23 A volume-price balance strategy was implemented throughout the year. In 2023, the volume volume remained the second largest in the industry. In 2023, the company recorded a business volume of 212 billion units, a year-on-year growth rate of 21.31%, which is slightly higher than the average growth rate of the industry (19.43%). 23 Throughout the year, the company recorded a single ticket revenue of 2.41 yuan, a year-on-year growth rate of -6.88%. The decline was lower than that of other express delivery companies such as Yunda and Shentong, indicating that the company's competitive strategy in '23 was relatively steady, and the balance between volume and profit performance was achieved as much as possible. In January '24, the company recorded a volume of 2.51 billion pieces, a year-on-year growth rate of 92%, which is still higher than the average industry volume growth rate (84.8%); in the same period, the company's single ticket price was 2.45 yuan, a year-on-year growth rate of -10.6%. The decline was significantly lower than the average price drop in the industry (-21.3%), indicating that the competitiveness and cost performance ratio of the company's products continued to improve.
The new express delivery regulations are officially implemented, and social security for couriers may be promoted one after another, boosting the cost of express delivery terminals. The Ministry of Transport's newly revised “Administrative Measures on the Express Delivery Market” will take effect on March 1, 2024.
Among them, the “Measures” stipulate that if an enterprise operating an express delivery business has any of the following circumstances, the postal administration department shall order correction, warn or report criticism, and may also be fined 10,000 yuan or less; if the circumstances are serious, a fine of not less than 10,000 yuan and not more than 30,000 yuan shall be imposed: (1) confirming receipt of the shipment on behalf of the user; (2) using smart express boxes, express delivery service stations, etc. without the user's consent... Furthermore, on January 19, 2024, the State Post Office held a meeting to publicize the “Ministry of Human Resources and Social Security” Express delivery industry “Special Action Plan to Promote the Labor Contract System”. The conference emphasized “taking practical measures to guarantee the sustainability of the labor contract system and social security payments”. The action plan was organized and implemented in stages according to the goal of “seeing results at the beginning of the year, significant progress in two years, and consolidation and improvement in three years.”
We believe that factors such as the new express delivery regulations and social security payments for couriers are aimed at regulating a series of problems existing in the industry's rapid development process, thereby ensuring the protection of couriers' rights and the smooth operation of the network. This may drive up the operating costs of the end of the industry to a certain extent.
Ready to move forward, the company has both the will and ability to compete, and growth is expected to accelerate. We believe that the intensity of competition in the industry depends on the competitive strategies of enterprises (especially leading companies) and the effects of implementing regulations; if regulations become stricter, it may limit the extent of the price war to a certain extent.
For 21 years, the company has continued to continuously empower and iterate its headquarters and franchisees through digital capabilities. In the first half of '23, the company promoted the implementation of integrated digitalization and standardization of the entire network, empowered the franchise network in multiple dimensions, enhanced the operating capabilities of franchisees, and comprehensively enhanced the competitiveness of the network. We believe that the profitability of a healthy franchisee network is the foundation for the company to further enhance its market share and profit performance in the future.
We are optimistic that the company will accumulate and grow at an accelerated pace in the new round of industry competition.
Investment advice: Reiterate the “buy” rating. Based on the decline in industry and company prices in '23, we lowered our profit forecast. That is, the company's net profit for 23-25 is estimated to be $39/41/49 billion (previous value of $40/48/5.8 billion yuan), and the corresponding PE is 12 x, 12 x, and 10 x, respectively, to reaffirm the “buy” rating.
Risk warning: The growth rate of industry demand is slowing down, the rate of cost decline is slowing down, and price competition is fierce