The performance of China's leading integrated logistics solutions provider is expected to continue to recover.

(1) The predecessor of the company was “Changxing Nuoli”. Through the acquisition of Zhongding Integrated and French Savoye, the company continued to expand from a light and small handling vehicle equipment manufacturer to a comprehensive internal logistics solution provider, becoming a leading domestic enterprise.

(2) The revenue scale of the two major business segments, smart logistics systems and intelligent manufacturing equipment, was equally divided. Affected by raw materials and the global epidemic in 2021, the company's profitability declined. In 2022, the company's gross margin recovered 0.79pct to 20.24%, and net interest rate increased 0.75pct to 5.74%. The company's overall cost ratio remained stable during the company period, and future optimization of company management is expected to drive the gross margin and net interest rate to continue to recover.

(3) Family enterprise equity is concentrated, and core personnel have sufficient equity incentives. The controlling shareholder and actual controller of the company is Ding Yi and his immediate family, which together hold 35.64% of the company's shares. The company's executives hold shares, and the company granted equity incentives to core personnel and senior management of France's SAVOYE and eight of its subsidiaries in December 2021, fully stimulating management potential.

Smart logistics: Leading domestic logistics system providers, and an upward inflection point in profit has already arrived.

(1) The domestic smart logistics industry's 100 billion market has entered the stage of accelerated implementation. According to CIC's insight consulting, the size of China's intelligent logistics equipment market in 2022 was 82.99 billion yuan, an increase of 16.1% over the previous year. Among them, the new energy, express express, and FMCG sectors have the largest markets, with 12.2, 12.2 billion yuan, and 10.5 billion yuan respectively. The penetration rate of intelligent logistics equipment in China is still less than 30%. It is estimated that in 2027, China's intelligent logistics equipment market will reach 192.02 billion yuan, and CAGR will reach 18.3% in the next five years, of which the NEV industry will have a CAGR of 33.1% in the next five years.

(2) Compared with other listed companies in the industry, the company has technology, size, experience and brand advantages. Compared with the nine listed logistics automation companies, Nuoli Co., Ltd. has the largest revenue and order scale. Accounts receivable and inventory turnover days are at the leading level in the industry, and capital recovery is significantly superior to that of its peers. In 2022, 4.5 billion new logistics orders were signed, and 6.455 billion in hand orders (excluding tax). More than 2000 related logistics system engineering cases have been completed, and customers are widely distributed, with case accumulation and experience advantages in multiple industries.

(3) There have been marginal changes in the two major logistics subsidiaries, and profits in the logistics sector are expected to recover. The ROE level of Nuoli Co., Ltd. is leading among listed companies in the same industry, but the net interest rate in 2022 was only 5.7%, which is lower than the industry average of around 8%. The efficiency of Zhongding's integrated optimization management team improved, and the net interest rate was restored to 6.4% in the first quarter of '23; as raw material prices fall and operating revenue increases, France's Savoye's profitability is expected to continue to increase.

Forklifts: The traditional trolley business has a stable position, creating the second growth pole for large cars.

(1) Under the advantages of economy and environmental protection, the trend of lithium electrification of forklifts is clear. Compared with fuel forklifts, electric forklifts are more economical and environmentally friendly. The share of electric forklifts in China increased from 26.51% in 2011 to 64.39% in 2022, and the penetration rate of lithium electric forklifts increased from 2% in 2017 to 41% in 2022.

(2) The overseas penetration rate of domestic forklifts is still low, and exports of lithium battery forklifts are going global. Domestic forklifts have gone global, benefiting from delivery times and price advantages in the lithium battery industry chain in the short term. In the long run, under the lithium electrification trend, the gap between domestic forklifts and global leaders has narrowed, which is expected to reshape the pattern of the forklift industry.

(3) The company's car market position is extremely strong, and the “Big Car Strategy” opens the second growth pole. The company has the highest sales volume of light and small manual trucks in the world, and the sales volume of electric storage forklifts is in the top three in China. Seizing the trend of lithium battery forklifts going overseas, the company plans to build a production capacity of 30,000 new large vehicles. It is estimated that production will reach 3 billion yuan in annual sales revenue within 2 years. Release new products to ensure the implementation of the big car strategy, compete in a differentiated competition with Hangzak and Fork, and use the channels and ODM/OEM resources accumulated by cars to form unique export competitiveness. Currently, the company accounts for less than 4% of the big car market. With the gradual release of big car production capacity, there is huge room for future growth.

Profit forecast: We expect the company's revenue for 2023-2025 to be 7.9 billion yuan, 10 billion yuan, and 12.4 billion yuan respectively; +18%, +27%, +24%, respectively; the net profit of the mother is 508 million yuan, 676 million yuan, and 886 million yuan respectively, +26%, +33%, +31%, respectively; EPS is 1.90 yuan, 2.53 yuan, and 3.31 yuan respectively; according to the stock price on May 13, 2023, the corresponding PE will be 10.4, 7.8, 6.0 times, respectively, to be purchased Rating (for the first time).

Risk warning: the risk of reduced demand due to the downturn in overseas economies; the risk of exchange rate fluctuations; management risks arising from the integration of company resources and scale expansion; the risk of rising costs due to fluctuations in raw material prices; risk of loss of core technology and management personnel; the risk of information being delayed or not updated in a timely manner; risk of bias in industry market size estimation.