China has high logistics costs and great potential for efficiency improvement. In 2020, the scale of intelligent logistics systems reached 100 billion yuan. In 2014, the total logistics cost in China accounted for about 16.6% of the country's GDP, which is twice that of developed countries such as the United States and Japan. There is a lot of room for efficiency improvement, and intelligent logistics equipment has a long-term objective demand foundation.

In 2014, China's intelligent logistics system was approximately 42.5 billion yuan (including automated three-dimensional warehouses, trolleys and AGVs, and automated sorting and conveying systems), and it is expected to exceed 80 billion yuan by 2020, with a CAGR of about 15%.

Industry driving force: Downstream capital expenditure drives industry development, and the listing of express delivery companies continues to drive China's express delivery business volume to reach 120 billion in 2015, with a CAGR of over 50% in the past five years.

The labor cost of the express delivery industry accounts for over 40%, and the industry competition is becoming increasingly fierce, which suppresses profit margins.

Express logistics automation is a breakthrough point for cost reduction and efficiency improvement. Since the end of 2015, express delivery companies have been intensively entering the capital market, and capital expenditures will significantly increase, driving the demand for intelligent logistics equipment to increase.

Industry pattern: Foreign investment accounts for most of the market share, and there is a certain gap between domestic companies. About two-thirds of the domestic market share is occupied by foreign investment, and domestic enterprises have weak discourse power. System integration giants represented by Dafu, Saint Phaer, and Dematic dominate the global market. Domestic companies started relatively late and there is still a certain gap.

International experience: The transformation from an equipment supplier to an integrated general contractor is a necessary path to growth. Combining industry value, growth rate, and international experience, we believe that from the perspective of the industrial chain, we are optimistic about core equipment, especially automated three-dimensional libraries; From a business model perspective, we are optimistic about enterprises with the ability to design, plan, and implement integrated general contracting.

Investment recommendation: Intelligent logistics equipment is entering a period of rapid development, with a "cautious recommendation" rating. Intelligent logistics equipment is entering a period of rapid development, and the intensive listing of e-commerce and express delivery is catalyzing the development of the industry. We are optimistic about core equipment suppliers and system integration general contractors. Be optimistic about Nori Group, Huazhong CNC, Tianqi Group, and pay attention to Dongfang Jinggong, Shandong Weida, Dongjie Intelligence, Yongli Group, etc.

Risk factors: Macroeconomic downturn exceeding expectations, suspension of shell mergers, IPOs, etc!