Company profile: focus on the field of intelligent transportation sorting, steady performance growth. The company was founded in 2001, taking the conveying roller as the starting point, accumulated the technical experience of conveying and sorting core components, and then extended downstream, continuously introducing slider sorting machine, cross-belt sorting machine, new rollers and other products, and completed the strategic reorganization of the business department in 2012, and identified transportation and sorting as the core business. So far, the company has business in more than 30 countries and regions around the world, radiating the world with its headquarters in Shanghai and the central factory in Huzhou, and setting up production bases and sales and service centers in Australia and Romania. it has become a leading company in the field of intelligent logistics transportation and sorting equipment in China. Regardless of the impact of the 2015 epidemic, the company's income grew at a compound rate of 18.5% from 2020 to 2019, and its net profit grew at a compound rate of 24.1%.

Industry analysis: the demand for wide application is considerable, and the bibcock is stable to compete for the best. 1) driven by both market environment and policy, the downstream demand continues to rise. The continuous expansion of the scale of industrial enterprises and social retailing has given rise to a growing demand for logistics management, but due to the gradual fading of the demographic dividend and the continuous growth of domestic labor costs, the demand for automated management of warehousing and logistics in various industries is increasing. At the policy level, in recent years, relevant departments have issued a series of policies, repeatedly mentioned to improve the intelligent level of warehousing and logistics equipment, increase the promotion and application of intelligent warehousing and logistics equipment, and support the upgrading and development of warehousing and logistics automation system industry. 2) the domestic market has not yet been born, and domestic manufacturers are expected to fully enjoy the industry beta. In the global market, the top 10 sales revenue are all located in the United States, Europe, Japan and other developed countries and regions. Due to long-term technology accumulation, foreign enterprises have advantages in warehousing and logistics software and hardware technology, product quality, system stability, industry experience and brand awareness. At present, the domestic market is in a state of full competition, leading enterprises have not yet been born, the gap between the technical level of domestic manufacturers and foreign enterprises is gradually narrowing, and the warehousing logistics automation system projects of domestic enterprises have the advantages of strong customized service ability, high performance-to-price ratio, timely service response and so on. It is expected to fully enjoy the industry beta.

Obvious advantages of core components and rich experience in system integration projects. At the core component level, the company's conveying rollers have a good reputation and high performance-to-price ratio in the industry, with an annual output of more than 5 million units, a customer base covering well-known equipment manufacturers at home and abroad, and a significant competitive advantage. In 2019, the company's roller business gross profit margin reached 29.99%, higher than the comprehensive gross profit margin 2.3pct. At the equipment level, the parameters of the company's transportation and sorting equipment have basically exceeded the domestic industry standards and reached the level of international well-known enterprises. At the system integration level, the company has completed more than 1000 system integration projects for many benchmark customers in domestic and foreign e-commerce, express logistics, clothing, medicine, tobacco, new retail and intelligent manufacturing industries, including JD.com and Cainiao. Experienced.

Accelerate the layout of overseas markets and continue to make efforts in the post-epidemic era. The company is one of the domestic logistics equipment enterprises that laid out the overseas market earlier. After years of layout, the company has accumulated more than 150 overseas customers and established a standardized and modular product system suitable for the international market. It can adapt to the characteristics and requirements of global sales, transportation, on-site installation, after-sales service and so on. In recent years, the company has performed well in its overseas business. After 2015, the gross profit margin of export sales was significantly higher than that of domestic sales. In 2020, the gross profit margin of export sales reached 36.56%, which is higher than that of domestic sales by 11.8pct. From 2016 to 2020, the company's export income CAGR reached 36%. In 2020, export income reached 211 million, accounting for 27.51% of the income, and overseas business continued to develop.

Profit forecast and investment advice: we expect the company's operating income from 2021 to 2023 to be 1.422 billion, 1.843 billion and 2.302 billion respectively, an increase of 85.37%, 29.67% and 24.88% respectively over the same period last year, and the return net profit is 88 million, 170 million and 244 million respectively, an increase of 32.74%, 93.21% and 43.03% respectively over the same period last year, and the corresponding PE is 30.7X, 15.9X and 11.1x respectively. As an invisible leader in the field of intelligent transportation and sorting, the company has been deeply cultivated in the field of intelligent transportation and sorting for many years, with a solid customer base, high cost-effective products, leading overseas strategic layout, sorting technology can be calibrated with international enterprises, and the valuation has a high performance-to-price ratio. for the first time, give a buy rating.

Risk hints: the risk of large fluctuations in raw material prices, the lower-than-expected risk of downstream demand, the lower-than-expected risk of overseas business expansion, the risk of lagging information or not updating in a timely manner.