Eneng Logistics released its report for the first quarter of '24. In 24Q1, the company achieved revenue of 2,378 billion yuan, +15.2% year on year, achieved net profit of 188 million yuan, +326.1% year over year, and achieved adjusted net profit of 209 million yuan, +173.9% year over year. The performance exceeded expectations.
The network strengthened the volume of goods increased, and cost optimization unleashed profit elasticity. According to the company's financial report, 24Q1 completed 2.885 million tons of freight, +21.7% year-on-year. Thanks to the increase in the number of freight partners and average cargo volume, the number of the company's freight partners increased by 600 to 6,400 year-on-year in the first quarter. In terms of unit revenue, according to the company's financial report, the average weight of the 24Q1 company ticket fell 3.19% year on year to 91 kg, and the structure was optimized; at the same time, service quality continued to improve, driving the decline in unit revenue to narrow. Revenue per ton in the first quarter was 827 yuan, -5.4% year on year. In terms of unit costs, the release of scale effects and management improvements led to a year-on-year decrease of 11.3% to 694 yuan in cost per ton. Cost-side optimization quickly unleashed the company's profit elasticity, and gross profit per ton increased by 44.6% to 133 yuan year-on-year.
We want profit from management first, and then we want space from industry. Looking at governance in the short term, corporate governance has been optimized since 2022, management changes, cost ratio optimization, profit margin restoration, and the profit center has risen markedly. Looking at the pattern in the medium term, the pattern of joining the Express Track is more divided. According to the Yunlian think tank, Eneng has the largest market share and has stronger financial strength as a listed company. Looking at industrial upgrading in the long term, the trend of penetration and expansion of joining express tracks to dedicated tracks and the trend of order fragmentation brought about by industrial upgrading are worth watching for a long time.
Profit forecasting and investment advice. Considering that the company's performance exceeded expectations, we raised our profit forecast. We expect EPS to be 0.60, 0.74, and 0.87 per share for 24-26, respectively. Referring to comparable company valuations, the company was given a PE valuation of 14 times in 24 years. The reasonable value corresponding to Hong Kong stocks was HK$9.06 per share, maintaining a “buy” rating.
Risk warning. Industry demand growth fell short of expectations, industry price competition worsened again, franchise network operations were unstable, strategy implementation fell short of expectations, and macroeconomic environment was under pressure.