Core views:

China's first foreign trade and transportation enterprise, a leading international logistics giant in volume. Established in 1950, Sinotrans is the general agent for the transportation of Chinese foreign trade import and export goods. With the booming development of China's foreign trade and multiple rounds of asset mergers, acquisitions and restructuring, the company has become a leading international logistics giant in volume. According to the company's financial report, in 14-23, the company's revenue CAGR was 9%, profit CAGR was 15%, and the average diluted ROE was 10.5%. According to Transport Topics, the company ranked fifth in the world in terms of air freight forwarding volume and second in the world in terms of shipping volume.

Diversify the business hedging cycle to jointly build a stable profit volume. Currently, the company has formed three major business segments: freight forwarding, professional logistics and e-commerce business. The business structure is diverse, and the cycle characteristics are not obvious.

In terms of profit composition, according to the company's financial reports, freight forwarding, professional logistics, and investment income contributed 45%, 19%, and 47% of operating profit (19-23 average), respectively. Each profit segment is divided into different segments. The business climate follows different industry segments, and it is expected that they will jointly build a stable profit volume.

Actively responding to the value of central enterprises has been realized, and the allocation value is still attractive. The company promotes repurchases and dividend increases to raise the level of shareholder returns, and responds positively to the transformation of central enterprises from value creation to value realization. According to the company's announcement, the company has launched repurchase plans for A shares or H shares several times. The repurchase pace is tight and the amount is considerable. In '23, the company's annual dividend ratio moved up to 49.77%. If the ratio remains unchanged, the dividend rate for 24E A shares is 5%, and the dividend rate for Hong Kong stocks is 7%, which is impressive for shareholders.

Profit forecasting and investment advice. The company's EPS for 24-26 is estimated to be $0.59, 0.62, and 0.68, respectively. Referring to comparable companies, the company will be given a 24-year PE valuation of 12 times, with a corresponding reasonable value of 7.08 yuan/share; considering AH share premium factors, the company will be given a 24-year PE valuation of 10 times for Hong Kong stocks, and the reasonable value of the corresponding Hong Kong stock is HK$6.37 per share. For the first time, coverage gave the company an “increase in holdings” rating for A shares and a “buy” rating for Hong Kong stocks.

Risk warning. Import and export trade demand fell short of expectations, air and sea freight rates showed abnormal shifts, professional logistics price stability fell short of expectations, subsidy policies faced downward adjustments, and investment returns fell short of expectations.