Core views:

Operating and financial data: The company released its 2023 annual report and 2024 quarterly report. In 23, the company achieved revenue of 44.983 billion yuan, -5.17% year over year; realized net profit of 1,625 billion yuan, +9.58% year over year; realized net profit without return to mother of 1,390 billion yuan, +0.07% year over year. The company completed a business volume of 18.854 billion tickets in 23 years, +7.07% year-on-year, with a single ticket revenue of 2.30 yuan, or -10.08% year-on-year. In 24Q1, the company achieved revenue of 11.156 billion yuan, +6.50% year over year; realized net profit of 412 million yuan, +15.02% year over year; realized net profit without deduction of 385 million yuan, +11.50% year over year. The company completed business volume of 4.942 billion tickets in 24Q1, +29.14% year over year, and single ticket revenue was 2.20 yuan, -15.92% year over year.

Network stability has been fixed, and profit levels have improved marginally. In '23, the company operated a total of 76 hubs nationwide, and the proportion of national hub transit centers remained 100%; the number of franchisees increased by 14.84% year-on-year to 4,851. Overall, the number of the company's terminal outlets has increased, self-operated hubs and transit centers have remained stable, and network stability has improved, leading to improved service capacity and a marked reduction in the time required for couriers to fulfill single tickets. Although the company's single-ticket revenue declined due to industry price competition in '23, the continued promotion of cost reduction and efficiency measures reduced the company's core operating costs by 849 million yuan, and the single-ticket core operating cost decreased 11% year on year; the scale of the four expenses decreased by 439 million yuan, a year-on-year decrease of 16%. The final gross profit of a single ticket was 0.20 yuan, a year-on-year decrease of only 0.01 yuan; the net profit of a single ticket was 0.09 yuan, an increase of 0.01 yuan over the previous year, and remained stable.

Profit forecasting and investment advice: After the growth rate of business volume came under pressure, the company's valuation center moved downward, but looking backwards, the company's valuation center is expected to return to reasonable as the company's profit level and business volume scale are repaired. We expect EPS in 24-26 to be 0.67, 0.80, and 0.91 yuan/share, respectively. Referring to comparable company valuations, the company will be given a 24-year 14 PE valuation, corresponding to a reasonable value of 9.38 yuan/share. For the first time, we covered it and gave it an “gain” rating.

Risk warning: Industry demand growth falls short of expectations, industry price competition has deteriorated again, franchise network operation is unstable, policy impact is uncertain, and macroeconomic environment is under pressure.