Incidents:
In Q1 2024, the company achieved operating income of 9.96 billion yuan, an increase of 10.9% year on year, and realized net profit of 1.45 billion yuan, a decrease of 13.0% year on year. Adjusted net profit was $2.22 billion, up 15.8% year over year.
The company's express delivery business volume increased 13.9% year on year in the first quarter, with a market share of 19.3% in 2024 Q1. The company completed the express delivery business volume of 7.17 billion units, up 13.9% year on year. The market share was 19.3%, down 4.1 pct year on year. The decline in market share was mainly due to the company actively adjusting the volume structure to reduce the proportion of low cost loss items. In 2024, Q1 Company's single-ticket core express delivery business revenue fell 0.04 yuan to 1.36 yuan year-on-year, or 2.5%, mainly due to the acceleration of price competition in the industry and the acceleration of the trend towards smaller delivery.
Cost control is strict. Single ticket sorting+transportation costs decreased by 0.06 yuan year on year in Q1 2024, the company's single ticket cost decreased by 0.06 yuan to 0.94 yuan year on year, a decrease of 5.3%. Among them, single ticket transportation costs decreased by 0.04 yuan to 0.47 yuan, or 7.0%; single ticket sorting costs decreased by 0.02 yuan to 0.30 yuan year on year, a decrease of 5.4%. Thanks to the company's good cost control results, the gross profit of a single ticket increased by 0.02 yuan to 0.42 yuan year on year in Q1 in 2024, and the gross margin of a single ticket was 31.0%, an increase of 2.0 pct year on year.
Net profit after the single ticket adjustment also increased by 1.7%. Profitability achieved steady growth. In Q1 of 2024, the company's net profit after the single ticket adjustment was 0.31 yuan, an increase of 1.7% over the previous year, and profitability continued to increase. According to current market conditions and operating conditions, the company expects the industry growth rate to be 15% to 20% in 2024. The company's package volume is about 34.73 billion to 35.64 billion pieces, and the year-on-year growth rate is about 15% to 18%. The company adheres to the strategic principle of “no loss-making express shipments”. As business volume maintains a steady growth rate, the company's performance is expected to maintain high-quality growth for a long time.
Profit Forecasts, Valuations, and Ratings
The company's revenue for 2024-2026 is estimated to be 439.63/493.66/ 54.542 billion yuan, respectively, with corresponding growth rates of 14.43%/12.29%/10.48%; net profit to mother is 102.47/118.27/13.542 billion yuan, respectively, with year-on-year growth rates of 17.12%/15.42%/14.50%; EPS is 12.61/14.55/16.66 yuan per share, respectively. In view of the steady operation of the company and the significant advantage of its leading position in the industry, based on comparable company valuations, we gave the company 16 times PE in 2024, with a target price of 201.76 yuan (HK$217.8 based on 1HKD=0.9262 CNY), maintaining a “buy” rating.
Risk warning: macroeconomic recovery falls short of expectations; price competition in the express delivery industry exceeds expectations; cost control results fall short of expectations; risk of selecting comparable companies across markets.