Introduction to this report:

Smart logistics: It enhances customer stickiness, drives overall revenue growth, and has huge potential to monetize the accumulated data assets.

Traditional logistics: Two-wheel drive with smart logistics, plans to expand scale, improve utilization, and transform to smart logistics.

Key points of investment:

Maintain an “Overweight” rating. The 2023 results are in line with our expectations, maintaining the 2024-2025 profit forecast, and adding the 2026 profit forecast. EPS is expected to be 0.25, 0.35, 0.41 yuan in 2024-2026. Maintain the target price of 7.42 yuan and maintain the “Overweight” rating.

The 2023 results were in line with expectations, and 2024Q1 operating cash flow increased year over year. The company is a leading warehousing intelligent logistics platform in the bulk sector. In 2023, revenue of 1.5 billion yuan increased 12% year on year, and net profit of 250 million yuan reached a new high of 250 million yuan, up 54% year on year, mainly due to improved warehousing utilization and operational efficiency, and gross margin increased by 6.1 pct. 2024Q1's revenue of 290 million yuan increased 9% year over year, net profit to mother of 73.97 million yuan increased 13% year over year, and net operating cash flow increased 230 million yuan year over year.

Smart logistics: Increased customer stickiness drives high revenue growth, and data elements have huge potential for monetization. The delivery rate of Changjiang International and Foreign Service Company's online cargo rights platform is 100%. “Clearing Connect”, a partnership between the Bonded Tax Division and the Shanghai Clearing House, provides simultaneous online payment delivery services, and innovates “digital finance warehouse” and digital yuan settlement. At the end of 2023, the cumulative amount of digital renminbi settlement exceeded 1 billion yuan and was connected to six central state-owned enterprise warehouses. Smart logistics revenue of 190 million yuan accounted for 12.5% in 2023, with a year-on-year increase of 46% driving overall revenue growth. Using accumulated digital assets to provide data services, revenue in 2023 was 8.39 million yuan, gross profit margin was 96.3%, and data elements have great potential for monetization.

Traditional logistics: increment, efficiency improvement, and deep transformation to smart logistics. Terminal storage resources along the Yangtze River Delta and the Yangtze River will continue to be integrated to expand the scale of assets. Promote the upgrading of wharves, storage tanks, warehouses, and depots to improve the utilization rate of storage. Deepen collaborative management and accelerate external expansion by promoting smart logistics platforms to Yangshan Shengang (28% shareholding).

Risk warning: Industry development falls short of expectations, competition in emerging businesses intensifies, etc.