Event

The company released the third quarterly report of 2023: the company's operating income in the first three quarters of 2023 was 3.528 billion yuan, down 34.76% from the same period last year; the net profit was 41.69 million yuan, down 58.14% from the same period last year; and the net profit after deducting 8.7 million yuan was down 91.74% from the same period last year. Of this total, the operating income of Q3 company was 1.264 billion yuan, down 28.63% from the same period last year, and the net profit from home was 20.03 million yuan, down 42.90% from the same period last year. The net profit after deducting non-profit was 14.31 million yuan, down 71.46% from the same period last year.

Comment

Performance decline narrowed month-on-month, deducting non-net profit to become a regular employee. In the first half of 2023 and the first three quarters of 2023, the company's operating income and net profit were-37.75%, 34.76% and-66.42%, respectively, compared with the same period last year. The month-on-month decline in operating income and net profit in the first three quarters narrowed, and the deduction of non-net profit in the first three quarters turned negative compared with the first half of the year. The marginal improvement of the company's performance is mainly due to the active business expansion of the company under external shocks, and the introduction of important customers in the electronic information industry, automobile industry, intelligent manufacturing and other industries, promoting the business volume to stabilize and gradually pick up. We expect the company's Q4 to continue to improve year-on-year growth in the single quarter under the conditions of the company's efforts and last year's low base.

Coordinated development of business structure to speed up the construction of overseas networks. The company actively develops the business and develops the integrated logistics business while the freight forwarder business receives the impact. At the same time, the company pays close attention to the supply chain layout of customers' transfer to Southeast Asia, speeds up case replication, and further extends the supplier business overseas to seize the opportunity. We believe that the company is expected to continue to open up room for growth by continuing to improve integrated supply chain services and expand the scope of services in the medium and long term.

Adhere to the data and technology two-wheel drive strategy. On the one hand, the company continues to cooperate with BABA to promote the construction of Shuangzhong Taiwan; on the other hand, the automated storage area is further expanded to achieve the improvement of human-efficiency ratio / cost-effectiveness ratio. We believe that digital technology and intelligence can be used as a sufficient underlying driving force to continuously contribute to the development of various businesses.

Major earnings forecasts and assumptions: taking into account the weak external demand and the sharp decline in freight rates compared with the same period last year, and according to the latest performance of the company, we downgrade the company's profit forecast. We estimate that the homing net profit of the company from 2023 to 2025 will be 0.63, 0.86 and 0.32 respectively (the original forecast is 0.97 and 1.27), and the EPS will be 0.17 and 0.23 respectively.

Compared with comparable companies, taking into account the growth potential of the company's comprehensive logistics business and the continuous improvement of the company's digital intelligence level, maintain the company's target price of 8.56 yuan (corresponding to 36.8 times PE valuation in 2024) and maintain the "better than the market" rating.

Risk hint: macroeconomic recovery is not as expected, business development is not as expected, and industry policy has changed.