Key points of investment
Incident: In 2023, the company achieved net profit of 4.222 billion yuan to mother, and the performance exceeded expectations
In 2023, we achieved operating income of 101.705 billion yuan, -6.94% year-on-year, mainly due to the year-on-year decline in shipping and air freight rates, achieving net profit of 4.222 billion yuan, +3.50% year-on-year, and net profit to mother reaching a record high.
23Q4 achieved operating income of 28.932 billion yuan, +1.79% year over year, and realized net profit of 1,058 billion yuan, +101.36% year over year. On the one hand, thanks to increased gross margin, 23Q4's gross profit margin was 4.88%, an increase of 1.44 pct over the same period in '22. On the other hand, 23Q4 was affected by increased government subsidies, and Q4's other revenue was 779 million yuan, an increase of 343 million yuan over 22Q4.
Agency and related business: Extended service chain, significant increase in gross profit per box 1) In 2023, agency and related businesses achieved external turnover of 61.919 billion yuan, -11.50% year over year, mainly affected by falling shipping and air freight rates. Segment profit was 2.308 billion yuan, +13.37% year over year, and sector gross margin was 5.29%, compared to +0.17pct last year. Active extension of the service chain led to a steady increase in profit margins.
2) By business:
Shipping agents achieved revenue of 41.057 billion yuan, -16.58% year on year, segment profit of 780 million yuan, +8.79% year over year, and shipping agent business volume reached 13.373 million TEU, +2.69% year over year. The share of multi-link shipping business increased, which led to an increase in individual profits. The shipping agent division's profit per box in 2023 was about 58.33 yuan, +5.94% year on year;
Air freight agents achieved revenue of 7.0 billion yuan, -12.97% year-on-year, and the air transport channel (including cross-border e-commerce logistics) business volume reached 920,000 tons, +15.5% year-on-year, and achieved a controllable capacity of 234,000 tons throughout the year.
Professional logistics business: Contract logistics is actively expanding new tracks, and the business scale reached a record high 1) In 2023, the professional logistics sector achieved an external turnover of 27.522 billion yuan, +0.25% year over year, and segment profit of 1,061 billion yuan, +15.22% year over year. The sector's gross margin was 9.20%, an increase of 0.73 pct over last year.
2) By business, the company's contract logistics/project logistics/chemical logistics/cold chain logistics revenue in 2023 was 209.76/40.86/19.89/553 million yuan, +3.94%/+3.03%/-15.51%/-1.07% year-on-year, respectively. The business volume was +13.26%/+10.20%/+3.99%/+0.31%, respectively. Contract logistics, project logistics, and chemical logistics all achieved positive profit growth, +12.57%, +39.39%, and +28.72%, respectively.
3) On the one hand, the high growth in contract logistics comes from the company's active development of new customers. In 2023, the company successfully expanded customers on new tracks such as beauty and home furnishings, and seized new energy vehicle business opportunities to develop leading customers in the industry; on the other hand, it achieved cost reduction and efficiency through lean warehouse operations and other measures, leading to increased profits.
E-commerce business: Cross-border e-commerce business volume +52% YoY, high growth in logistics e-commerce platform business volume led to segment profit +170% YoY
1) In 2023, the e-commerce business achieved an external turnover of 12.263 billion yuan, +3.25% year-on-year, and divisional profit of 199 million yuan, +12.41% year-on-year. The gross margin of the sector was 0.05%, a decrease of 1.54 pct from last year.
2) By business, the revenue of cross-border e-commerce logistics/logistics equipment sharing platforms/logistics e-commerce platforms in 2023 was 90.97/1.63/6.188 billion yuan, respectively, -19.28%/-3.55%/+103.15% year-on-year, while segment profits were +15.22%/-9.33%/+170.00% year-on-year respectively.
3) In 2023, the cross-border e-commerce logistics business volume was 204,000 tons, +52.40%. The company's logistics e-commerce platform Yunyitong's business volume reached 2.474 million TEUs, +137% year-on-year. The high increase in business volume led to a significant increase in revenue and profit in the segment.
Affected by the decline in air freight rates, Sinotrans DHL's net profit was -6.23% YoY, and the total investment income of the company in 2023 was 2,326 billion yuan, or -9.81%. Among them, the joint venture company Sinotrans DHL achieved operating income of 23.031 billion yuan, +8.38% year over year, and realized net profit of 3,501 billion yuan, or -6.23% year over year.
The average BAI80 of the Pudong outbound air cargo index in 2023 was 4,194 points, -39%. The decline in air freight rates led to a decline in Sinotrans DHL's profits, and the sharp increase in revenue may be due to a sharp increase in business volume.
We attach great importance to shareholder returns. The dividend payout rate in 2023 may reach 50.40% (including H share repurchase amount)
Since its listing, the company has maintained a relatively stable dividend policy. The dividend payment rate from 2018 to 2022 was above 30%, and the year-end dividend of 2023 or cash dividend of 0.145 yuan (tax included) per share was issued. If approved, the total dividend amount per share in 2023 reached 0.29 yuan (tax included), and the total dividend amount reached 2.01 billion yuan (tax included), including the H share repurchase amount, and the total dividend rate reached 50.40%.
Outlook: Short-term cross-border e-commerce logistics may welcome rapid growth, and medium- to long-term product optimization will drive a steady increase in profitability
In 2023, the company continued to improve its business structure and strengthen cost control, and the business volume of major business segments grew steadily. In the short term, the rapid growth of cross-border e-commerce platforms in 2024 may drive a significant increase in the company's air transport business volume. In the medium to long term, as the company continues to optimize product channel construction and extend the service chain, single box gross profit continues to increase or drive a steady improvement in the company's profitability, and professional logistics actively lays out new tracks to help the company develop new growth poles.
Profit forecasts and investment advice
After more than 70 years of deep cultivation in the field of international freight forwarding and integrated logistics, Sinotrans has formed a strong professional logistics solution capability, and has a strong position in the industry and a good brand image. In 2024, as shipping and air freight prices return to the normalized range, the company's revenue is expected to be 1180, 1302 and 141.2 billion yuan respectively, and net profit to mother is 44.59, 48.65 billion yuan, and 5,091 billion yuan, respectively. 9.31, 8.53, and 8.15 times, maintaining the “gain” rating.
Risk warning
Risks that global trade growth falls short of expectations; risk of fluctuating sea and air freight rates, etc.