Key points of investment:
It is a leading aerial work platform company, and its business covers many countries around the world. Zhejiang Dingli is committed to the development of various intelligent aerial work platforms.
The company's main products are arm type, scissor type and mast type. It has pioneered the implementation of all optional fuel, pure electric and hybrid models. It is the first manufacturer in the world to achieve a high meter, large load, and modular electric arm series. The product and brand value have been widely recognized by domestic and foreign customers. The business covers more than 80 countries and regions around the world, and has reached stable cooperation with many overseas lessors.
Both revenue and profit increased throughout the year. In 2023, the company promoted its products smoothly in overseas markets, driving the company's performance, achieving revenue of 6.312 billion yuan, a year-on-year increase of 15.92%; net profit to mother was 1,867 billion yuan, an increase of 48.51% year on year; at the same time, a cash dividend of 10.0 yuan was distributed to all shareholders for every 10 shares, which is expected to distribute a total of 506 million yuan in cash. In 2023, gross margin and net margin were 38.49% and 29.58%, achieving increases of 7.45 pct and 6.49 pct. Thanks to the company's increased cost control efforts, production efficiency and high-margin product structure improvements. In 2023, the company's sales, management, and R&D expenses were 3.68%, 2.24%, and 3.49%, respectively. The increase in sales expenses is mainly due to an increase in product after-sales service costs, sales staff remuneration, etc.
In 2024Q1, the company's net profit to mother was 300 million yuan, down 5.4% year on year, mainly due to profit and loss of changes in fair value - 100 million yuan.
Domestic market space can be expected, and domestic manufacturers have a global layout. “Economic+efficiency+safety” drives aerial work platforms to replace traditional climbing equipment, and the degree of market development is closely related to the local economic level. The North American and European markets are mature, with large equipment holdings and a steady growth rate, mainly due to renewal demand; in the Asian market, China started late and grew rapidly, mainly due to new demand; in 2022, the domestic leasing volume was 448,400 units, compared to 794,300 units in the US. In terms of per capita ownership, China has 3.17 units/10,000 people, and the US has 2385 units/10,000 people, which is 7.5 times that of China, and there is plenty of room for demand to increase. Domestic manufacturers are gradually advancing the global strategy to achieve growth in sales volume and market share. China already accounts for four of the world's top ten manufacturers.
“Design+intelligent manufacturing” creates barriers, and the global strategy is being firmly promoted. The company arm type uses a modular design, and all parts are 85% universal, which can reduce procurement, logistics, manufacturing, service costs and maintenance costs; the “future factory” increases assembly efficiency by more than 50%. The company's global sales network covers more than 80 countries, accounting for 60.8% of overseas revenue; the acquisition of US CMEC shares to develop high-end markets has the least impact on the “double reverse” tax rate in the US, and can still successfully expand its business in the US region.
Investment advice: The company is a leading domestic aerial work platform enterprise. The product design concept is complete, and it has been widely recognized by domestic and foreign customers. The business covers the world, has leading profitability, excellent cost control, the “double reverse” tax rate is lower than that of its peers, and the ROE is 20.83%. The company's new construction projects are gradually being put into operation, sales of high-value arm-type and new energy equipment have increased, and exports to Europe, America and emerging countries have continued to rise. We predict that the company's net profit for 2024-2026 will be 21.60/25.44/2,973 billion yuan, respectively. The PE corresponding to the current stock price is 14.90/12.65/10.82 times, respectively, which gave it a “buy” rating for the first time.
Risk warning: “double reverse” investigation risk; risk of raw material price fluctuations; international trade risk; increased risk of industry competition.