Event: The company released its 2023 annual report and 2024 quarterly report. The company achieved operating income of 57.7 billion yuan in '23, up 7.7% year on year; realized net profit of 3.72 billion yuan, down 5.0% year on year; realized net profit without return to mother of 3.6 billion yuan, down 4.6% year on year. The company's revenue for the first quarter of '24 was about 15.4 billion yuan, up 19.5% year on year; net profit to mother was about 940 million yuan, up 4.1% year on year; net profit after deducting non-return to mother was about 90 billion yuan, up 3.2% year on year. The company plans to pay a cash dividend of 0.35 yuan/share (tax included).
The volume of the company's express delivery orders maintained a high growth rate. The company's express delivery volume in 2023 was about 212 billion, an increase of 21.3% over the previous year, which is higher than the national express order volume growth rate (19.4%). In 2023, the company's express delivery business accounted for 16.1% of the business volume of express delivery service companies in the country, an increase of 0.25 pct over the same period last year. In the first quarter of 2024, the company completed about 5.57 billion express deliveries, up 24.9% year on year, lower than the national express delivery order growth rate (25.2%), accounting for 15.0% of the country's express delivery business volume, a decrease of 1.57 pct compared to the same period last year.
Express ticket revenue declined, and express delivery business revenue continued to grow. The company's express delivery business revenue in 2023 was about 51.1 billion yuan, up 13.0% year on year, down from the same period last year (20.7%); single ticket revenue was about 2.41 yuan, down 6.7% year on year, mainly due to increased market competition. In the first quarter of 2024, the company's express delivery product revenue was about 13.5 billion yuan, up 18.8% year on year; single ticket revenue was about 2.43 yuan, down 4.9% year on year, up 0.26% from the fourth quarter of 2023.
Cost reduction and efficiency are driving the cost of a single ticket to continue to decline. The company's express delivery service costs rose 14.4% year on year in 2023, benefiting from the increase in express delivery business volume and the company's continued focus on deepening cost control. The single ticket cost for the company's express delivery business in 2023 was about 2.18 yuan, down about 6.0% year on year. Among them, single ticket delivery costs, single ticket center operation costs, and single ticket network transit fees decreased by 3.8%, 9.7%, 5.4%, and 14.5%, respectively.
Based on the cost of revenue, the gross margin of the company's express delivery business was about 10.3% in '23, a year-on-year decrease of 0.86pct. The company's gross profit per ticket in 2023 was about 0.23 yuan, a year-on-year decrease of 13.0%.
The profit contribution of international business and aviation business declined. The impact of the pandemic has subsided, and the profit contribution of the company's international business and aviation business has declined. Yuantong Express International achieved net profit of 81 million yuan in 2023 (3.85 billion yuan in 2022); the aviation business division lost 30 billion yuan in 2023 (profit of 130 million yuan in 2022).
Improve the infrastructure layout and consolidate the foundation for the development of the main business. In 2023, the company continued to consolidate network infrastructure construction, investing nearly 4.9 billion yuan in capital expenditure for transit center construction, automation equipment upgrades, capacity improvement, and introduction of all freighters, etc., to further strengthen control over core assets and establish a solid foundation for the development of the main business.
Investment advice: The company's cost control has achieved remarkable results, and the cost of a single ticket has dropped significantly; industry competition continues to intensify, and the company's single ticket revenue is under pressure in the short term. Considering the intense market competition, we lowered the company's net profit forecast of 2%/3% for 24-25 to 4.40 billion yuan and 4.99 billion yuan respectively, adding 5.64 billion yuan to the 26-year net profit forecast. Overall, on the basis of guaranteeing an increase in market share, the company insists on prudent management and continues to promote cost reduction and efficiency, which is expected to maintain a stable single-ticket profit. We maintain the company's “gain” rating.
Risk warning: Demand for express delivery declined due to the risk of macroeconomic fluctuations; competition in the industry exceeded expectations and led to a decline in single ticket revenue; enforcement of administrative supervision fell below market expectations.