3Q23 earnings +53% YoY; A clean beat on a surprising margin expansion

（以下内容从招银国际《3Q23 earnings +53% YoY; A clean beat on a surprising margin expansion》研报附件原文摘录）
浙江鼎力(603338)
Dingli’s net profit in 3Q23 surged 53% YoY to RMB462mn, which is way aboveour expectation. The surprise came from the 11.5ppt YoY gross margin expansionto 43.8%, driven by strong sales of boom lifts and rising contribution fromoverseas. We revise up our 2023E/24E/25E earnings forecast by 15%/8%/4%(8%/7%/4% above consensus), largely due to higher margin assumptions. Webelieve wide range of product offerings, together with clear strategies inoverseas including the penetration into tier-one leasing companies in the USand the expansion to emerging countries, will help Dingli differentiate itself frompeers. We revise up our TP to RMB70, after rolling over our base year to 2024E(based on 18x 2024E P/E which is 1SD below the historical average of 31x).Trading at 12x 2024E P/E, we see the risk/reward profile is highly attractive.Reiterate BUY. Dingli remains one of the key picks in our universe.
An impressive set of results in 3Q23. Revenue grew 34% YoY toRMB1.64bn in 3Q23, driven by strong growth in overseas (70% of totalrevenue, up from 63% in 1H23). Of the overseas revenue in 3Q23,Europe/US/other regions accounted for 35%/35%/30% (previously:40%/40%/20%). Gross margin surprisingly expanded 11.5ppt YoY (11.7pptQoQ) to 43.8%, which was driven by strong sales of boom lifts and risingcontribution from overseas. Selling & distribution expense ratio expanded2ppt YoY to 5.8% but largely due to higher overseas sales. All these boosteda 121% YoY increase in EBIT in 3Q23. Dingli reported net finance expenseof RMB62mn (versus income of RMB74mn in 3Q22), due to the volatility ofFX rate during the quarter. Net profit in 3Q23 grew 53% YoY to RMB462mn.Operating cash inflow surged 81% YoY to RMB694mn. In 9M23, net profitgrew 48% YoY to RMB1.29bn (76% of our full year estimates).
Boom lift remains the key growth driver. Boom lift revenue surged 1.9xYoY to RMB730mn in 3Q23. This is the first time that revenue from boomlift exceeded that of scissor lift (RMB700mn in 3Q23). For boom lift,overseas sales ratio in 9M23 increased to 45% (previously 30%). Dingliexpects the overseas sales ratio will exceed 50% in 2024E. Furthermore,given that boom lift in overseas carries higher gross margin (>40%)compared with China’s market, higher overseas sales will boost grossmargin going forward.
Key risks: (1) Further intensified competition in China’s AWP market; (2)slowdown of overseas demand; and (3) sharp rebound of RMB rate.