Yongtaiyun released 2023Q3 results: the company's operating income in a single quarter was 640 million yuan, down 15.39% from the same period last year, and its net profit was 38.7256 million yuan, down 63.88% from the same period last year. In the first three quarters, the company's operating income was 1.843 billion yuan, down 23.57% from the same period last year, and its net profit was 142 million yuan, down 42.20% from the same period last year.

Q3 performance was-64% year-on-year, a decline that exceeded expectations. 2023Q3, the company's operating income in a single quarter was 640 million yuan, down 15.39% from the same period last year, and its net profit was 38.7256 million yuan, down 63.88% from the same period last year. In the first three quarters, the company's operating income was 1.843 billion yuan, down 23.57% from the same period last year, and its net profit was 142 million yuan, down 42.20% from the same period last year. The company's performance declined more than expected. In terms of profit margin, Q3 gross profit margin was 14.3%, down 4.6 percentage points from the same period last year; and the net return rate was 6.1%, down 8.1 percentage points from the same period last year.

The low prosperity of the industry has an impact on the company's short-term performance, and the volume of operating boxes continues to improve. We believe that the year-on-year decline in revenue is mainly due to the low prosperity of the shipping market this year, the low operation of the major shipping and comprehensive freight index, the weak overall market demand, and the high base in the same period last year; referring to the Ningbo export container freight index, the average 2023Q3 is-73% year-on-year. On the other hand, with the growth of the company's customers and market share, the company's operating volume continued to grow compared with the same period last year; 2023Q3's cross-border chemical logistics supply chain service box volume reached 388,000 TEU, an increase of 18% over the same period last year. In addition, Q3 company's financial expenses of 8.52 million yuan (2022Q3 financial expenses-24.4 million yuan) have an impact on the company's profits: 1) due to exchange rate fluctuations, Q3 company recorded an exchange loss of 2.6216 million yuan, compared with an exchange gain of 24.5777 million yuan in the same period last year; 2) with the increase in bank borrowing, the company's interest expenses increased.

There is still long-term growth potential. In the long run, we believe that the company will continue to benefit from: 1) stricter safety supervision in the chemical logistics industry, it is beneficial to professional leading enterprises that have been recognized by the market and have a stable history of safety operation; 2) the company is based on East China, which is economically active and in strong demand. Ningbo Port has formed a scale advantage, continue to expand other parts of the country, the market share is expected to increase rapidly. 3) "Transportation Chemical" platform has the advantage of integrating downstream small and medium-sized customers, and has its own storage resources, and the storage area is expected to continue to grow in the future. In view of the low prosperity of shipping, we downgrade the company's profit forecast and estimate that the company's net profit for 2023-25 will be 2.0 and 270 million respectively. Based on our earnings forecast, the company's current share price corresponds to 2023-25e Ppace E in 18-13-11, maintaining the company's "highly recommended" rating.

Risk tips: downstream chemical industry risk; safety operation risk; policy risk; the company's business development and warehousing growth is not as expected.