Lead the domestic cross-belt sorting system, the core technology to create a moat. Zhongke Weiwei to back to the Institute of Microelectronics of the Chinese Academy of Sciences, the core technical personnel and management have a deep technical foundation, and firmly occupy the domestic leading position in the subdivision of cross-band sorting, and the sorting technology is at the international advanced level. In 2020, Zhongke Weizhi's cross-belt sorting system achieved an income of 864 million yuan, with a gross profit margin as high as 43%. The income scale and gross profit margin of the cross-band sorting system are the first in China.
The volume of the downstream express industry is large and the growth rate is stable, and the demand gap for automation is large. At present, express logistics is the main downstream of the domestic automatic sorting equipment industry. according to the statistics of the Post Office, the income of China's express delivery industry increased from 75.8 billion yuan to 879.5 billion yuan from 2011 to 2020, with an average annual compound growth rate of 31%. With the increasingly fierce competition in the express delivery industry, reducing costs and increasing efficiency brought about by equipment automation has become the only way for express delivery enterprises to build competitive advantages. We estimate that the market size of automatic sorting equipment will reach 43.3 billion yuan in 2025.
The scale of orders on hand continues to expand, the landing of fund-raising projects is expected to increase production capacity, and Zhongke is expected to grow. According to the company's prospectus, by June 2021, Zhongke Weiwei's existing orders totaled about 2.805 billion yuan, and the business scale continued to grow significantly; the funds raised in this listing will be used for the research and development of key technologies of intelligent logistics such as intelligent transportation and intelligent warehousing, expand product categories; and integrate the industrial chain to improve the ability of system integration; and enter overseas markets to establish overseas marketing networks and product service bases. The expansion of products and the development of the market are expected to contribute to the sustained high growth of the company.
Profit forecast and investment advice: assuming that 3300 million shares are issued, we expect the diluted EPS of the company to be 2.39 / 3.27 / 4.45 yuan per share in 2021-2023. With reference to the comparable company, taking into account the company's technological leadership and growth, the company is given a PE valuation of 40-50 times the parent net profit by 2021, with a corresponding total market capitalization of 126.04-15.755 billion yuan, and a reasonable value range of 95.77-119.71 yuan per share after the corresponding issue.
Risk tips: the income from ZTO Express is relatively high; the impact of COVID-19 epidemic; the risk of new product research and development; the risk that the implementation effect of the fund-raising project is not as expected; the risk that the immediate return is diluted.