Intelligent logistics market space is nearly 100 billion, system integration and equipment enterprises have ushered in a golden period of development: in recent years, China's e-commerce has developed rapidly. According to Ai Media Consulting, by 2019, the number of China Mobile Limited e-commerce users will exceed 700 million. With the rapid growth of the express delivery market in the same period, according to the data of the State Post Bureau, it has exceeded 63 billion pieces in 2019, with an average daily delivery capacity of 170 million pieces handled by express enterprises. It is estimated that the annual business volume of China's express delivery will reach 74 billion pieces in 2020. Domestic labor costs are rising year by year. Compared with the logistics warehousing level of developed countries, there is more room for improvement in China. According to the statistics of the forward-looking Industrial Research Institute, the overall penetration rate of logistics automation in China is about 20%, while that in developed countries is 80%. China's intelligent logistics industry still has great potential for development. Intelligent logistics system combines automated warehousing, automatic handling, automatic transportation and logistics management software, which can well reduce labor costs and improve the efficiency of manufacturing and circulation. The rapid rise of intelligent logistics is expected to solve the problem of high logistics cost in China for a long time. In 2018, the market scale of China's automated logistics system is expected to break through the 110 billion mark, and the compound growth rate of the industry is expected to maintain more than 15% in the next few years. We predict that the scale of China's intelligent logistics system integration market in 2020 will be close to 140 billion yuan, with an average annual compound growth rate of more than 20%. Intelligent logistics system integration and intelligent logistics equipment enterprises will usher in a golden period of development.

Intelligent transportation and sorting are the core of intelligent warehousing, and domestic enterprises are expected to speed up the realization of import substitution:

Intelligent logistics transportation and sorting system is the core subsystem of material handling and warehousing, and it is the key equipment to perform the functions of commodity entry / exit, zero sorting, review and packaging, path sorting and so on, just like the aorta throughout the whole process of logistics. With the rapid development of e-commerce, the operation efficiency, accuracy, stability, on-line rate and processing capacity of transportation and sorting system and equipment are important factors that determine the operation efficiency, operation cost, operation quality and user satisfaction of warehouse distribution center and modern logistics system. Intelligence, modularization and standardization have become the key factors and development trend that affect the performance of transportation and sorting system and equipment.

The most advanced logistics transportation and sorting technology and enterprises in the world are mainly concentrated in Europe, the United States, Japan and other developed countries and regions. After years of development, a small number of leading domestic enterprises have accumulated more experience, and the level of equipment manufacturing has been continuously improved. Compared with foreign advanced equipment technology, the technical level of domestic logistics transportation and sorting equipment has been greatly improved with the rapid development of the industry in recent years, but there is still a gap in technology integration capability, equipment stability, processing efficiency, processing capacity, error rate and so on.

Domestic logistics equipment enterprises started relatively late, but the technology gap is constantly narrowing, and breakthroughs have been achieved in several areas with the highest technical difficulties (automated three-dimensional database, AGV, sorting machine). Domestic brands with core technology are expected to accelerate import substitution in the wave of localization.

Intelligent logistics transportation and sorting leader, fund-raising projects to expand production capacity: Dema Science and Technology is the only scientific and technological innovation enterprise in China that covers the whole industrial chain of intelligent logistics transportation and sorting equipment, and presided over the formulation of national standards for the prices of some finished products. Customers include JD.com, Cainiao, Shunfeng and other well-known enterprises. The company is mainly engaged in the research, design, manufacture, sales and service of automatic logistics transportation and sorting system, key equipment and its core components, and is a leading enterprise in the field of domestic automatic logistics transportation and sorting equipment. In 2017 and 2018, the amount of orders from regular customers is more than 70%. In 2019, the company vigorously develops overseas business while maintaining the orders of old customers. In 2019, the operating income was 789.1659 million yuan, an increase of 9.35% over the same period last year, and the net profit was 64.0136 million yuan, an increase of 10.31% over the same period last year. With the continuous improvement of the industrial environment, the company relies on its strong ability of independent research and development and innovation, as well as the rich experience accumulated in various application fields and a comprehensive and accurate understanding of customer needs. Business has achieved rapid development, and business income and profitability continue to grow. According to the company's preliminary calculation, affected by COVID-19 's epidemic situation, from January to June 2020, the company's operating income is expected to be about 3.05-325 million yuan, an increase of about-2% to 5% over the same period last year, and the net profit is about 14 million yuan to 16 million yuan, an increase of about-2% to 12% over the same period last year. After deducting non-recurring profits and losses, the net profit belonging to the shareholders of the parent company is about 8 million yuan to 11 million yuan, an increase of about 5% to 44% over the same period last year. The company plans to further enhance the competitiveness of its products and expand its production capacity. 378 million yuan will be used for the transformation of the industrial base of the intelligent transportation and sorting system, the construction project of the digital workshop, and the research and development project of the new generation intelligent logistics transportation and sorting system.

Investment suggestion: we have selected the domestic intelligent logistics industry company Today International, Nuoli shares, Tianqi shares, Yingfei Storage as comparable companies. Among them, net profit and operating income use wind consistent forecast data. The average PE of the above companies in 2019 is 34.80 times, and the average forecast PE from 2020 to 2021 is 20.73,15.16 times. The average value of PS in 2019 is 3.92 times, and the average predicted PS in 2020-2021 is 3.36,2.62 times. According to the PE and PS valuation levels of the above companies, considering that Science and Technology Innovation Board's listed Dema Technology belongs to the scarce intelligent logistics transportation and sorting target in the industry, and considering giving a certain valuation premium, it is estimated that the 2020 net profit of Dema Technology will be reasonably valued by PE30-35 times, PS2.5-3 times and then multiplied by our forecast 2020 net profit of 72 million yuan, and operating income of 863 million yuan. The two market capitalization ranges are 21.46-2.504 billion yuan and 21.58-2.59 billion yuan respectively. Considering the approximate market value range obtained by the above two valuation methods, the market value range that intercepts the overlapping part as a reference is 21.58-2.504 billion yuan. The number of new shares issued by Dema Science and Technology is 21.41915 million shares, with a total share capital of 85.676599 million shares, thus the corresponding future price range is 25.19-29.23 yuan.

Risk tips: fierce competition in the industry; bad debt risk of accounts receivable; lower-than-expected risk of technology and R & D; depressed demand risk of downstream industries; risk of price fluctuation of major raw materials; risk of international trade disputes; legal risk of overseas operations.