Recently, CITIC Securities released the latest research report on the digital freight platform Manbang Group (YMM.US), giving Manbang a “buy” rating, with a target price of 11 US dollars. In the report, considering the strong increase in the number of Manbang platform users and fulfillment orders in the first quarter of 2023, CITIC Securities raised its revenue expectations and predicted that in 2023 its revenue would exceed 8 billion yuan, an increase of more than 20% year on year. Considering that changes in the company's revenue structure are expected to drive continuous improvement in profitability and raised net profit expectations, it predicted that net profit in 2023 will exceed 2 billion yuan, an increase of more than 50% year on year.
Research reports show that on the business side, online trading services are the main driving factor for the company's revenue growth and profit improvement. Manbang continues to optimize its business structure. Its freight brokerage service has always been positioned as a drainage and sticky business, and is expected to maintain a steady revenue growth rate.
At the same time, Manbang management gave detailed answers to recent concerns about freight brokerage services from the outside world during the earnings conference call. According to reports, the freight brokerage business provided by the platform to the cargo owner mainly means that the platform signs a shipping contract with the cargo owner, then entrusts the driver matched by the platform or designated by the cargo owner to fulfill the freight order. Manbang acts as the carless carrier and provides compliance invoices to the cargo owner. Freight brokerage business helps cargo owners to better prevent cargo damage, driver price increases, and delays. After the order is fulfilled, the platform charges a service fee from the shipper, which is collected in a certain proportion of the shipping fee and confirmed as revenue.
Manbang management revealed that the company positions the freight brokerage business as a user sticky business, and its strategic significance is to increase the stickiness and frequency of use of the platform by shippers. The data shows that shippers using the freight brokerage business ship more frequently on the platform. Currently, shippers are in high demand for this business. In terms of relative volume, the user penetration rate of the freight brokerage business is still very low. In the future, the platform will gradually drive the migration of the freight brokerage business to groups of cargo owners who need to find cars rather than simply invoicing, thereby increasing the profit contribution rate of this business, rather than simply pursuing an increase in the revenue scale of the freight brokerage business.
According to Manbang's management presentation during the previous quarter results conference call, starting in the first quarter of 2023, the platform will no longer disclose GTV. The reason is that GTV's freight rate index is largely affected by many external factors, mainly including oil prices, high-speed toll fees, etc. These factors are affected by uncontrollable forces and are difficult to accurately predict. In contrast, the number of orders fulfilled on the platform can more truly reflect the overall operational capacity of the company's business.
According to the 2022 financial report, freight matching service revenue was 5.657 billion yuan. Under segmentation, freight brokerage service revenue was 3.360 billion yuan, an increase of 34.5%; freight information publication revenue was 852 million yuan; and transaction commission revenue reached 1,444 billion yuan, accounting for 21% of total revenue, an increase of 107.4%. At the same time, data shows that since Manbang began piloting the online trading business in August 2020, the share of freight brokerage service revenue has gradually declined. Manbang's sharp increase in revenue in FY2022 was mainly due to an increase of over 50% in trading commissions and value-added services.
Manbang's management also explained that judging from the platform business itself, excluding the freight brokerage business will also have very little impact on the company's overall profit level, and will not affect the company's continuous operation and increase in business scale.
Furthermore, in response to previous questions about “buying orders” and “exaggerating transaction volume,” Manbang once again refuted that this was due to its lack of understanding of the company's business model. Platform value-added tax is mainly divided into two categories. One category is value-added tax generated by freight brokerage services (car-free transportation) (only this part involves government tax rebates), and the other type is value-added tax generated from other actual business income. Value-added tax is mainly levied based on the invoice amount for freight brokerage services, that is, 9% of Manyunbao's GTV and other business revenue, not based on the GTV disclosed by the platform as a whole. The VAT is calculated based on the platform's overall GTV of 262.3 billion yuan multiplied by 9%, leading to an erroneous conclusion, which is suspected of deliberately misleading investors.