Zhongtong Express announced its results for the first quarter of 2024. 2024Q1 achieved a total operating revenue of 9.96 billion yuan, an increase of 10.9% year on year, realized net profit of 1.45 billion yuan, a decrease of 13.0% year on year, and realized adjusted net profit of 2.22 billion yuan, an increase of 15.8% year on year.
Continue to optimize the package structure and focus on quality growth. 1) Volume: In the first quarter of 2024, the company achieved a package volume of 7.17 billion pieces, a year-on-year increase of 13.9%, achieving a market share of 19.3%, a year-on-year decrease of 4.1 pcts, and a month-on-month decrease of 7.3 pcts. The company continued to improve the package structure, strategically reduce the loss parts business, increase the share of spare parts, and the market share declined. 2) Single ticket revenue: In the first quarter of 2024, the company's single-ticket express delivery service revenue was 1.29 yuan, down 3.3% or 0.04 yuan year-on-year, and increased 14.9% or 0.17 yuan month-on-month. The recovery in single ticket revenue was better than that of the industry. 3) Single ticket cost: In the first quarter of 2024, the company's single ticket express delivery cost (transport+sorting) was 0.77 yuan, a year-on-year decrease of 6.7% and a year-on-year increase of 7%. 4) Single ticket gross profit: In the first quarter of 2024, the company's gross margin was 30.1%, up 2.1 pcts year on year, up 0.7 pcts month over month, achieving a gross profit of 0.52 yuan for the single ticket express delivery business, up 1 cent year on year, and 0.12 yuan month-on-month. Thanks to the company's cargo volume structure optimization, gross profit increased significantly.
The cost side continues to improve, and capital expenditure is slowing down. Looking at various core single ticket costs in the express delivery business, the company's single ticket transportation cost in the first quarter of 2024 was 0.47 yuan, down 7% or 4 cents from the previous year, mainly due to continuous scale effects, trunk line optimization and load rate improvement; the single ticket sorting cost was 0.3 yuan, a decrease of 5.4% or 2 cents over the previous year, mainly due to improvements in automation and manpower efficiency in transit centers. In terms of capital expenditure and cash flow, the company's capital expenditure in the first quarter of 2024 was 1.69 billion yuan, a year-on-year decrease of 26.5%. Capital expenditure investment slowed down, achieving a free operating cash flow of 2.03 billion yuan. The company adheres to a balanced development strategy, continues to hierarchically classify products, increase the enthusiasm of terminal couriers to pick up packages, and promote the continuous growth of spare parts orders.
Investment advice. In the homogenized competition to join express delivery, Zhongtong continues to adhere to the concept of balanced development of quantity, quality, and profit. Forward-looking strategic measures in production capacity investment and franchise network management have brought the company a triple barrier of cost+network+capital. The company's moat is stable. The company's net profit for 2024-2026 is expected to be 103/121.3/13.88 billion yuan, respectively, an increase of 18%/18%/14%, corresponding to PE 13.9x and PB 2.1x in 24. Maintain a “Highly Recommended” rating.
Risk warning: Industry price competition exceeds expectations, downstream e-commerce consumer demand falls short of expectations, core costs have risen sharply, etc.