\u3000\u3000 Zhejiang Dingli Machinery Co.Ltd(603338) (603338)
In the development process of our company since 2015, the average annual growth rate of the company’s revenue and net profit has reached more than 40%, ranking among the top 10 high-altitude working platforms in the world. However, the company’s profit growth slowed down in 2021 due to the rise of raw materials, shipping costs and intensified competition in the Chinese market. At the current time point, we believe that the company has ushered in four inflection points, namely: 1) strong recovery in overseas markets; 2) “Double reverse” landing; 3) The company’s product strategy returns to overseas (United States); 4) With the implementation of fixed increase, the company has entered a new round of production expansion cycle. Next, we focus on the connotation of the four inflection points and the high growth prospects of the company’s performance.
The first inflection point: overseas markets have ushered in the inflection point of recovery, especially in North America.
① the demand for high-altitude working platforms in North America is hot, and the products are in short supply. North America’s aerial work platform market is relatively mature. In 2020, the number of equipment will reach 656500, and the scale of aerial work platform leasing market will reach US $10.3 billion. With the gradual normalization of the epidemic in North America and the stimulation of U.S. infrastructure policies, the utilization rate of aerial work platform equipment has gradually increased and returned to the average level before the epidemic. After June 2022, the production schedule of jierjie, the leader in North America, has reached US $1.7 billion at the end of the third quarter of 2021, an increase of 257% compared with the end of the third quarter of 2020. Products in the North American market are in short supply, which will create a good demand environment for China’s export of aerial work platforms.
② the European aerial work platform market is gradually developing towards electrification. According to ipaf data, in 2019, the number of equipment in ten European countries was 308300, and the scale of aerial work platform leasing market was 2.9 billion euros. Electric aerial work platform has been widely used because of its advantages of green environmental protection, low noise and small volume. There is an obvious trend of electrification in the European market. According to the data of global market insight, the sales volume of electric aerial work platforms in Europe accounted for more than 70% in 2020; The export of China’s electric products to the European market is expected to increase rapidly.
③ the global market presents structural characteristics, and domestic brands rank among the top in the world. According to the ranking of accessm20 list, in 2020, the sales of the top three manufacturers of aerial work platforms in the world (jierje, Gini and skyjeco) accounted for more than 35%; The sales of the world’s top 20 manufacturers account for more than 90%. Five Chinese enterprises (XCMG, Dingli, Lingong, Xingbang and Zoomlion) are listed in the top 20 list. Cr20 of global aerial work platform decreased from 94.7% in 2015 to 88.9% in 2020. Due to the rapid development of China and other emerging markets, it provides a hotbed for domestic and other brands to grow rapidly, and the global concentration shows a downward trend.
The second inflection point: “double anti” is gradually implemented, and the company may become the main winner.
① the “double reverse” process of aerial work platform industry. In March 2021, the U.S. Department of Commerce announced that it would launch an anti-dumping and countervailing investigation on mobile lifting platforms and components imported from China. At present, the U.S. Department of Commerce has announced the final determination results of countervailing investigation. The fully applicable final determination tax rate of countervailing is 11.95% and that of temporary work is 18.34%; The United States International Trade Commission (ITC) has ruled on the threat of material damage to the countervailing investigation. At present, the final result of the anti-dumping investigation has not been announced. The preliminary result shows that the fully applicable anti-dumping preliminary determination tax rate is 17.78% and the temporary work tax rate is 275.06%.
② under the background of “double reverse”, the company is expected to deal with it calmly. During the Sino US trade friction from 2018 to 2019, the United States imposed a 25% tariff on aerial work platform enterprises imported from China, and has accumulated rich coping experience. In this “double anti”, the tax rate applicable to other domestic brands other than Dingli is high, and the threshold for entering the U.S. market will be greatly increased; In contrast, with the least pressure, it is expected to deal with it calmly, and its development in the North American market is expected to return to the right track.
The third inflection point: the company’s product strategy returns overseas.
① returning to the overseas market, the strategic connotation has undergone profound changes. In 2018, affected by Sino US trade friction, the company was forced to shift its sales focus from overseas to China. In 2020, affected by the continuous spread of overseas epidemic, the proportion of the company’s overseas revenue further decreased. However, facing 2022, under the background of the above first and second inflection points, it is undoubtedly the best choice for the company’s product strategy to return overseas. The strategic focus of this time is back overseas, but the strategic connotation is very different from that before 2018: first, brand awareness has been passively improved through “double anti” investigation; Second, the investment of R & D, sales and after-sales resources for overseas customers has been greatly enhanced; Third, the company has a deeper understanding of the overseas market, and can easily interpret the rules and formulate tactics of the North American market.
② acquire well-known overseas enterprises and gradually improve the overseas layout. In recent years, the company has successively acquired 20% equity of Italy magni (the world’s leading enterprise in intelligent telescopic boom fork loading), 25% equity of America CMEC (the old American manufacturer of aerial work platform) and 24% equity of Germany teupen (the global leader of spider aerial work platform), which has effectively improved the brand value, expanded sales channels and accumulated strength for developing the global market. The company’s products have passed the authoritative certification of European CE, American ANSI, Australian as / nzs1418 and Korean KC, and are exported to more than 80 countries and regions. The company’s overseas sales business is expected to regain momentum and achieve rapid growth.
The fourth inflection point: fixed increase is implemented, and the company enters a new round of production expansion cycle.
① fixed value-added projects will be implemented in 2021, and the production capacity is expected to be released continuously. After listing, the company has completed two fixed increase projects. In 2021, the company raised 1.5 billion yuan, with an issue price of 71.90 yuan / share, for the project of annual output of 4000 large-scale intelligent high-altitude platforms. After the project is completed, the company’s production capacity will be further improved, and its operating performance is expected to usher in a new round of high growth.
② continuously optimize the product structure and gradually enhance the competitiveness of high-end market. The fixed increase project will add 1500 intelligent high-level electric arm aerial platforms (36-50m), 1000 intelligent high-level electric scissor aerial platforms (33-36m), 1000 vehicle mounted insulated arm aerial work vehicles and 500 spider insulated arm aerial work vehicles. After the completion of the project, the company’s product structure will be further optimized, the proportion of arm type is expected to continue to increase, and the gross profit margin level is expected to continue to improve. At the same time, the insulating ARM technology is still blank in China, which also puts forward higher requirements for technology, and the company’s share in the high-end aerial work platform market is expected to be further improved.
Give the company a “buy” rating.
We believe that the company has ushered in four inflection points: (1) overseas markets meet the inflection point of recovery, among which the North American market will have high growth in 2022; (2) “Double anti” is gradually implemented, and the company may become the main winner; (3) The company’s product strategy returns to overseas (the United States), but the strategic connotation has undergone profound changes; (4) With the implementation of fixed increase, the company has entered a new round of production expansion cycle. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 939 million, RMB 1409 million and RMB 1832 million respectively, and the corresponding PE will be 42.08, 28.06 and 21.57 times respectively. The company presented a rare time window with four inflection points and gave the company a “buy” rating.
Risk tips: the deterioration of overseas trade environment, intensified market competition, sharp fluctuations in raw material prices and shipping costs, the promotion of raised investment projects is not as expected, and the information used in the research report is not updated in time.
