The company announced its 2023 performance report: In 23, it achieved operating income of 36.28 billion yuan, an increase of 15.6% year on year; of which Q4 revenue was 10.84 billion yuan, up 26.4% year on year; in '23, it achieved profit of 746 million yuan, up 13% year on year, after deducting non-profit of 568 million yuan, up 77% year on year; of these, Q4 achieved profit to mother of 270 million yuan, -14.9% year on year, up 0.1% year on year.

Note: Regarding confirmation of changes in fair value. The company confirmed profit and loss from changes in the fair value of other non-current financial assets - 95.42 million yuan, reducing net profit attributable to shareholders of listed companies by 92.71 million yuan. After excluding this effect, net profit attributable to shareholders of listed companies was 838 million yuan, an increase of 29% over the previous year, achieving net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of 5.68, an increase of 76.85% over the previous year. According to calculations, Q4 confirmed that the profit and loss from changes in fair value was -90.34 million yuan, which estimated to affect the company's net profit of 87.77 million yuan. After excluding this impact, Q4's net profit to mother reached 363 million yuan, an increase of 12.3% over the previous year.

According to the company's announcement, in 2023, the company's business development continued to improve, revenue scale increased steadily, costs and expenses were reasonably controlled, and the profitability of the main business continued to improve: 1) Revenue side: On the one hand, the company actively promoted product upgrades and enhanced product competitiveness. On the other hand, in the second half of 2023, the company and various divisions of JD Group Co., Ltd. gradually carried out business cooperation and resource integration, and promoted network integration projects in an orderly manner. 2) Cost and expense side: The company continues to dig deeper into various lean management initiatives, continuously improve personnel efficiency and asset efficiency, and control costs reasonably and effectively.

Emphasize views, and are optimistic that Debon and JD Logistics will begin resource integration to accelerate the release of synergy effects. In the short term, with the introduction and integration of JD's logistics and express business volumes, it is expected to improve revenue side performance in the short to medium term. According to Debon's related transaction announcement on November 30, 2023, the estimated transaction amount related to the provision of labor services to the JD Group and its controlling companies is estimated to be 3.64 billion yuan in 2023, accounting for 10% of Debon's revenue in 23; in 2024, it is estimated to be 7.79 billion yuan, an increase of 114% over the previous year. In the medium to long term, the strengths of Debon and JD Logistics's various exhibitions complement each other, which is conducive to improving the resource efficiency of all aspects of Debon Logistics's manpower, vehicles, and transit stations, further improving scale effects, and driving down various costs such as manpower, transportation capacity, and depreciation per kilogram of Debon Logistics.

Investment advice: 1) Profit forecast: Due to the impact of fair value profit and loss, we adjusted the 2023-2025 profit forecast to be 7.5 billion yuan, 11.9 billion yuan, and 1.42 billion yuan (the original forecast was 8.5, 12.5 billion yuan, 1.47 billion yuan), corresponding EPS was 0.73, 1.16, and 1.38 yuan, respectively, and the corresponding PE was 19, 12, and 10 times, respectively. 2) Target price: We believe that the inflection point of the company's performance in '22 confirms that profit in '23 achieved significant year-on-year growth, with an average growth rate of about 30% + in 24-25, combined with the future presence of the company and JD Logistics to bring potential growth space through further collaboration and integration, giving an estimated profit of 18 times PE for 24 years, with a target market value of about 21.5 billion yuan and a target price of 20.9 yuan. It is expected to maintain the “recommended” rating.

Risk warning: The economic growth rate is lower than expected, the industry competition pattern worsens, and collaboration with JD falls short of expectations.