Zhongtong Express Reveals 2023 Annual Report
Zhongtong Express disclosed its 2023 annual report. Operating revenue for 2023 was 38.42 billion yuan, up 8.6% year on year. Net profit attributable to common shareholders was 8.75 billion yuan, up 28.5% year on year, and adjusted net profit attributable to common shareholders was 9.0 billion yuan, up 29.4% year on year. Among them, the company's revenue for the fourth quarter was 10.62 billion yuan, up 7.6% year on year, and realized net profit attributable to ordinary shareholders of 2.19 billion yuan, an increase of 1.3% year on year.
In 2023, the company's express delivery order volume increased by 23.8%, and China's express delivery industry continued to recover in 2023. As the leading e-commerce express delivery company in China, Zhongtong Express's business volume continued to grow rapidly. In 2023, Zhongtong Express's express delivery service business volume reached 30.2 billion units, up 23.8% year on year, and the market share reached 22.9%, up 0.8 pct year on year. Among them, the company's express delivery service volume in the fourth quarter of 2023 was 8.703 billion units, up 32.0% year on year, market share 22.3%, down 0.1 pct from month to month. Price competition in the express delivery industry was relatively intense in 2023. The company's express ticket revenue (excluding delivery fees) declined year-on-year, by 12.0% to 1.175 yuan. In 2023, the company's express delivery business revenue was 354.9 yuan, an increase of 8.9% over the previous year.
The cost of a single ticket continues to decline, and the company's performance is basically in line with expectations
The company continues to improve the processing capacity of the express delivery business and the ability to handle rapid increases in cargo volume, and continues to invest in the construction and transformation of sorting centers, the expansion of the main line transport fleet and the upgrading of logistics infrastructure. By the end of 2023, the company's logistics infrastructure included 99 sorting centers, 464 automated sorting lines, and more than 10,000 self-operated trunk trucks. Thanks to infrastructure guarantees and operational efficiency improvements, the company's single ticket cost was reduced by 13.2% to 0.723 yuan in 2023, of which the single ticket transportation cost was reduced by 12.0% to 0.450 yuan, and the cost of the single ticket forwarding center was reduced by 15.0% to 0.273 yuan. Overall, the company's leading position in e-commerce express delivery business was stable in 2023. Market share increased, business volume increased and prices fell, and performance was basically in line with expectations.
Order volume is expected to increase by 15-18% in 2024. It is proposed to stabilize dividends and increase the repurchase amount. The company will continue to optimize digital operations and fine management in the future, pay more attention to improving service quality, and ensure share stability on the basis of guaranteeing reasonable profits. It is expected that the annual package volume will increase by 15-18% over the previous year, consolidating its leading position in e-commerce express delivery. In terms of dividend payouts and repurchases: The board of directors of the company has approved the declaration of regular cash dividends every six months starting in 2024. The total amount of dividends for each half year is not less than 40% of the company's profits that can be distributed in that fiscal year. In addition, the board of directors of the company has approved the expansion of the share repurchase program by 500 million US dollars to 2 billion US dollars, and the effective period will be extended by one year until June 30, 2025.
Investment advice
The express delivery industry grew at 28.5% in the first two months of 2024, maintaining a relatively rapid growth rate, and is expected to continue to maintain double-digit growth throughout the year. As the core leading e-commerce express company, the company stabilizes capital expenses while increasing dividends. It is no longer aggressive about the sinking of the low-end market, the intensity of the industry price war may have declined, and the company continues to emphasize improving service quality. While stabilizing market share, the company is making further efforts to improve the overall profit level. The company's revenue for 2024-2026 is estimated to be 42.65 billion yuan, 47.23 billion yuan, and 51.43 billion yuan, respectively, up 11.0%, 10.7%, and 8.9%, respectively. The net profit attributable to common shareholders is 9.77 billion yuan, 11.08 billion yuan, and 12.37 billion yuan respectively, up 11.7%, 13.4%, and 11.6% year-on-year respectively.
The company's closing price on March 26, 2024, corresponding to the 2024-2026 EPS PE valuation was 12.7X, 11.2X, and 10.0X, respectively, covering the first time to give it a “buy” rating.
Risk warning:
The macroeconomic economy declined, the express delivery industry's growth rate fell short of expectations, and the price war worsened.