Operating and financial data: The company released its 2023 annual report. In 23, the company achieved revenue of 36.279 billion yuan, +15.57% year over year, of which express business revenue was 32.280 billion yuan, +18.19% year over year, and express delivery business revenue was 2,728 billion yuan, -11.22% year over year. The company's gross margin was 8.57%, down 1.63 ppts year over year. In '23, the company achieved net profit of 746 million yuan, +13.32% year over year, net profit of 568 million yuan after deducting non-return to mother net profit of 568 million yuan, or +76.77% year over year.

The results of cost control have been outstanding, and we are waiting for integration to take effect. In '23, the company's expenses for the period were 2,386 billion yuan, -13.71% year-on-year, and the ratio of expenses to revenue for the period decreased by 2.23 ppts. Among them, sales expenses were 480 million yuan, or +13.76% year-on-year, accounting for the revenue ratio, mainly for the company to strengthen sales capacity building and increase sales staff investment to help increase revenue; management expenses were 1,560 billion yuan, -19.75% year-on-year, accounting for a year-on-year decrease of 1.89 ppts of revenue, mainly for the company to continue to promote technological empowerment and process optimization to promote continuous improvement in management efficiency and continuous flattening of functional organization, and achieved a qualitative decline in management expenses. The reduction in the cost ratio effectively offset the decline in gross margin caused by the company's increase in network integration projects and various costs. Ultimately, the net profit margin remained stable year on year. Looking ahead, the company and JD Logistics will continue to integrate the transit and transportation networks. According to an announcement from Debon Co., Ltd., the company expects the labor service provided to the JD Group to increase to 7.8 billion yuan in '24, an increase of 114% over the same period last year. The volume will further increase, and the volume will further increase, waiting for integration to take effect.

Profit forecasting and investment advice. Debon is a leading direct express company in China. It is in a leading position in terms of scale and profit. In the context of the current industry pattern improvement and the company's logistics integration with JD continues to advance, the company's growth center and profit level are expected to rise. We expect the 24-26 EPS to be 1.07, 1.39, and 1.60 yuan/share, respectively. Referring to comparable companies, the company was given a reasonable PE valuation of 19.26 yuan/share in 24 years, corresponding to a reasonable value of 19.26 yuan/share.

Risk warning. Industry demand growth fell short of expectations, industry price competition worsened again, mergers and acquisitions integration and coordination fell short of expectations, and the macroeconomic environment was under pressure.