Key points of investment:
Incident: Sinotrans released its 2023 annual report. The company's annual revenue was 101.705 billion yuan, down 6.94% year on year, and net profit to mother was 4.222 billion yuan, up 3.5% year on year. Among them, 2023Q4 revenue was 28.932 billion yuan, up 1.26% year on year, and net profit to mother was 1,058 billion yuan, up 110.61% year on year, up 6.7% month on month, and Q4 performance reached its peak in the same period in history.
The results exceeded expectations.
Shipping agents: Cost advantages brought by core storage warehouses. Volume and price have risen sharply, and unit profit continues to rise. In 2023, the total shipping volume reached 13.373 million TEU, up 2.69% year on year, and segment profit was 780 million yuan, up 8.8% year on year; of these, Q4 business volume was 3.728 million TEU, up 7.65% year on year. The annual gross profit of a single shipping container was 58.33 yuan/TEU, an increase of 5.94% over the previous year. The shipping market has abundant supply, strong cargo collection capacity, and increased freight forwarder discount rates. Combined with the cost advantages brought by core storage warehouses, high cargo volume resilience, and expansion of profit margins.
Air freight agents: Segment profits declined due to fluctuations in air freight rates and charter prices. The company completed the annual air transport business volume of 698,000 tons (excluding cross-border e-commerce business), with a year-on-year increase of 7.88%, and a division profit of 284 million yuan, a year-on-year decrease of 15.5%; of these, the Q4 business volume was 20.2 tons, up 6.32% year on year. The increase in air traffic volume was mainly due to the increase in the capacity of the company's Middle East, Latin America and other routes, and the annual controllable capacity reached 234,000 tons. The annual gross profit per ton of air freight was 314.86 yuan/ton, a year-on-year decrease of 26.81%.
Professional logistics: The cost advantage of core regional teams entering the warehouse was evident, and contract logistics growth exceeded expectations. Annual revenue was $27.522 billion, up 0.25% year on year; segment profit was $1,061 million, up 15.22%. Among them, contract logistics business volume was 468.19 million tons, up 13.3% year on year, division profit growth rate 12.6%; project logistics business volume was 6.275 million tons, up 10.2% year on year, and segment profit growth rate 39.4%; chemical logistics business volume was 38.29 million tons, up 4.0% year on year, segment profit growth rate 28.7%; cold chain logistics business volume was 980,000 tons, up 0.3% year on year, and division profit decreased by 14 million yuan.
The air transport-related business is related to market sentiment, and the investment income of Sinotrans DHL declined. The company's annual investment income in joint ventures and joint ventures was 2.27 billion yuan, a year-on-year decrease of 4.92%. Among them, Sinotrans DHL contributed 1.75 billion yuan to investment income, a year-on-year decline of 6%. According to DHL's financial report, Sinotrans DHL's net profit in 2023 was 396 million euros, a year-on-year decrease of 25.7%. Affected by the renminbi-euro exchange, the decline in Sinotrans DHL's contribution to investment income was lower than the decline in net profit.
Equity incentives build a bottom line of performance. In November 2021, the company once again issued a draft equity incentive plan. The ROE for 2021-2023 is not less than 10.25%, 10.5%, 10.75%, and not lower than the industry average. In addition, net profit to mother grew at a compound rate of 11%, 11.25%, and 11.5%. According to the exercise requirements, the company's net profit to mother in 2024 was not less than 4.257 billion yuan.
Continued stable dividends bring a margin of safety. According to the company's announcement, the company plans to distribute year-end dividends and is expected to pay a cash dividend of RMB 1,051 million (tax included). In addition, the company paid a mid-year dividend of RMB 1,051 million on October 19, 2023. The total annual dividend amount accounts for 49.77% of the mother's net profit, combined with the repurchase of the company's H shares, with a dividend rate of 50.4% and a dividend rate of 5.1%.
Maintain a “buy” rating. Considering the strong resilience of the company's main freight forwarding business, the cost advantage of core warehouses is obvious. Professional logistics continues to increase, the company's profit forecast for 24-25 was raised, and the profit forecast for 2026 was added. The company's 2024E-2026E net profit is estimated to be 43,46,4.9 billion yuan (the original 24-25 forecast was 4.10 billion yuan, 4.3 billion yuan), corresponding to 10/9/8 times PE. Maintain a “buy” rating.
Risk warning: The global economy is declining, leading to a continuous decline in international trade volume and demand; the competitive pattern of contract logistics has further deteriorated.