What happened: the company reported revenue of 4.08 billion in the first three quarters, up 5.0% from the same period last year, and net profit of 2.66 billion, down 4.1% from the same period last year. Revenue in the third quarter reached 1.38 billion per quarter, which was basically the same as the same period last year, while the net profit of returning home was 800 million, down 21.3 percent from the same period last year.
The number of pieces increased steadily, and the market share decreased slightly: the company achieved 15.01 billion pieces of business in the first three quarters, an increase of 18.4% over the same period last year, of which 5.24 billion in the third quarter, an increase of 14.1% over the same period last year. On the other hand, the company has maintained its own relatively robust price strategy, resulting in a slightly lower growth rate of business volume than the industry average.
Price competition is more fierce, single-vote net profit decreased from the previous quarter: the company's gross profit margin in the third quarter was 9.35%, which was about 1.3pct lower than the same period last year. Affected by the price war, the company's express ticket revenue in the third quarter was about 2.34 yuan, down about 7.8% from the same period last year, which is the main reason for the decline in profits. The company's single-ticket net profit in the third quarter was about 0.14 yuan, which was about 0.03 yuan lower than that in the second quarter.
Compared with its competitors, Yuantong has a stronger ability to resist the profit fluctuations caused by the price war: although Yuantong is under pressure in the price war from the perspective of financial performance, it has a stronger ability to resist price fluctuations than Yunda and Shentong. The net profit after deduction of Yunda in the third quarter dropped to 181 million yuan, and the net profit of single ticket decreased to about 0.04 yuan, which decreased by about 0.06 yuan compared with the previous quarter. Shentong's net profit after deduction in the third quarter was-8 million yuan, resulting in a slight loss. Although Yuantong's non-net profit dropped from 910 million yuan in the second quarter to 757 million yuan in the third quarter, it still maintained a high profit base, which shows that Yuantong has a strong ability to resist the profit fluctuations caused by the price war. We believe that this is mainly due to the fact that the company's stable franchisee network and the good customer experience brought about by digital transformation have brought a service premium to the company's business and avoided the company from falling into the predicament of cost inclusion.
The space for the price war to continue to heat up is limited, and the fourth quarter is expected to usher in the peak season repair: the overall profit pressure of the industry in the third quarter shows that the current price war intensity is already at a high level, considering that the regulatory authorities are committed to creating a healthy competition environment, the situation of price war at a loss has been effectively curbed after 21 years, we believe that the current price war continues to heat up space is relatively limited. With the arrival of the peak season in the fourth quarter, the profitability of the industry is expected to recover to a certain extent.
Company profit forecast and investment rating: affected by the price war, we slightly lowered the company's 2023-2025 net profit forecast to 37.7,44.4 and 4.97 billion yuan, corresponding to EPS 1.10,1.29,1.44 yuan respectively. The current stock price corresponds to 12.4,10.5 and 9.4 times PE in 2023-2025, respectively.
Although the industry is in a more fierce price war, we believe that the room for its intensity to continue to improve is limited, and the current pessimistic expectations have been basically reflected in the stock price, so the company's stock price is obviously undervalued. After a continuous decline, the company's current PE valuation is historically low, and once the price war abates, profits will have strong upward flexibility in the context of a low single-ticket profit base, so the company will be upgraded to a "highly recommended" rating.
Risk tips: macroeconomic recession, intensified competition in the industry, higher-than-expected rise in labor costs, and so on.