The policy is expected to usher in the medium-and long-term inflection point is the core logic of the investment express cabinet industry chain. At present, express delivery and takeout platforms have launched "contactless distribution" services, and the State Post Bureau put forward at a news conference on February 6 that "smart express box model should be actively promoted." As an important carrier of "contactless distribution", intelligent express cabinets will be highly valued at the national policy level and are expected to be vigorously promoted, while consumers' acceptance of express cabinets will be greatly improved after the epidemic.
From an investment point of view, equipment manufacturers are expected to benefit first. We estimate that the stock size of express cabinets is about 330000 sets in 2019. It is expected that the rate of express delivery cabinets will increase to 33% in 2025, and the stock size of express cabinets will reach 2 million sets. With the end of the adjustment of major operators and the accelerated layout of express delivery enterprises, we expect to see an outbreak of demand for express cabinets in 2020. Zhilai Technology, as the leading domestic express cabinet equipment manufacturer (its express cabinet revenue accounts for about 95%), is expected to further increase its market share and fully enjoy the development dividend of the industry.
The company holds the two core customers of "Fengnest" and "Amazon.Com Inc", and the growth point lies in the upstream scale expansion and the improvement of its own market share. 1) the company has carried out business cooperation with Fengnest since 2015. In recent years, Fengnest has continued to build express cabinets in China, with a market share of 55% among operators. Fengnest, as the company's largest customer, accounts for about 52.77% of its revenue. The company is deeply bound to Fengnest, and with the strong market competitiveness of its products, it is expected to further increase its market share. 2) the company has been working with Amazon.Com Inc since 2011 and is currently the only supplier of Amazon.Com Inc's smart express box. Amazon.Com Inc contributed 30.74% of the revenue in 2018, as Amazon.Com Inc continues to promote logistics capacity building. It is expected to continue to promote the company's overseas equipment sales.
"technological advantage + service network" to build competitive barriers and raise investment projects to expand production capacity. The company's gross profit margin of express cabinets is 47.3%, leading its peers in profitability. For the express cabinet manufacturing industry, the company has established two core barriers: 1) to master the core technology of design, production and development, has a number of patents, and the R & D expenses account for more than 3.7% of revenue to meet the needs of different customers. Create reliable and stable products. 2) the company has been ploughing the industry for 20 years and has established a sound marketing and service network with rapid response ability to meet the needs of large customers. At present, the independent production mode of "production to order" adopted by the company, the capacity utilization rate and production and sales rate are maintained at more than 90%. The latest fund-raising project will add 80,000 smart express boxes, opening up room for the company's growth.
Investment suggestion: intelligent express cabinet has important strategic value for terminal distribution (express delivery and real-time logistics). Under the implementation of "contactless distribution" model and national policy, the demand for express cabinet is expected to break out in 2020. Zhilai Technology, as the leading domestic express cabinet equipment manufacturer (its express cabinet revenue accounts for about 95%), has accumulated deeply for 20 years. With the strong market competitiveness of its products, it is deeply bound to Fengnest, Amazon.Com Inc and other big customers. We believe that with the rapid growth of domestic express cabinet demand, the company is expected to further increase its market share and fully enjoy the development dividend of the industry. It is estimated that the return net profit of the company from 2019 to 2021 is 2.7 million yuan, 3.7 million yuan, 4.88 yuan, respectively, and the corresponding PE is 29x, 21x, 16x, respectively. The company will be given a "Buy-A" rating for the first time.
Risk Tips:
1) the growth rate of the express delivery industry is lower than expected, resulting in a slowdown in the growth of related industries at the end. The core driving force of express delivery comes from e-commerce. A sharp decline in the growth rate of e-commerce online shopping will lead to lower-than-expected demand for express delivery, which in turn affects the demand at the end of the express cabinet.
2) great changes will take place in the terminal form of express delivery in the future, and the development of express cabinet industry will be impacted. At present, there are many forms such as post stations and express cabinets at the end of express delivery. If post stations or other terminal forms rise in the future, it will affect the development of express cabinets.
3) the policy promotion is lower than expected, and if the national or industry authorities do not have a substantial promotion policy, it will deal a blow to the laying power of operators, resulting in the demand growth rate of express cabinets being lower than the estimated value.
4) the use of express cabinets is lower than expected, resulting in a lower-than-expected increase in the entry rate of express delivery, which makes the estimated industry space value and growth rate lower than expected.
5) the company's major customers shrink the purchase plan of express cabinets. The company's business is highly dependent on Fengnest and Amazon.Com Inc's two major customers, but express cabinet operators are still in the profit exploration period, if Fengnest continues to lose money or shrink its procurement plan.
6) the increase of the company's supply share in Fengnest is lower than expected. Fengnest has several suppliers, although the company as one of the important suppliers, but may lose share due to increased competition in the industry, resulting in lower-than-expected performance estimates.
7) affected by the epidemic and other extreme circumstances, the company's production capacity or upstream supplier capacity is insufficient.