Based in the Shanghai Free Trade Zone, the company's asset-light model provides high-end supply chain services for the automotive, IT, medical and other industries.
With the gradual establishment of five key logistics bases, the company's service model has been extended to the whole country, and its performance is expected to grow rapidly. For the first time, it has been given a “Highly Recommended - A” rating, with a target price of 11.4 yuan.
State-owned supply chain enterprises in Shanghai, management's shareholding interests are highly consistent. The company is a state-owned supply chain enterprise under the Pudong New Area of Shanghai. Management's shareholding was achieved through capital increases and equity transfers in 12-13. Shareholders' interests and management interests were highly consistent. Taking advantage of the location advantages of the Shanghai Free Trade Zone, the company specializes in high-end supply chain services, with customers concentrated in the fields of automobiles, high-tech electronics, medical devices and reagents.
Information technology is the core competitiveness, leasing warehouse+business outsourcing asset-light management. The company uses information systems as its core competitiveness, externally integrates functional modules in ERP, SCM-HUB, and WMS, and fully digitizes its business. As of August '17, the company's warehouse houses were about 488,000 square meters, of which 338,000 square meters were leased (accounting for 69.3%), and the assets were relatively light. In addition, the company outsources non-core businesses such as customs inspection, logistics and distribution, simple warehousing and operation to improve operational efficiency.
The gross margin of the core business is over 30%, which highlights the true character of high-end services. With Shanghai as its core, the company has gradually formed “five core backbone bases” covering East China, North China, South China, Southwest and Central China. The main business includes integrated supply chain services, medical device logistics and manufacturing (mainly automobiles) logistics, and the mature service model has gradually been extended to the whole country. Automobile manufacturing logistics competition is fierce, and gross margin is relatively low. As the company expands into the high-tech electronics industry in the future, the profit level is expected to increase; the gross margin of integrated supply chain services and medical device logistics is stable at around 30%, and the revenue share is rising steadily, which is the double axis driving the company's performance growth.
Fund-raising projects: The company plans to publicly issue no more than 92.17 million shares to raise capital for projects such as the Southwest Logistics Center. The total investment for fund-raising projects is 926 million yuan, and plans to use the raised capital of 639 million yuan.
Investment strategy: The company is based in the Shanghai Free Trade Zone. Although the five major logistics bases are gradually formed and the service model has been extended to the whole country, its performance is expected to grow rapidly. We predict that the company's EPS in 17/18/19 will be 0.38/0.42/0.45 yuan, corresponding to the issue price of 19.2/17.5/16.4X PE. For the first time, it covered the “Highly Recommended - A” rating. The target price was 11.4 yuan, corresponding to 30X PE in '17.
Risk warning: customer concentration risk, policy risk
