浙江鼎力(603338) We believe the US’s newly proposed tariff on China will place Dingli into achallenging situation, given that the US has long been the most important marketfor Dingli (close to 30% of total revenue in 2024E, based on our estimates). Wesee several downside risks: (1) the policy uncertainties will likely affect the capexplan of AWP operators in the US, thereby affecting the procurement for AWPs;(2) the proposed 34% incremental tariff on China’s exports exceeds the 19%reduction of anti-dumping (AD) duties approved by the US last year. While weunderstand that Dingli will potentially expand the manufacturing capacity in theUS, we believe it will take time to see the actual impact. We revise down our2024E/25E/26E earnings forecast by 3%/12%/18%, due to lower salesassumptions in the US and lower gross margin due to tariffs. We now expect only5% earnings growth in 2025E. Downgrade to HOLD from Buy with new TP ofRMB51 (previously RMB75), based on 12x 2025E P/E. New tariff to more than offset the decline in AD duties in the US. Dingli’sAD duty in the US was finalized at 12.39% in 2024, down substantially fromthe 31.54% set in 2022. However, the newly proposed tariff on Chinesegoods (34%) exceeds the 19ppt reduction on AD duties. This, together withthe countervailing duties (CVDs) of 11.95% and the existing tariff onChinese goods (20%), adds up to a total of >78% tariffs and duties. Accelerated shipment to the US to avoid tariff impact. We understandthat Dingli has been accelerating the AWP shipment to the US since earlythis year to mitigate the impact of upcoming tariffs on China. Given the fullconsolidation of CMEC in 3Q24, we expect these AWPs (already in Dingli’swarehouse in the US) will gradually translate into actual sales and revenuein 2Q and 3Q25E. New target multiple to reflect the uncertainties. Our previous TP ofRMB75 was based on 18x 2024E P/E (1SD below the historical average of31x). Our new TP of RMB51 is based on 12x 2025E, based on 1SD belowthe three-year average P/E (13.5x), as we expect earnings growth to slowsubstantially from previous years. Upside risks: (1) Substantial reduction of proposed tariffs on China; (2)stronger-than-expected demand in other countries that offsets theweakness in the US. Downside risks: (1) Further increase in tariffs in the US; (2) furtherintensified competition in China’s AWP market; (3) continuous weakness ofoverseas demand.