Key points of investment
Different from the market: The market believes that the company's attributes are commercial real estate, the main business growth is weak, Chinagoods, and the payment business are in the early stages, and the profit contribution is low. On the other hand, we believe that the company has benefited from the Belt and Road Initiative, 1039 trade, and industrial agglomeration in Yiwu. The supply of high-quality stores is in short supply, and operating income is expected to increase.
Furthermore, the company's leasable area continues to expand: the consolidation of the old area plus active investment promotion in Zone 2 East, and the contribution of the Global Digital Trade Center, which will be launched in October 2025; Chinagoods and Payment is an important part of the company's transformation into a comprehensive trade service provider, further empowering merchant operations, solving the pain points of merchants in logistics, warehousing, operation, trading and payment, forming a closed loop of digitalization, adding new monetization channels, and opening up a long-term growth center.
Cross-border trade is booming, and Yiwu has a unique location advantage and obligation. The import and export market is booming, and industry, logistics, and capital are concentrated, providing a unique place of business. With policy support such as the “Belt and Road”, the “Yixinou” train, and the 1039 pilot, trade facilitation has improved, and demand continues to expand.
Company level: The main business has been steadily expanded and upgraded to a top integrated trade service provider.
Yiwu's commercial market boom surpassed the same period in 2019, and the main business ushered in a strong recovery. Occupancy rates have remained high in recent years, and the market value of stores has continued to rise. The main business continues to expand. The second district east market was completed in June 2022. Through digital applications and intelligent services, the market infrastructure is expected to be fully upgraded, and it is expected that the new third floor will increase its performance. In 2025, the company will build the Yiwu Global Digital Trade Center on the east side of Zone 5 of Yiwu International Trade City, with a total construction area of about 1,236 million square meters, and a total project investment of about 8.32 billion yuan. The overall market business is expected to continue to expand.
Integrated service products such as Chinagoods and E-Pay are leaps and bounds in upgrading the company's business, forming a closed loop of digital transactions. 1) Chinagoods connects the needs of both supply and demand in various aspects such as production design, display and trading, market management, logistics and warehousing, financial credit, etc., with the aim of promoting the efficient and accurate allocation of market resources and creating a real, open and integrated digital trade complex. GMV surpassed the scale of 65 billion yuan in 2023, far exceeding the target of 50 billion yuan set at the beginning of the year, and growth continued to exceed expectations. 2) Yiwu Pay was officially launched in February 23, marking that the world's largest small commodity distribution center has its own global payment channel, helping Yiwu's 900,000 market players, and 2.1 million upstream and downstream micro, small and medium-sized enterprises have a global digital chain and no boundaries for payments. 3) Establish a global Yida and comprehensive insurance zone, continuously arrange logistics and warehousing, and establish strong delivery and contract fulfillment capabilities.
Profit forecasting and valuation
The company is expected to achieve operating income of 167.57/201.14/23.543 billion yuan in 2024-2026, +48.30%/+20.03%/+17.05%; net profit to mother of 29.94/30.47/4.158 billion yuan, +11.88%/+36.45% year-on-year, corresponding to PE 16X/15X/11X. Consider the company's leading position in cross-border trade and long-term growth, and give it an “gain” rating.
Risk warning
Geopolitical risk; project progress risk; macroeconomic fluctuation risk.