Zhongtong Express released its 2023 annual report. It achieved annual revenue of 38.42 billion yuan, an increase of 8.6% over the previous year, and achieved adjusted net profit of 9.01 billion yuan, an increase of 32.3% over the previous year. The company announced a dividend of 0.62 US dollars per share in 2023, promising a dividend distribution ratio of not less than 40% for the semi-year 2024, while increasing repurchase efforts.
The 23-year results show the resilience of leading companies, and the volume is expected to increase by 15% to 18% in 24 years. 1) Volume: In 23, the company completed 32 billion units of business, up 23.8% year on year, exceeding the industry volume growth rate of 4.4 pcts. The market share was 22.9%, up 0.8 pcts year on year. Of these, 23Q4 completed business volume of 8.75 billion units, up 32.7% year on year, market share was 22.4%, up 0.8 pcts year on year, basically flat month on month, and continued to lead the industry in volume. The company expects the 24-year volume range to be 347.3-35.64 billion units, up 15% to 18% year on year. 2) Single ticket revenue: 23Q4 The company's single ticket revenue (excluding freight forwarding) was 1.19 yuan, down 0.27 yuan year on year, up 2 cents from month to month, or mainly due to a decline in the company's direct customer revenue while continuing to optimize loss-making business. 3) Single ticket cost: 23Q4 single ticket transportation cost was 0.46 yuan, single ticket distribution cost was 0.26 yuan, a total year-on-year decrease of 0.11 yuan. The company continues to optimize loading rates and transportation routes, improve distribution efficiency and automation levels, and achieve cost savings. The gross margin of the company's express delivery business was 38.4% in '23, up 0.8 pcts year on year. Among them, the gross margin of the 23Q4 express delivery business was 29.5%, up 1.4 pcts year on year, increasing cost productivity, making leading operations resilient.
Q4 Calculate the impact costs of loss preparation, increase dividends and increase repurchase efforts. The company's 23Q4 sales, general and administrative expenses increased by 24.9% year-on-year to 700 million yuan. The increase was mainly due to loss provisions arising from providing loans to equipment suppliers. 23Q4's net profit after a single ticket adjustment was 0.25 yuan, all of which declined from month to month. Zhongtong Express strengthened investor return management and announced a cash dividend of $0.62 per share of American Depositary Shares and Common Shares in 2023. The dividend increased 68% year over year, and the dividend ratio reached 40%. At the same time, it has implemented a semi-annual regular dividend payment policy since '24, and the dividend ratio is not less than 40% of the profits that can be distributed for the fiscal year. At the same time, the company expanded its share repurchase plan by 500 million US dollars to 2.5 billion US dollars, and extended the effective period until June 30, '25. Active investor management combined with early entry is expected to strengthen the company's market attention.
Investment advice. In the homogenized competition to join express delivery, Zhongtong continues to adhere to the concept of balanced development of quantity, quality, and profit. Forward-looking strategic measures for production capacity investment and franchise network management brought the company a triple barrier of cost+network+capital. The company's moat is stable. The company's net profit is expected to be 103.6/118.9/13.62 billion yuan in 2024-2026, respectively, an increase of 18%/15%/15%, corresponding to PE 12.9x and PB 2.0x in 2012. Maintain a “Highly Recommended” rating.
Risk warning: Industry price competition exceeds expectations, downstream e-commerce consumer demand falls short of expectations, core costs have risen sharply, etc.