【招银国际】浙江鼎力（603338）-2024 earnings way below expectations; outlook remains challenging-250421（6页）.pdf

1、 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG:RESP CMBR OR http:/.hk 1 MN 21 Apr 2025 CMB International Global Markets|Equity Research|Company Update Zhejiang Dingli(603338 CH)2024 earnings way below expectations;outlook remains challenging

2、 Zhejiang Dingis(Dingi)net profit in 2024 came in at RMB1.63bn(-13%YoY),substantially falling short of our/Bloomberg consensus by 20%/21%.The negative surprise was due to:(1)advanced shipments of AWPs to the US warehouses for customs clearance in 4Q24 to avoid upcoming tariff hikes,which in turn res

3、ulted in early recognition of some costs;(2)the acquisition of CMEC in mid-2024 that resulted in the consolidation of higher salary and warehouse expenses.During the post-results call,Dingli revealed that the current AWP inventory(not subject to the recent increase in tariff)will be enough to cover

4、the sales in the US until Sep 2025.We maintain our view that the unpredictable US tariff policy will(1)hurt the demand for AWPs in the US;and(2)put Dingli into a quandary given the high proportion of capacity in China serving the US market.We revise down our 2025E-26E earnings forecast by 13%,due to

5、 higher cost assumptions.Maintain HOLD with new TP of RMB44(previously RMB51),based on an unchanged 12x 2025E P/E(derived from 1SD below the three-year average P/E of 13.5x to reflect earnings slowdown).4Q24 results highlights.Dinglis gross profit dropped 28%to RMB515mn in 4Q24,due to a weak revenue

6、 growth(+6%YoY)and a 14.9ppt YoY contraction of gross margin(to 30.9%).Net profit plummeted 71%YoY to RMB168mn,due to a higher administrative expense ratio(+2.3ppt YoY),an increase in asset impairment and share of JV loss that offset the increase in other gains.Measures to mitigate tariff impact.The