How has overseas demand changed?

  • Zhejiang Dingli's overseas business grew 30% in the first three quarters of 2026, exceeding the company's earlier guidance of 20%. Management said US order visibility had improved, with orders on hand covering the first quarter of 2027.
  • The company's revenue grew 45% year on year in the third quarter of 2026, exceeding HSBC Qianhai's expectations. The bank attributed the growth to strong exports, new product launches in the US and stronger after-sales capabilities; European sales rose 20% year on year in the third quarter.
  • HSBC Qianhai also expects China's aerial work platform market to bottom out. Industry data show that domestic sales volume in China rose 22% year on year in the first three quarters of 2026, while export volume rose 34%.

How is the US recovery translating into demand for Dingli's products?

  • HSBC Qianhai believes large projects in infrastructure, electricity, energy and data centers are driving incremental US equipment demand. Rental company United Rentals' non-residential business still achieved double-digit growth in the third quarter of 2026 excluding data centers, indicating a broad range of demand sources.
  • The order backlogs of US equipment manufacturer Terex's aerial work platform business and JLG, owned by Oshkosh, rose 115% and 274% year on year, respectively, as of the third quarter of 2026. Rental companies United Rentals and Sunbelt also raised their rental capital expenditure guidance for fiscal 2026 and 2027, respectively.
  • The company sees increasing demand for small battery-powered scissor lifts, which are suited to overhead wiring and the installation of cooling and electrical systems in confined data-center spaces. On that basis and in light of demand in Europe and the US, HSBC Qianhai raised its scissor-lift revenue forecasts for 2026–2028 by 7%–24%.

Why is the improvement in profit smaller than the increase in revenue forecasts?

  • HSBC Qianhai raised its revenue forecasts for 2026–2028 by 5.8%, 12.6% and 14.6%, respectively. Over the same period, it lowered its net profit forecast by 0.8% for the first year and raised it by 4.6% and 9.1% for the following years, to 1.995 billion yuan, 2.516 billion yuan and 2.812 billion yuan, respectively.
  • Renminbi appreciation during the year, pressure from tariffs and anti-dumping duties, and a higher share of lower-margin small scissor lifts sold to the US led the bank to cut its gross margin forecasts across business lines; price increases in the second quarter of 2026 partly offset the pressure. The bank also included an exchange loss of approximately 350 million yuan in its 2026 forecast.
  • For 2027, for example, the forecast overall gross margin fell from 33.6% to 31.2%. Overseas revenue accounted for 75% of the company's revenue in 2025, so the overseas operating environment has a significant impact on earnings.

Why were the rating and target price raised?

  • HSBC Qianhai upgraded Zhejiang Dingli from hold to buy and raised its target price from 54.10 yuan to 94.40 yuan, approximately 73% above the 30 October 2026 closing price of 54.60 yuan.
  • The bank raised its target price-to-earnings multiple from 12 times to 19 times and switched to its 2027 earnings-per-share forecast of 4.97 yuan as the valuation basis. It expects compound annual earnings-per-share growth of 19% over 2026–2028, above its previous forecast of 13%; the target multiple of 19 times remains below the historical average of 21 times for 2018–2025 cited in the report.
  • The US factory project remains under evaluation, and any potential capacity contribution would not materialize before 2028. HSBC Qianhai expects the company not to undertake large-scale construction or commit significant capital expenditure in the near term.