it is in the stage of capacity climbing and early trial promotion, and the gross profit margin is lower than that of scissors (the gross profit margin of arm products will be lower than that of scissors by 17pct in 2020). With the expansion of sales scale of arm products, the optimization of production beat and the running in of production line, it is expected that the gross profit margin will be greatly improved in 2022.
The aerial work platform industry outside China maintains a high boom, and the CAGR of China’s industry is about 25%
(1) China sold 128000 aerial work platforms (+ 58%) in the first three quarters of 2021, including 95000 in China, a year-on-year increase of 40%. Hongxin Jianfa predicts that by 2025, China’s ownership will reach 810000 units, and the CAGR will be about 25% from 2020 to 2025. (2) Overseas markets benefit from the compensatory demand after the epidemic and the boost of the US infrastructure stimulus plan, and the industry demand is expected to reverse. The American equipment Leasing Association expects construction / industrial rental income to increase by 3% in 2021 and 12% in 2022.
Profit forecast and valuation
It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 900 / 12.6 / 1.72 billion respectively, with a year-on-year increase of 36% / 40% / 37%, corresponding to 43 / 31 / 23 times of PE valuation. In the past five years, the company’s PE valuation center has been 40-50 times. In 2022, the company’s PE has been lower than the valuation center. Considering the industry boom and the company’s core competitiveness, it currently has medium and long-term investment value and maintains the “buy” rating.
Risk tips: 1) deterioration of China’s competition pattern; 2) Price increase of raw materials and freight; 3) Exchange rate appreciation
