New AWP capacity expansion plan to further enhance global competitiveness

（以下内容从招银国际《New AWP capacity expansion plan to further enhance global competitiveness》研报附件原文摘录）
浙江鼎力(603338)
Zhejiang Dingli (Dingli) announced over the weekend that it plans to spendRMB1.7bn to build a new production base for 20k units of new energy aerial workplatform (AWP). We understand that the entire capacity will be for scissors lifts,given the rising demand for electric and advanced models in the overseas. Weestimate the new capacity will add 30% capacity in 2026-27E. With net cash of~RMB3bn based on our estimate, Dingli has sufficient internal resources tofinance the capex without the need to go for equity financing. While there will beno earnings contribution before 2026E, we believe the expansion plan will helpfurther enhance Dingli’s global competitiveness. Maintain BUY with unchangedtarget price of RMB70 (18x 2024E P/E, 1SD below the historical average of31x). Meanwhile, we believe Jiangsu Hengli (601100 CH, BUY), the majorsupplier of hydraulic components and motors, will also benefit from Dingli’scapacity expansion over the medium term.
New capacity and sales contribution: Dingli’s board of directors approvedon 22 Mar a plan to construct a new production base for 20k units of newenergy AWP. Dingli estimates it will take 36 months to complete theconstruction. We see chance that the capacity will commence earlier thanplanned, given the previous capacity expansion experience. Dingliestimates that, under normal circumstances, the annual sales contributionfrom the new capacity could reach ~RMB2.5bn.
Location of the new capacity: Dingli currently has five production basesin Deqing, Zhejiang. The site area has been fully utilized. Therefore, Dingliwill need to acquire a piece of new land in Deqing for the planned newcapacity.
Capex: The total budget is estimated at RMB1.7bn, which include theacquisition of land, construction work and equipment procurement.
Key risks: (1) Further intensified competition in China’s AWP market; (2)slowdown of overseas demand; and (3) sharp rebound of RMB rate.