浙江鼎力RidingonthestrongmomentumRaisedearningsestTP

招银国际发布投资研究报告，评级: 买入。

浙江鼎力(603338)

Sales of aerial working platform (AWP) by major players in China surged 121%YoY to 13.6k units in Apr, taking the 4M20 sales up 42% YoY to 26.7k units. Weexpect the growth momentum to continue over the upcoming months, driven byresilient construction activities in China as well as recovering demand with thegradual re-opening of economies in overseas. We revised up our 2020E-22Eearnings forecast on Dingli by 4-8% (16-25% above consensus). We lifted our TPfrom RMB67.14 to RMB81, based on 42x 2020E P/E, on the back of 35%/42�rnings growth in 2020E/21E. Reiterate BUY.

Explosive growth of AMP sales. According to CCMA data, sales of AWP bythe nine major manufacturers located in China surged 121% YoY to 13.6kunits in Apr. Domestic sales surged 196% YoY to 12.2k units, driven by strongconstruction activities. Apart from Dingli, we expect Jiangsu Hengli (601100CH, BUY, TP: RMB85) is also a major beneficiary as Hengli supplies hydrauliccylinders and motors to major AWP makers.

Expect gradual recovery of export over the coming months. Overseasrevenue (mainly in the US and Europe) accounted for 37% of Dingli’s totalrevenue in 2019. According to CCMA, AWP export volume declined 31% YoYto 1.4k units in Apr (for the industry as a whole), due to the COVID-relatedshutdown in the overseas. That said, we expect the gradual re-opening of theoverseas economies will offer upside to the AWP sales in the near term.

Our 2020E-22E earnings forecast is now 16-25% above consensus. Inview of the strong demand for scissor lifts, we raised our sales volume forecaston Dingli’s scissor lifts by 3-10% in 2020E-22E. Our earnings forecast isrevised up by 4-8% in 2020E-22E.

Raised TP to RMB81. Dingli announced stock split (1 to 1.4) after the releaseof 2019 result and it came into effect last Friday. Our previous TP wastherefore automatically adjusted from RMB94 to RMB67.14. We raised our TPto RMB81, based on 42x 2020E PE (up from 36x). Our higher multiple is toreflect the 42% estimated earnings growth in 2021E. Besides, we believe ourhigh target multiple is justified, given that rising labor cost will remain thestructural driver for the application of AWP in China over the coming years.

Major risk factors: (1) more new entrants in the AWP market; (2) prolongedimpact of COVID-19 in overseas; (3) slowdown of construction activities in China.

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