Brief performance review
On March 22, 2024, Sinotrans released its 2023 annual report. In 2023, the company achieved operating income of 101.705 billion yuan, a year-on-year decrease of 6.94%; realized net profit to mother of 4.222 billion yuan, an increase of 3.50% over the previous year. Among them, 4Q2023 achieved operating income of 28.932 billion yuan, up 1.79% year on year, and realized net profit of 1,058 billion yuan, up 101.36% year on year. The company's full-year and fourth-quarter results exceeded market expectations.
Management analysis
Freight forwarder profits increased, and professional logistics profits increased. By business: 1) Foreign revenue of the freight forwarding business in 2023 was 61.92 billion yuan, -11.5% year-on-year, mainly due to the decline in shipping and air freight rates; segment profit was 2,308 billion yuan, +13.4% year over year, mainly due to the company's active extension of the service chain to drive profit growth. Among them, shipping agents made a single box profit of 58.3 yuan, +5.9% year on year. 2) The professional logistics business achieved external revenue of 27.52 billion yuan, +0.3% year on year; segment profit was 1,061 billion yuan, +15.22% year over year. Among them, the contract logistics division's profit was +12.6% year-on-year, mainly due to new customer expansion results and cost reduction in lean warehouse operations. 3) The e-commerce business achieved external revenue of 12.26 billion yuan, +3.3% year on year; realized segment profit of 199 million yuan, +12.4% year over year. The company's cross-border e-commerce business volume reached 204,000 tons, +52.4% year-on-year, mainly benefiting from the development of the cross-border e-commerce market. 4) The company achieved investment income of 2,326 billion yuan, or -9.8% year-on-year, of which Sinotrans DHL's net profit contributed 1,751 billion yuan, or -6.23% year-on-year, mainly due to the decline in air freight rates.
The year-on-year increase in gross margin led to an increase in net profit margin to mother. The company achieved a gross profit margin of 5.72% in 2023, +0.14pct year-on-year. Among them, the gross margin of the agency business was +0.17pct, the gross margin of the professional logistics business was +0.73pct, and the gross margin of the e-commerce business was 1.54 pct year-on-year. The company's sales expense ratio was 1.06%, +0.11pct year on year; the management expense ratio was 3.32%, +0.23pct year on year. Net profit margin was 4.15%, +0.41pct year over year.
The dividend payout ratio has increased, and the company has strengthened its network layout. The company plans to pay a dividend of RMB 0.145 per share at the end of 2023. If implemented, the annual dividend will be 0.29 yuan per share (the company has implemented a mid-term dividend), and the dividend ratio is 49.77%, an increase of 13.99 pcts compared to 2022. In 2023, the company continued to strengthen its transportation and freight forwarding network layout. The domestic company completed the integration of the Yangtze River container business and became the largest branch line carrier in public containers in the Yangtze River. On the international side, the company set up a Hungarian subsidiary and built a network covering 21 countries in Central and Eastern Europe. City-level branches continue to be opened in places such as Singapore, Malaysia, Vietnam, Laos, and Indonesia, and the network layout in Southeast Asia is improving day by day.
Profit Forecasts, Valuations, and Ratings
Net profit attributable to mother in 2024-2025 was raised to 4.69 billion yuan and 5.03 billion yuan, and net profit to mother was increased by 5.17 billion yuan in 2026. Maintain a “buy” rating.
Risk warning
There is a risk that air and sea freight rates will fluctuate greatly, and there is a risk that competition in the international freight forwarding industry will worsen further.