Description of the event

Yunda Co., Ltd. disclosed its three-quarter report for 2023: in the first three quarters, the company achieved operating income of 32.84 billion yuan, a year-on-year decrease of 6.8%; realized net profit of 1.16 billion yuan, an increase of 56.1% over the previous year; and realized net profit of 970 million yuan, an increase of 39.1% over the previous year. In the third quarter, the company achieved operating income of 11.26 billion yuan, a year-on-year decrease of 9.2%; realized net profit of 300 million yuan, an increase of 51.5% over the previous year; and realized net profit of 180 million yuan, an increase of 10.2% over the previous year.

Incident comments

Shares improved month-on-month, and single ticket revenue was under pressure. In 2023Q3, the company's express delivery revenue fell 8.7% year on year to 10.08 billion yuan, and volume price increases reduced express delivery revenue year on year. In 2023Q3, the company's volume was 4.87 billion units, up 6.4% year on year, lower than the industry volume growth rate of 16.7%; the company's market share was 14.5%, down 1.4 pct year on year, up 0.5 pct from month to month, and its share improved steadily from month to month. In 2023Q3, the company's single ticket revenue was 2.22 yuan, down 0.37 yuan from the previous year and 0.10 yuan from the previous month. Market competition intensified, and the company's unit price declined month on month.

Single ticket profits are under pressure, and costs are effectively reduced. In 2023Q3, the company's gross profit for a single ticket was 0.20 yuan, down 0.01 yuan from the previous year and 0.07 yuan from the previous month. Competition intensified, and single ticket profits were under pressure. 2023Q3, the company's single ticket cost decreased by 0.39 yuan year on year and 0.04 yuan month on month. The company made efforts to reduce costs and increase efficiency, and the increase in share led to a month-on-month improvement in costs.

Expense control is better, and profits and losses have increased more. In 2023Q3, the company's single ticket fee decreased by 0.05 yuan year on year, and single ticket sales expenses/single ticket management expenses/single ticket financial expenses decreased by 0.01/0.02/0.02 yuan year on year, respectively. Other income from a single ticket/fair value income from a single ticket decreased by 0.01/0.02 yuan, respectively. Non-recurrent profit and loss on a single note increased by 0.02 yuan year-on-year, mainly due to the disposal of non-current assets. In the end, the net profit deducted from a single ticket was 0.04 yuan, the same as the previous year, down 0.06 yuan from the previous month.

Capital expenditure declined, and operating cash flow improved. In 2023Q3, the company's capital expenditure was 4.1 billion yuan, a year-on-year decrease of 41.8%. The reduction in the scale of capital expenditure will effectively improve the efficiency of resource use. In 2023Q3, the company's net operating cash flow was 370 million yuan, up 44.0% year on year, and the cash flow level improved year over year.

The number of items has been steadily repaired, and we look forward to management improvements. Competition in the 2023Q3 market has intensified, and the decline in the company's unit price has put pressure on single ticket profits.

However, as an industry leader, the company focused on its main business to drive management improvements, and achieved a month-on-month increase in share. At the same time, efforts were made to reduce costs and increase efficiency. Cost improvements were very effective. It is expected that the company's management will continue to improve, and its overall competitiveness will be further strengthened. Profitability is expected to increase steadily. The company's net profit from 2023-2025 is estimated to be 18.0/26.3/3.07 billion yuan, corresponding to PE 14.7/10.1/8.6X, maintaining the “buy” rating.

Risk warning

1. Industry price competition intensifies;

2. The recovery in macro-demand fell short of expectations;

3. Oil prices and labor costs have risen sharply.