Brief performance review
On July 9, 2024, the company disclosed a preliminary increase in semi-annual results. It is expected to achieve net profit of 0.746 billion yuan to 0.796 billion yuan in the half-year 2024, an increase of 48%-58% over the previous year.
Among them, Q2 achieved net profit of 0.44 billion yuan to 0.49 billion yuan, a year-on-year increase of 45%-62%, and an increase of 43%-59% over Q1
Management analysis
The business scale continued to grow in the first half of the year, driving a significant increase in performance. The sharp increase in the company's performance in the first half of 2024 was mainly due to an increase in business scale in markets such as China, Mongolia, Central Africa, and Central Asia. (1) China-Mongolia market: From January to May 2024, the bilateral trade volume between China and Mongolia reached 51.9 billion yuan, up 14.9% year on year, and the company's cross-border integrated logistics business volume between China and Mongolia increased dramatically; (2) African market: in the first half of 2024, the traffic flow and freight volume of the Casa Dry Port project grew steadily, driving the company's revenue growth; (3) Central Asia market: From January to May 2024, the import and export trade volume between China and the five Central Asian countries reached 259.6 billion yuan, an increase of 14.8% year on year; import and export volume of goods at Khorgos port Over 17 million tons, an increase of 12% over the previous year. Benefiting from the sharp increase in import and export trade volume and its own location advantage, the company's business volume in the Central Asian market continues to grow.
Foreign cooperation has shown results, and competitiveness continues to increase. The results of the company's “resource+trade+logistics” business model in the China-Mongolia market were evident. In the first half of the year, the company signed a long-term coal cooperation agreement with MMC to purchase 17.5 million tons of coal within ten years. The company was able to guarantee a stable supply of coal from the supply side, which helped the company's main coking coal trade volume and storage volume to increase significantly. MMC is the largest producer and exporter of high-quality refined coking coal (HCC) in Mongolia. The gradual release of long-term agreements and stable supply to downstream end customers have consolidated the company's core competitiveness and is expected to bring continuous growth in the future.
The results of Africa's major logistics landscape are beginning to show, and the scale of capacity will continue to be expanded. The company completed the acquisition of 80% of BHL's shares in Q2. BHL is the largest trucking company in Zambia, with more than 500 transport vehicles. After the acquisition, it not only shared customer resources, but also served the overall layout of the company's major logistics. In the future, the company will continue to expand the BHL fleet size, optimize transportation routes, establish distribution logistics nodes in different countries in Central and Southern Africa, increase the loading rate of cross-border vehicles in various ways, and build a transportation network integrating roads, ports, logistics nodes, and ports in Central and Southern Africa.
Profit Forecasts, Valuations, and Ratings
The company's 2024-2026 net profit forecast was raised to 1.45 billion yuan, 1.65 billion yuan, and 1.86 billion yuan (originally 1.3 billion yuan, 1.51 billion yuan, 1.69 billion yuan), maintaining the “buy” rating.
Risk warning
The construction of the African Highway Project fell short of expectations; Mongolia's domestic railway construction exceeded expectations; the government increased the risk of port resource investment; the risk of shareholder holdings reduction; and exchange risk.