Incidents:
On August 19, 2024, Jitu Express announced the 2024 interim results:
With 2024H1, the company achieved operating income of 4.862 billion US dollars, +20.62% year over year, achieved gross profit of 0.536 billion US dollars, +176.81% year over year, and realized net profit of 0.028 billion US dollars to mother, turning a loss into a profit year over year.
2024H1, the company achieved a business volume of 11.01 billion, +38.3% year-on-year. Among them, the company's business volume in Southeast Asia/China/New Markets completed 2.043/8.836/0.136 billion tickets respectively, +42.0%/+37.1%/+63.9% year-on-year respectively. 2024Q2 achieved business volume of 5.983 billion tickets, +30.7% year-on-year. Among them, the company completed 1.017/4.894/0.072 billion tickets in Southeast Asia/China/New Markets respectively, +30.8%/+30.6%/+33.5% year-on-year respectively.
Investment highlights:
Different regions have implemented different price strategies to support continued rapid growth in business volume. In terms of volume, 2024H1 and Jitu Express continued to seize e-commerce dividends, continue to deepen partnerships with cross-border e-commerce and local e-commerce, and completed 11.01 billion business volumes, +38.3% over the same period last year. By market, the company completed 2.043/8.836/0.136 billion tickets in Southeast Asia/China/New Market respectively, with a year-on-year ratio of +42.0%/+37.1%/+63.9%, respectively. The market share was 27.4%/11.0%/6.1%, respectively, and +2.0/ +1.1/+0.1pcts year over year. Among them, 2024Q2 completed a business volume of 5.983 billion, an increase of 30.7% over the previous year. By market, Southeast Asia/China/New Markets completed 1.017/4.894/0.072 billion tickets respectively, +30.8%/+30.6%/+33.5% YoY.
The company continues to maintain strong growth in Southeast Asia/China/New Markets, and the growth rate of the new market has slowed down, mainly due to the negative impact of changes in cross-border policies in the new market on the growth of cross-border e-commerce.
In terms of price, 2024H1's single ticket revenue performance in different markets is divided. By market, the company's single ticket revenue in Southeast Asia/China/New Markets was $0.74/0.34/2.14 US dollars, respectively, -0.12/-0.002/+0.54 US dollars, respectively, and -14.12%/-0.72%/+34.07% year-on-year respectively.
2024H1, the company's single ticket revenue dropped significantly in the Southeast Asian market, mainly due to the company's aggressive pricing policy in the process of rapid cost reduction, which ensures continued rapid growth in business volume; in the Chinese market, due to the company's optimization of package volume structures and customer structures for different e-commerce platforms, and the steady development of reverse and loose parts, the single ticket price is generally stable, but the business volume has maintained steady growth due to improved service quality; benefiting from the increase in the number of high-quality non-platform customers in the structure and changes in the model of cooperation with strategic e-commerce customers, the company's single ticket in the new market Revenue has grown substantially.
Refined management reduces single ticket costs. Under the refined management and optimization of operations in China and new markets, the company's single ticket costs in the Southeast Asia and Chinese markets have dropped significantly, while the new market has basically remained flat. By market, (1) The cost of a single ticket in the Southeast Asia market was 0.60 US dollars, -0.11 US dollars, and -15.41% year over year. Among them, single ticket collection and delivery costs/transportation costs/sorting costs/other costs were 0.37/0.16/0.06/0.01 US dollars, respectively, -0.03/-0.03/-0.02 US dollars, respectively, -7.50%/-15.79%/-33.33%/-66.67% year over year. Among them, the reduction in single ticket collection and delivery costs is mainly due to the improvement of operating efficiency under the density and location adjustment of various outlets; the reduction in single ticket transportation costs is mainly due to the increase in the number and utilization efficiency of own vehicles; and the increase in sorting efficiency per capita has contributed to the reduction in single ticket sorting costs. As the reduction in the cost of a single ticket hedged some of the price cuts, the final gross profit of a single ticket was $0.14, -$0.01 year over year, and -8.11% year over year.
(2) The cost of a single ticket in the Chinese market was 0.32 US dollars, -0.03 US dollars year on year, -8.51% year on year.
Among them, single ticket collection and delivery costs/transportation costs/sorting costs were 0.2/0.07/0.05 US dollars respectively, flat /-0.01/-0.01 US dollars, and flat/-12.50%/-16.67% year over year, respectively. Among them, the reduction in single ticket transportation costs is mainly due to investment in own trunk line transport vehicles and optimized management of transportation links; while optimization of operation of transit centers and upgrading of automated sorting equipment, single ticket sorting costs have been greatly reduced. The cost reduction outperformed the price reduction, and the gross profit for a single ticket reversed to $0.02, compared to -0.003 dollars in the same period last year, or +0.03 dollars compared to the same period last year.
(3) The cost of a single ticket in the new market was 1.88 US dollars, which was basically the same as the previous year. Among them, single ticket collection and delivery costs/transportation costs/sorting costs/other costs were $1.02/0.32/0.22, respectively, -0.07/+0.02/+0.03/+0.02 US dollars year-on-year, respectively, -6.42%/+6.67%/+10.34%/+10.00% year-on-year respectively. However, due to higher price increases, the gross profit for a single ticket in the 2024H1 new market reversed to 0.26 US dollars, compared to -0.28 US dollars in the same period last year, +0.54 US dollars compared to the same period last year.
E-commerce growth brings growth dividends, and there is still plenty of room for cost reduction due to scale effects. The company is optimistic about long-term development in the Southeast Asian market. The company has always acted as a neutral e-commerce enabler, maintained and developed good cooperation with the original e-commerce platform, and expanded cooperation with newly entered e-commerce platforms, and continued to benefit from the rise in the total e-commerce market and the rise of social e-commerce. At the same time, the company continues to diversify its customer structure and expand non-e-commerce platform customers; in the Chinese market, the growth of social e-commerce has brought opportunities for the company's development; in the new market, driven by economic growth and the rapid development of the e-commerce retail market, the express delivery industry in the new market has also grown significantly, and the company also has good growth opportunities.
The rapid growth in business volume will help the company make full use of the scale effect and intensity effect. Single ticket costs are expected to decline further, which in turn will lead to continuous improvement in profits, and we are optimistic about the company's long-term development.
Profit forecast and investment ratings We expect Jitu Express's 2024-2026 revenue to be 10.137 billion US dollars, 12.022 billion US dollars and 14.004 billion US dollars, respectively, +15%, +19%, and +16% year over year; net profit to mother will be 0.185 billion US dollars, 0.39 billion US dollars and 0.476 billion US dollars, respectively, +117%, +111%, and +22% year-on-year, corresponding to EPS 0.02 yuan, 0.04 yuan, 0.05 yuan; PE corresponding to 2024-2026 is 41.17 times, 19.49 times, and 15.99 times, respectively. The company's local express delivery layout not only opens up local market space, but also prepares the first and last stage supply for cross-border business. With the continuous release of cross-border and foreign e-commerce dividends, and the company's deep cooperation with cross-border e-commerce platforms such as SHEIN, the company's business volume may continue to grow rapidly, and profitability is expected to continue to increase, maintaining the “gain” rating.
Risks suggest that industry sentiment falls short of expectations; overseas business growth falls short of expectations; domestic business losses fall short of expectations; overseas policy risks for cross-border e-commerce; price wars restart; regulatory policy changes; franchise network instability; rapid labor cost inflation; continued rise in oil prices; Internet companies are forced to intervene again; risk of large fluctuations in stock prices in the secondary market; differences between the Hong Kong stock valuation system and A-shares.
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