We believe the finalization of Dingli’s anti-dumping (AD) duties (in EU) at 20.7% is a better-than-feared result, given that such rate reduced from the preliminary rate of 31.3% and is now the lowest among all Chinese manufacturers. This suggests that, in EU, Dingli will enjoy competitive advantage among Chinese players. This decision, together with the finalisation of AD duties in the US (reduced from 31.54% to 12.39%) earlier, implies that the overall duties will be reduced going forward, which offers a buffer for the potential tariff increase suggested by the president-elect in the US. We maintain our positive stance on Dingli which reiterates the strategy to focus on the US, the most promising market for AWP. We have left our earnings forecast unchanged. Maintain BUY with an unchanged TP of RMB75 (18x 2024E P/E, 1SD below the historical average of 31x).

AD duties on Dingli further reduced in EU. The preliminary rate was set by the European Commission at 31.3% in Jun but reduced to 23.6% afterwards. The finalized rate further reduced to 20.7% following Dingli’s negotiation. Based on our check, such rate is even lower than the 22.5%/22.9% for Oshkosh JLG (Tianjin) /Terex (Changzhou), and much lower than the 30-49% for other Chinese manufacturers. With the new duties in place, we believe Dingli will be able to gain market share from other Chinese players in the EU market. Going forward, Dingli will continue to offer differentiated products to increase pricing power, which will enable it to partially pass through the AD duties to the downstream.

AD duties in the US was revised down earlier. Dingli’s AD duties in the US was finalized at 12.39%, down substantially from the 31.54% set in 2022. Together with the counter-vailing duties (CVD) which is unchanged at 11.95%, Dingli’s AD & CVD rate added up to 24.34% only. Such reduction will mitigate the potential increase in tariffs suggested by the president-elect in the US.

Key risks: (1) Further intensified competition in China’s AWP market; (2) a slowdown of overseas demand; and (3) higher-than-expected potential tariff in the US.