J.P. Morgan: Zhejiang Dingli raises overseas growth guidance as orders extend into next year; gross margin recovery still depends on price increases and capacity expansion

Why was overseas growth guidance raised again?

Zhejiang Dingli’s management raised its guidance for year-on-year overseas revenue growth in 2026 from above 20%, as stated in the first half, to above 30%. The US remains the strongest growth engine, with demand from data center construction, equipment replacement and rental fleet expansion.
Growth is also spreading beyond the US: the European market maintained growth of around 20% in the third quarter of 2026, while markets outside Europe and the US grew faster, led by the Middle East, Brazil, India and Africa. JPMorgan believes this shows that the overseas upcycle is broadening.

The company’s production schedule is full through the first quarter of 2027, with some orders extending into the second quarter. Orders in the pipeline are being converted into firm orders, and management expects North American orders in 2027 to be stronger than in 2026.
Capacity constraints have led the company to prioritize supplies to North America, where demand is strongest. Capacity from phases six and seven is expected to give the company greater flexibility to allocate capacity to Europe and emerging markets from 2027; phase six will add capacity for 20 thousand new-energy scissor lifts.

Of the decline in the third-quarter gross margin in 2026, freight costs accounted for about 1 percentage point and exchange rates for more than 2 percentage points. The rising share of US business also added pressure, as tariffs leave its gross margin below the group average.
The company plans to raise US prices again in the second quarter of 2027 to pass on tariff costs when securing new orders. It also plans to expand its base of small and midsize customers, who typically command better pricing. JPMorgan believes a normalization of freight costs and exchange rates, along with a broader product mix enabled by new capacity, could also support gross margin recovery.

The planned US factory is unlikely to add capacity before 2028. Over the long term, it could hedge against tariffs, trade friction and export restrictions; China will remain the core production base in the near term.
JPMorgan maintained its Overweight rating and its December 2027 price target of 65 yuan. The target is based on average estimated earnings per share for 2026–2027 and applies a 14-times 2027 estimated price-to-earnings ratio, broadly in line with the company’s average valuation over the past five years.