The leading logistics automation system integrators, tobacco and lithium industry advantage. Founded in 2000, it is one of the earliest enterprises engaged in logistics automation system integration in china. The company has independent research and development of logistics management and control system, to provide customers with integrated warehousing, distribution automation logistics system and services. The company started with the logistics automation business in the tobacco industry, is now in the leading position in this field, the customer coverage rate reached 80%; in 2016, the tobacco industry achieved revenue of 276 million yuan, an increase of 56.66%. 2014 began to expand the field of new energy vehicles, the successful implementation of the BYD "automatic detection and high temperature storage logistics system project, the contract amounted to 205 million, a strong demonstration effect; at present, CATL, BYD, Zhuhai long silver and other mainstream battery manufacturers are the company's quality benchmark for customers, companies continue to release in the lithium battery industry competition order. A significant advantage.

Sales expenses and R & D investment increased in the first half of the decline in performance, the second half of the confirmation and development of orders is expected to grow substantially. The company achieved revenue of 169 million yuan in the first half, a decrease of 2.98%; net profit of 21 million 708 thousand and 900 yuan to the parent, down 31.23%. Revenue declined slightly mainly due to the project orders delivered less, concentrated in the second half of the completion and settlement. Net profit declined more than revenue, mainly because the company increased business development efforts and R & D investment, the cost grew larger, of which sales costs 13 million 969 thousand and 800 yuan, an increase of 29.45%; management costs 30 million 650 thousand and 900 yuan, an increase of 25.57%. The first half of the company's orders in hand 1 billion 32 million yuan, of which the tobacco industry orders 720 million yuan, accounting for 69.70%; the power lithium battery industry orders 234 million yuan, accounting for 22.66%; in general, the lithium battery industry project delivery cycle for 3-6 months, the tobacco industry for 6-12 months, the company orders full, the second half of the revenue that is expected to increase the first half of the year; at the same time, power lithium battery industry new orders 220 million yuan, an increase of 354.64%, R & D cost increases will strengthen the company's new product development efforts to further open new areas to expand the space order.

The benefit of the downstream power lithium battery manufacturers capacity expansion, the lithium industry orders is expected to grow rapidly. According to EVTank forecast, at the end of 2017, lithium battery mainstream manufacturers capacity will reach 140GWh, and by the end of 2016, the total capacity is only 71.3GWh, the gap of 68.7GWh; according to each GWh corresponding logistics automation investment about 40 million yuan calculation, the potential market size is about 2 billion 748 million yuan. The company has a significant advantage in the lithium industry, will fully benefit from lithium battery capacity expansion, performance in 2018 is expected to continue high growth.

Equity incentives in place to help companies continue to expand across industries. In May 2017, the company awarded 2 million 829 thousand and 600 shares of restricted shares to Dong Jiangao and its core technical personnel, with a price of 17.60 yuan / share, and the lifting of the ban for 2017-2019 years was based on the net profit of 2016, with an increase rate of not less than 15%, 40% and 70%. We believe that equity incentives will help retain key technical personnel, and help companies in the new energy batteries, cold chain, high-speed rail, aerospace and other areas of continuous development capabilities.

First coverage gives overweight rating. The company expects 2017-2019 years net profit of 1, 1.53, 195 million yuan, corresponding to EPS were 0.65, 1, 1.26 yuan / share, according to the latest closing price of 27.27 yuan, corresponding to PE were 42, 27, 22 times, the first coverage to "overweight" rating.