Brief performance review

On August 15, 2024, Debon Co., Ltd. released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 18.446 billion yuan, a year-on-year increase of 17.54%; net profit to mother was 0.333 billion yuan, an increase of 37.08% over the previous year. Among them, 2Q2024 achieved operating income of 9.151 billion yuan, an increase of 10.58% year on year, and realized net profit of 0.24 billion yuan to mother, an increase of 41.07% year on year.

Management analysis

Revenue continued to grow, with the express shipping business being the main driver of growth. The year-on-year increase in the company's revenue in the first half of 2024 was mainly driven by the year-on-year increase in express business revenue. By business:

(1) The express delivery business revenue for the first half of 2024 was 1.073 billion yuan, a year-on-year decrease of 23.90%; of these, 2Q2024 revenue was 0.531 billion yuan, a decrease of 25.7% year-on-year. (2) Express's revenue for the first half of 2024 was 16.625 billion yuan, up 21.13% year on year, of which 2Q2024 revenue was 8.262 billion yuan, up 13.6% year on year. The main reason was that the company continued to improve delivery service quality and promote product innovation and operating model changes to meet the diversified needs of customers. At the same time, network integration projects are progressing steadily to jointly promote further growth in the scale of the express shipping business.

The gross margin decreased year over year, and the cost ratio decreased year over year. In the first half of 2024, the company achieved a gross profit margin of 7.62%, a year-on-year decrease of 1.25pct, mainly due to the increase in transportation costs brought about by the company's increased investment in transportation resources. In terms of cost ratio, the company's expense ratio for the 2023 period was 6.11%, down 1.34 pct year on year, of which sales expenses were 0.273 billion yuan, up 19.8% year on year, accounting for 0.03 pct increase in revenue ratio; management expenses were 0.699 billion yuan, down 9.5% year on year, accounting for a 1.13 pct year-on-year decrease of revenue; mainly due to the company increasing resource support for the sales team and continuing to promote process optimization and functional organization flattening to achieve an improvement in management level.

Cost control has achieved remarkable results, and asset disposal benefits have increased dramatically. The company continues to promote cost control, and the cost reduction effect is remarkable. The company's labor costs as a share of revenue fell by 6.44 pct. This is due to the company's continuous promotion of various lean management initiatives, improving labor efficiency in the distribution and transit process, and promoting the transformation of frontline civilian personnel. At the same time, network integration with high freight costs and low labor, and the volume of businesses such as vehicles have increased, further reducing labor costs as a share of revenue. 1H2024 confirmed asset disposal revenue of 97.84 million yuan, an increase of 1209.5% over the previous year, mainly due to the company transferring the shares of the subsidiary and signing a sales and leaseback contract, confirming the sales and leaseback profit of the industrial park of 88.5 million yuan.

Profit Forecasts, Valuations, and Ratings

Maintain the 2024-2026 net profit forecast to 1.11 billion yuan, 1.37 billion yuan, and 1.65 billion yuan. Maintain a “buy” rating.

Risk warning

Price competition in the industry is fierce; rent, labor costs, and oil prices have increased dramatically; the company's business volume growth has fallen short of expectations.