Introduction to this report:
Taking into account the valuation of the industry and comparable companies, as well as price reduction behavior due to the exclusion of risk from high prices during the inquiry process, we expect Demar Technology's issuance price range to be 24.66 yuan to 26.90 yuan.
Summary:
Currently, the market has entered the stage of information validity and low price games between institutions. Taking into account the valuation of the industry and comparable companies, as well as price reduction behavior due to the exclusion of risk from high prices during the inquiry process, we expect Dema Technology's corresponding inquiry range for May 18 to be between 24.66 yuan and 26.90 yuan.
Dema Technology covers the entire logistics transportation and sorting equipment industry chain and is a leading enterprise in the domestic sorting equipment field. The company achieved revenue of 789 million yuan in 2019 and net profit of 64 million yuan. The compound growth rate of revenue and Guimu's net profit in the past three years was 14.22% and 24.87%. The company continued to increase investment in R&D, and the share of R&D expenses in revenue has continued to increase in the past three years. Dema Technology has accumulated key core technologies such as transportation and sorting technology and drive technology, and has formed a competitive advantage in the integrated industrial chain of core component design, key equipment manufacturing, software development, and system integration. The company has participated in the factory side, distribution side and consumer side. Dema Technology's transportation and sorting equipment sales in 2017 were 603 million yuan, accounting for 7.43% of the market segment, ranking at the forefront of the industry, covering core customers in various fields, covering e-commerce (customers include JD, Suning, Amazon, e-bay, Vipshop), express logistics (SF, Cainiao), clothing (Anton, Belle, La Chapelle, Samsonite), pharmaceutical distribution (Kyushu Express, Guangzhou Pharmaceutical), retail (Guangzhou Pharmaceutical), retail (Hema Xiansheng), intelligent manufacturing (Huawei), etc., and the company has accumulated fields such as e-commerce (JD, Suning, Amazon, e-bay, Vipshop), and the company has accumulated More than 150 overseas customers with global operating capabilities.
Based on the above analysis and disclosure in the company's prospectus, based on product or business similarity, we chose Today International, Dongjie Intelligence, Huachangda, Tianqi Co., Ltd., and Yinfei Storage as comparable companies. Comparable companies' price-earnings ratio in 2019 was 42.87-97.99 times, the average was 66.98 times; the predicted price-earnings ratio for 2020 was 18.76-27.79 times, and the average was 23.28 times.
Referring to the company's industry “C34 General Equipment Manufacturing”, the static price-earnings ratio for the past month (as of May 15, 2020) was 29.59 times. Based on the valuations of comparable companies and industries, we gave a valuation range of 33-36 times PE based on the 2019 net profit that has been disclosed in the prospectus, which is higher than the price-earnings ratio of the industry and lower than the average price-earnings ratio of comparable companies in 2019. Based on its estimated total share capital after issuance is no more than 85.68 million shares, the estimated market value after issuance is RMB 2,112 billion to RMB 2,304 billion, and the corresponding issue price range is RMB 24.66 to RMB 26.90.
Risk warning: (1) Be wary of rigidly excluding the risk of 10% higher prices and secondary game behavior on the day market quotes. (2) Operating performance was affected by the downstream industry and fell short of expectations.
