Zhejiang Dingli (603338): Third-quarter earnings exceeded expectations but revenue recovery is a sign of improvement

The company’s net profit for the third quarter of 2019 decreased by 3.

9% to 1.

83 billion yuan, mainly due to the lack of profits contributed by associates (compared to the high base in the third quarter of 2018).

Although the overall performance in the third quarter was slightly lower than our expectation, the company’s third quarter revenue increased by 10%, which was an improvement from the second quarter decline of 2%. We believe this reflects a recovery.

The increase in domestic labor costs is still the main reason for the application of aerial work platforms. We maintain our positive view on Dingli and re-buy the rating. The target price is set at the RMB 72 exchange rate unchanged (30 times the predicted profit in 2020).

Highlights of third quarter results.

In the third quarter of 2019, revenue increased by 10 in ten years.

4% to 5.

RMB 9.7 billion.

Although the gross profit margin fell by 4 single year by year and decreased by 1 compared with the previous month.

2 up to 39.

6%, but we think this is still the ideal level.

Sales expenses fell by 29% each year, reflecting the company’s strict cost control.

In the third quarter of 2019, the associates only contributed 200,000 yuan in profits (mainly for overseas business), a decrease of 99%.

However, for some reasons, the profits from associates in the third quarter of 2018 were exceptionally high and only once.

Excluding the contribution of associates, the company’s net profit for the third quarter of 2019 increased by 18%.

Net profit for the first nine months of 2019 accounted for 74% of our progressive 武汉夜网论坛 forecast.

Net profit for the first nine months of 2019 increased by 12% annually to 4.

4.4 billion yuan.

Operating cash inflows fell by 26% to 3 per year.

RMB 290,000 was mainly due to increased inventory to meet sales.

We expect earnings to improve in the fourth quarter, so we maintain our earnings forecast unchanged.

The impact of the reduction of shares is limited.

At the same time, the company announced that Deqing Zhongding Equity Investment Management Co., Ltd. plans to sell 2.5 million Dingli shares within six months.

We believe that this factor will have a limited impact on the market, as the stocks planned to sell only account for 0% of total equity.


Deqing Zhongding is currently owned by Xu Shugen 39.

69% equity investment company.

In 2018, Deqing Zhongding placed 3.67 million shares in the market with a price of 46 digits.


7 yuan, far lower than the current sustainable.

The main risk factors are: (1) more new indicators appear in the market of aerial work platforms; (2) the uncertainty of Sino-US trade disputes; (3) domestic engineering activities are worse than expected.