The company disclosed its results for the third quarter of 2023, with Q3 revenue of 13.759 billion yuan, an increase of 0.01% over the previous year. Revenue for the first three quarters was 40.759 billion yuan, up 4.98% year on year, and net profit was 2,659 billion yuan, down 4.06% year on year. The company's operating performance in the first three quarters was relatively steady, maintaining the company's buying rating.
Key points to support ratings
Operating income is relatively stable, and net profit has declined somewhat. According to data released by the State Post Office, from January to September 2023, the total business volume of express delivery service enterprises nationwide reached 93.12 billion units, an increase of 16.4% over the previous year; the total business revenue reached 854.55 billion yuan, an increase of 11.1% over the previous year. The company's 23Q3 express delivery business completed 5.237 billion units, an increase of 14.10% over the previous year; the cumulative number of express delivery services completed in the first three quarters was 15.013 billion units, accounting for 16.12% of the business volume of express delivery service enterprises nationwide. In the first three quarters, the company achieved cumulative revenue of 40.759 billion yuan, an increase of 4.98% over the same period in 2022, and net profit of 2,659 billion yuan, a year-on-year decrease of 4.06%.
Single ticket prices and costs have declined, and gross margin has declined. Competition in the industry was still intense in the third quarter of 2023. The company's 23Q3 single ticket revenue fell 7.88% year on year to 2.33 yuan. Although single ticket revenue has declined and oil prices have risen, thanks to factors such as the company's continued deepening of cost control, the cost of a single ticket fell in Q3 in 2023. However, due to the decline in single ticket revenue, the company's Q3 gross margin fell 1.33pct year on year to 9.35%.
Actively promote digital transformation, continuously improve management systems, and continuously enhance core competitiveness. In terms of core competitiveness, the company has improved in three areas. The first is to continue to promote digital transformation and strengthen digital capabilities; the second is to promote the upgrading of automation, including unmanned and flexible production; and finally, management reforms to promote the integration of management and production operations of transfer centers and franchisees. In addition to this, the company has also increased investment in infrastructure, improved handling efficiency, and extended main line transportation from the center to franchisees. As the 'Project No.1, 'a representative project of digital standardization transformation, the company has proposed a plan to increase efficiency and improve quality. Currently, it is widely distributed among franchisees. In the future, it may save operating costs for franchisees and promote distributed cost reduction.
valuations
We maintain our previous profit forecast. We expect the company's net profit from 2023-2025 to be 42.10/50.98/5.899 billion yuan, +7.4%/+21.1%/+15.7% year-on-year, and EPS is 1.22/1.48/1.71 yuan/share, corresponding to PE 11.0/9.1/7.9 times, respectively, maintaining the company's buying rating.
The main risks faced by ratings
Demand growth fell short of expectations, competition among industries intensified, labor costs rose, and economic recovery fell short of expectations.