Core views:

Operating and financial data: The company released its 2023 annual report and 2024 quarterly report. In 23, the company achieved revenue of 40.924 billion yuan, or 21.54%; realized net profit of 341 million yuan, +18.41% year-on-year; realized net profit of 339 million yuan without return to mother, +9.86% year-on-year. The company completed a business volume of 17.507 billion tickets in 23 years, +35.23% year over year, and single ticket revenue was 2.23 yuan, -11.24% year over year. In 24Q1, the company achieved revenue of 10.131 billion yuan, +15.87% year-on-year; realized net profit of 190 million yuan, +43.20% year-on-year; realized net profit of 186 million yuan without return to mother, +48.70% year-on-year. According to the company's announcement, 24Q1 completed business volume of 4.587 billion votes, +36.56% year over year, and single ticket revenue was 2.17 yuan, -12.47% year over year.

The growth rate of business volume was quickly fixed, and product strength improved marginally. In '23, the company's business volume was +35% year-on-year, exceeding the industry's business volume growth rate of 16 ppts. The annual market share reached 13.26%, an increase of 1.55 ppts over the previous year, which is a further increase over last year. With the rapid growth in business volume and high capacity utilization, the company will continue to invest in infrastructure construction to further strengthen the supply of production capacity at important central nodes and push the company's production capacity to a new level. It is expected that within 2024, the company's normal throughput capacity is expected to increase to more than 75 million orders per day, and the company's business volume is expected to maintain the growth trend. In recent years, the company has adhered to the strategy of balanced development of “business scale, service experience and profit”. On the cost side, the company's transportation cost for a single ticket in 23 years was 0.41 yuan, a year-on-year decrease of 12.42%. Other transit costs for a single ticket were 0.37 yuan, a year-on-year decrease of 12.87%. Cost optimization led to an increase in the company's profit level and marginal improvement in product strength.

Profit forecasting and investment advice. Due to its high business volume growth rate and high potential for recovering profit levels, we expect EPS to be 0.53, 0.62, and 0.70 yuan/share in 24-26, respectively. Referring to comparable companies, we will give the company 18 times PE valuation in 24 years, corresponding to a reasonable value of 9.54 yuan/share, covering the first time, and giving it a “holding” rating.

Risk warning. Industry demand growth fell short of expectations, industry price competition worsened again, franchise network operations were unstable, policy impact was uncertain, and macroeconomic environment was under pressure.