Zhejiang Damon Technology Co.Ltd(688360) (688360)
Report summary
Company profile: focus on the field of intelligent transportation and sorting, with steady performance growth. The company was founded in 2001. Taking the conveying roller as the starting point, it has accumulated technical experience in the core components of conveying and sorting, and then extended to the downstream. It has continuously launched slider sorters, cross belt sorters, new rollers and other products, and completed the strategic reorganization of the business division in 2012 to determine conveying and sorting as the core business. So far, the company’s business has spread over more than 30 countries and regions around the world, radiated the world with Shanghai headquarters and Huzhou central factory, and set up production bases and sales service centers in Australia and Romania, becoming a leading enterprise in the field of intelligent logistics transportation and sorting equipment in China. Regardless of the impact of the epidemic in 2020, the compound growth rate of the company’s revenue and net profit attributable to the parent company from 2015 to 2019 was 18.5% and 24.1%, with steady performance growth.
Industry analysis: it is widely used and has considerable demand. The leader is stable and all boats compete for the best. 1) Driven by both market environment and policy, downstream demand continues to rise. The continuous expansion of the scale of industrial enterprises and social retail industry has given birth to the growing demand for logistics management. However, due to the gradual decline of demographic dividend, China’s labor cost is increasing, and the demand for warehousing logistics automation management in various industries is increasing. At the policy level, in recent years, relevant departments have successively issued a series of policies, repeatedly mentioned to improve the intelligent level of warehousing and logistics equipment, increase the promotion and application of intelligent warehousing and logistics equipment, and support the upgrading and development of warehousing and logistics automation system industry. 2) There is no leader in the Chinese market, and domestic manufacturers are expected to fully enjoy the industry beta. In the global market, the top 10 sales revenue are located in developed countries and regions such as the United States, Europe and Japan. Due to long-term technology accumulation, foreign enterprises have advantages in warehousing and logistics software and hardware technology, product quality, system stability, industry experience and brand awareness. At present, the Chinese market is in a state of full competition and no leading enterprise has been born. The gap between the technical level of Chinese manufacturers and foreign enterprises is gradually narrowing. Moreover, the warehousing and logistics automation system project of Chinese enterprises has the advantages of strong customized service ability, high cost performance and timely service response, and is expected to fully enjoy the industry beta.
Core components have obvious advantages and rich experience in system integration projects. At the core component level, the company’s conveying rollers have a good reputation and high cost performance in the industry, with an annual output of more than 5 million. The customer group covers well-known equipment manufacturers at home and abroad, with significant competitive advantage. In 2019, the gross profit margin of the company’s roller business reached 29.99%, 2.3pct higher than the comprehensive gross profit margin. At the equipment level, the parameters of the company’s conveying and sorting equipment have basically exceeded the Chinese industry standards and reached the level of international well-known enterprises. At the system integration level, the company has completed more than 1000 system integration projects for many benchmarking customers in e-commerce, express logistics, clothing, medicine, tobacco, new retail and intelligent manufacturing industries at home and abroad, including JD and rookie.
Accelerate the layout of overseas markets and continue to make efforts in the post epidemic era. The company is one of the earliest logistics equipment enterprises in China to layout the overseas market. After years of layout, the company has accumulated more than 150 overseas customers and established a standardized and modular product system suitable for the international market, which can meet the characteristics and requirements of global sales, transportation, on-site installation and after-sales service. In recent years, the company’s overseas business has performed well. After 2015, the gross profit margin of export sales is significantly higher than that of domestic sales. In 2020, the gross profit margin of export sales will reach 36.56%, 11.8pct higher than that of domestic sales. From 2016 to 2020, the company’s export revenue CAGR reached 36%, and the export revenue reached 211 million in 2020, accounting for 27.51% of the revenue. The overseas business continued to develop.
Profit forecast and investment suggestions: we expect the company’s operating revenue from 2021 to 2023 to be 1.422 billion, 1.843 billion and 2.302 billion respectively, with a year-on-year increase of 85.37%, 29.67% and 24.88% respectively; The net profit attributable to the parent company was 88 million, 170 million and 244 million respectively, with a year-on-year increase of 32.74%, 93.21% and 43.03% respectively, and the corresponding PE was 30.7x, 15.9x and 11.1x respectively. The company is an invisible leader in the field of intelligent transportation and sorting. It has been deeply cultivated in the field of intelligent transportation and sorting for many years. It has a solid customer base, high product cost performance, leading overseas strategic layout, and sorting technology can be benchmarked with international enterprises. The valuation has high cost performance. It is covered for the first time and is given a buy rating.
Risk tips: the risk of sharp fluctuations in raw material prices, the risk that downstream demand is less than expected, the risk that overseas business expansion is less than expected, and the risk that information lags behind or is not updated in time
