Under industry competition, the company's profit for 23 years was under pressure; 1Q24 had steady performance, Yuantong Express released 2023 and 1Q24 results: 1) Achieved operating revenue/net profit to mother of $57.68 billion/3.72 billion yuan in 23, +7.7%/-5.0% year-on-year, of which 4Q23 achieved net profit of 1.06 billion yuan, -7.4%/+33.2% year-on-year; 2) 1Q24 achieved net profit to mother of 940 million yuan, +4.1% year over year. In '23, through integrated digital construction throughout the network, the company improved service quality and operating efficiency, and achieved share growth to support an increase in revenue scale; however, the downward pressure on industry prices was strong, suppressing short-term profit levels. Looking ahead to 24 years, we are optimistic that the company will continue to strengthen its standardized service capabilities. Brand premiums are expected to continue to rise, price competition in the superposition industry is slowing down, and the company's profit is expected to grow steadily. Considering continued competition in the industry, we lowered our 2024/2025 net profit forecast of 3%/3% to 4.47 billion yuan, added the 2026 forecast of 6.03 billion yuan, and lowered the target price by 3% to 20.8 yuan, corresponding to 16x 2024E PE (comparable company Wind's consistent expectation 13.5x. The valuation premium is mainly due to the company's lean management+service optimization, and clear brand premiums, which are expected to offset the downward pressure on prices in some industries).
With a lower price decline, the company achieved share growth in '23
In terms of industry volume and price, the express delivery industry volume increased 19.4% year on year in '23, corresponding to CAGR 10.4% in 22-23, and the average domestic part price decreased 4.5% year on year. The company completed 21.2 billion pieces in '23, with a year-on-year volume of +21.3%. The corresponding 2-year CAGR was +13.2%. The volume growth rate was superior to the industry, and its share increased by 0.2 pct to 16.1% year over year. Single ticket revenue was -6.9% year-on-year to 2.41 yuan (Shentong/Yunda: -11.3/ -9.0%). The decline in the company's single ticket revenue in '23 was lower than that of its A-share e-commerce express delivery peers, but the share grew, reflecting the company's price competition, forming a brand premium with quality service, supporting the company's single-ticket revenue level.
The cost of a single ticket continues to decline, but industry competition affects the gross profit level of a single ticket. From the cost side, the cost of a single ticket for the company's express delivery business in '23 was 2.18 yuan, down 6.0% from the previous year. Among them, single ticket delivery service/ transport/ central operation/ branch transport/ face order expenses decreased by 3.8%/9.7%/5.4%/14.5%/4.1%, respectively, over the same period last year, and all costs were optimized. In '23, the company's gross profit per ticket was 0.23 yuan, down 13.0% year-on-year, mainly due to industry competition suppressing prices, which affected single-ticket profit performance.
1Q volume is growing rapidly, and prices are still under downward pressure
In 1Q24, the company achieved operating revenue/net profit of 15.43 billion yuan/940 million yuan, an increase of 19.5%/4.1% year-on-year. In terms of volume and price, 1Q24 completed 5.57 billion packages, up 24.9% year on year; the average price of each package was 2.43 yuan, down 4.9% year on year. The first quarter was a traditional low season, but demand in the 1Q24 express delivery industry was strong, leading to rapid growth in the company's volume, and prices were still under downward pressure. In the medium to long term, the company's flat management of franchisees is expected to maintain network stability and improve the quality and efficiency of network services. We are optimistic that the company's brand premium will increase and profitability will continue to improve.
Risk warning: The volume growth rate is lower than expected; the cost reduction effect is lower than expected; price competition worsens.