Dingli’s share price surged 10% yesterday (28 Apr) following better-thanexpected 1Q26 results (strong revenue growth + QoQ gross margin improvement + lower expense). Take a closer look at the results, however, could find it difficult to conclude that the high growth is sustainable. First, we believe the revenue growth in 1Q26 (30% YoY) included part of the US tariff passthrough. Second, the decline in SG&A expense ratio (through efficiency enhancement of the US subsidiary) has lasted for several quarters, setting a low base for upcoming quarters. We revise up our 2026E/27E earnings forecasts by 3%/6%, due to higher sales volume assumptions (slightly offset by lower finance income). Our TP is revised up to RMB59 (from RMB48), based on 14x 2026 P/E (0.5 SD below the three-year average P/E unhanged). We maintain our HOLD rating for now until we see a more sustainable growth trend.

1Q26 results highlights. Revenue grew 30% YoY to RMB2.46bn. Gross margin contracted 6.8ppts YoY but expanded 5.2ppts QoQ to 33.8% (note: 2- month US tariff impact in 1Q26 before the court’s ruling to halt). Given that both the SG&A and R&D expense ratio dropped YoY in 1Q26, EBIT grew 38% YoY to RMB609mn. Net finance expense was RMB82mn (vs net finance income of RMB93mn in 1Q26), due to appreciation of RMB. Net profit grew 6% YoY to RMB453mn, while operating cash outflow improved 61% YoY to RMB186mn.

Latest Anti-dumping (AD), countervailing duties (CVD) and tariff: The US latest AD rate on Dingli is set at 18.27% (effective from 16 Apr 2026), with a rate same as Sinoboom, Terex (Changzhou) Machinery (owned by Terex [TEX US, NR]) and Oshkosh JLG (Tianjin) Equipment (owned by Oshkosh [OSK US]). The latest AD, together with the CVD (33.1%) and Section 301 tariff (25%), adds up to a total rate of ~76% for Dingli’s AWPs selling into the US. We think such level of rate is still manageable given Dingli’s rich experience in dealing with tariff and duties.

Upside risks: (1) recovery of AWP demand; (2) strong demand for new products.

Downside risks: (1) further intensified competition in China’s AWP market; (2) additional tariff/AD/CVD.