With the optimization of epidemic prevention and control, the express delivery industry is recovering rapidly.

On December 7, the Comprehensive Group of the Joint Prevention and Control Mechanism of the State Council issued the Circular on further optimizing and implementing the measures for the Prevention and Control of COVID-19 's epidemic situation. Then, on December 9, the Office of the leading Group of the State Council issued the notice on scientifically and accurately doing a good job in the work of Traffic and Logistics.

(1) completely cancel the epidemic prevention checkpoints of highways, waterways and ship locks set up in various localities, (2) completely abolish the closed-loop management requirements of freight vehicles, and (3) completely cancel the "landing inspection" of cross-regional mobile truck drivers and crew.

In this context, recently, express transit centers and outlets in some parts of the country have been quickly unsealed, and the operational efficiency of express delivery has been improved. some express delivery outlets have rebounded and recovered quickly from the suspension of operation and the backlog of express delivery.

According to the State Post Bureau, about 4.303 billion items were collected from the network from December 1 to 12, up 5.6 per cent from the same period last year. In particular, since the release of the "New Ten principles" for epidemic prevention and control on December 7, the daily collection volume has remained at more than 360 million pieces. On the day of "double 12", postal and express delivery enterprises across the country collected 453 million pieces of mail (express), basically the same as that of "double 12" in 2021.

In addition, in order to ensure the smooth flow of express delivery channels, the state also focuses on ensuring the safe and orderly transportation of materials, ensuring the stable operation of the transportation and logistics network, and strengthening the service guarantee of traffic and logistics employees. At present, the blocking points in most parts of the country are effectively dredged, and the backlog of mail express has also been dynamically cleared.

As of December 11, the postal express distribution center has been closed nationwide, and only some outlets in Beijing and other places have been closed because of the epidemic.

Take extreme Rabbit Express as an example, at present, the two major transfer centers in Guangzhou are in low-risk areas, have orderly promoted the resumption of work and production, in the normal state of operation. In terms of outlets, the operation of the network in the low-risk area gradually resumed. Guangzhou Polar Rabbit suspended operation of about 40% / 50% of the network in November due to closure and control, and the operation of the network has resumed to more than 90% in early December. Guangdong Polar Rabbit as a whole, about 20% of the network operations were suspended in November due to closure, and the network operation has resumed to more than 95% in early December.

Haitong International said that after the Shanghai epidemic, the overall business volume of the express delivery industry showed a trend of recovery, but the year-on-year growth rate was still lower than the level in recent years. With the recent optimization of prevention and control measures, the impact of the epidemic on the economy has gradually weakened, superimposed the traditional peak season is approaching, industry business is expected to usher in a faster recovery.

Looking forward to next year, with the elimination of the influencing factors of the epidemic, the growth of express demand is expected to increase significantly.

According to the logic of industrial development, the trend of historical data, and the specific situation of the epidemic in the past three years, Guoxin Securities expects the industry express delivery volume to return to double-digit year-on-year growth next year and significantly better than 10%.

Specifically, as the transmission power of the Omicron virus this year is stronger than that of the new crown virus strain in 2020, the government will regulate express delivery operations in areas where the epidemic is spreading (while national express delivery has been operating normally from April to December 2020). Therefore, the limited supply of express delivery this year is one of the main reasons for the sharp slowdown in the growth of express business volume.

According to the growth rate of online retail sales of physical goods from 2015 to 2021, the theoretical growth rates of 2022 and 2023 are fitted with the index trend (assuming that the supply of express delivery is not affected by the prevention and control of the epidemic). By dividing next year's theoretical online retail sales of physical goods by the actual value of this year, the predicted growth rate of online shopping next year is about 14%. If there is no interference from epidemic prevention and control factors next year, the growth rate of express delivery volume will be the same as that of online shopping, so it is concluded that the growth rate of express demand next year is expected to be significantly better than 10%.

Focusing on the situation of each listed company, Guoxin Securities mainly recommended SF Holdings for three reasons: first, under the background of the deregulation of epidemic control and the marginal improvement of macroeconomic and consumption growth, the growth rate of prescription express is expected to be significantly better than this year; second, the company has entered the channel of declining capital expenditure this year and next year, and with the reduction of resource investment and the steady increase in high-quality business, the company's profitability will continue to improve next year. Third, the air transit center of Ezhou Airport will be put into operation in the second half of next year, and the operating effect will gradually show, which is expected to form a strong catalyst.

Secondly, Yuantong, Yunda and ZTO Express are recommended. Under the background of the deregulation of epidemic control and the marginal improvement of macroeconomic and consumption growth, the demand growth of e-commerce express delivery next year will be repaired obviously, and the competition will still remain relaxed. Yuantong, Yunda and ZTO Express, as the leading e-commerce express delivery enterprises, volume and profit growth is expected to be better than the industry, corresponding to the PE valuation of 16x, 17x and 20x respectively next year, all at the low level of historical valuation.