The company announced its 2023 annual results. 1) In 2023, we achieved operating income of 38.42 billion yuan, +8.6% year on year, net profit of 8.75 billion yuan, +31.5% year on year, adjusted net profit of 9 billion yuan, +32.3% year on year, and net interest rate of 22.8%, +3.5pct year on year. The 2023 distribution per share was 0.62 USD, +68% YoY. 2) The fourth quarter of 2023 achieved operating income of 10.62 billion yuan, +7.6% year on year, net profit of 2.21 billion yuan, +3.8% year on year, adjusted net profit of 2.21 billion yuan, +4.4% year on year, and a net interest rate of 20.8%.
Operating data: The volume of packages for the full year of 2023 was 32 billion pieces, with a year-on-year growth rate of +23.8%, surpassing the industry growth rate of 4.4pct; Tongda is ranked by volume growth rate in 2023: Shentong (35.2%) > Zhongtong (23.8%) > Yuantong (21.3%) > Industry (19.4%) > SF Express (7.5%) > Yunda (7.1%); Tongda (7.1%); Tongda (7.1%); Tongda (7.1%); Tongda (7.1%) market share ranking in 2023: Zhongtong (22.1%) > Yunda (14.3%) > Shentong (14.3%) 13.3%). 2023Q4 completed a business volume of 8.71 billion units, up 32.0% year on year, exceeding the industry growth rate of 4.7 pcts. Q4's market share was 22.4%, up 0.8 pct year on year, and remained flat compared to 23Q3.
Single ticket revenue, cost, profit: The decline in the cost of a single ticket exceeds expectations. (1) Single ticket revenue: In 2023, the company's single ticket revenue was 1.24 yuan, a year-on-year decrease of 11.3% (or 0.16 yuan); 2023Q4 single-ticket express revenue was 1.19 yuan, down 18.2% (or 0.27 yuan) from the previous year, and an increase of 0.02 yuan over 2023Q3; the decline in unit prices was mainly due to the combined impact of the decline in the average weight of the company's products, the decline in the business share of direct KA customers, and market competition. The company accurately released network policies based on detailed sorting and control of costs. (2) Single ticket cost:
In 2023, the company's single ticket cost was 0.86 yuan, down 16.6% (or 0.17 yuan) year on year; single ticket transportation cost in 2023 was 0.45 yuan, down 12.1% (or 0.06 yuan) year on year; single ticket sorting cost was 0.27 yuan, down 15% (or 0.05 yuan) year on year; 2023Q4 single ticket express delivery cost was 0.83 yuan, down 19.8% (or 0.21 yuan) year on year, up 0.02 yuan from 23Q3; the company's core cost continued to drop significantly, thanks in part to the scale brought about by strong growth in business volume The release of effects, on the other hand, comes from the release of the effects of refined operation management tools that continue to be implemented, including improvements in operational efficiency brought about by vehicle route optimization, increased capacity vehicles, and increased automation equipment. (3) Net profit per ticket: In 2023, the company's net profit per ticket was 0.29 yuan, up 6.2% (or 0.02 yuan) year on year, and adjusted net profit of single ticket was 0.30 yuan, up 6.9% (or 0.02 yuan) year on year.
Investment advice: 1) Profit forecast: The company focuses on improving service quality and insisting on obtaining profitable business growth, and continues to promote the continuous reduction of core costs such as single ticket sorting and transportation costs through digital intelligence and refined management to achieve balanced development of “quality, quantity, and profit”. The company disclosed that the annual business volume of 2024 is 347.3-35.64 billion units, an increase of 15% to 18% over the previous year. The company values shareholder returns, discloses the 2024 dividend payment rate of at least 40%, and adopts a semi-annual regular dividend policy starting 2024. The company revealed that it plans to add $500 million to the original $1.5 billion repurchase plan, showing confidence. We maintain our profit forecast for 2024-25. We expect to achieve net profit of 10.9 billion yuan and 12.8 billion yuan of net profit to mother, respectively, and introduced a net profit forecast of 14.1 billion yuan for 2026, corresponding to 12, 10, and 9 times PE, respectively. 2) We have given an estimated net profit of 15 times PE for 2024, corresponding to a market capitalization of 163.9 billion yuan (approximately HK$1805 billion), and a target price of HK$218, which is 33% compared to the current price space. We continue to be optimistic about the development opportunities of leading e-commerce express delivery companies and maintain a “recommended” rating.
Risk warning: Fluctuations in the economic environment, intensification of price wars, etc.