Key points of investment

Revenue grew steadily, and Q2 profits were under pressure in the short term

24H1 revenue +5%, net profit to mother +10%, integrated logistics business drives revenue growth. Revenue 0.66 billion yuan (+5%, all the following are year-on-year proportions); net profit due to mother 0.12 billion yuan (+10%); net profit not attributable to mother 0.12 billion yuan (+17%). The increase in revenue was mainly due to the increase in integrated logistics business revenue after Ka Shing International Port was fully put into use. Furthermore, the interest fee for 24H1 convertible bonds was about 23 million yuan. Excluding interest charges on convertible bonds, 24H1's net profit to mother was about 0.137 billion yuan, an increase of 29% over the same period.

24 Q2 revenue was +9%, net profit to mother was -18%, manufacturing sentiment fluctuated, and profits were under pressure in the short term. Revenue 0.37 billion yuan (+9%); net profit attributable to mother 0.05 billion yuan (-18%); net profit without return to mother 0.05 billion yuan (-15%).

Cross-border e-commerce is booming, and integrated logistics revenue growth is stable 1) 24H1 sub-business: Integrated logistics business contributes to core profits. Integrated logistics revenue was 0.4 billion yuan, +22% year over year; supply chain distribution revenue was 0.29 billion yuan, -4% year over year.

2) Increase the share of 24H1 integrated logistics business and optimize profit margins. Gross profit margin 35.4% (+6pct), net profit margin 17.9% (+1pct), sales expense ratio 2.2% (+0.5pct), management expense ratio 5.3% (+0.9pct).

Cross-border e-commerce is booming, and the growth rate of integrated logistics revenue is stable 1) Ali: Guangzhou Tianyun Logistics Center, providing global central warehouse services for import business; 2) Temu: Jiacheng International Port Park, providing integrated cross-border export services (main line transport+customs+international charter (packaging));

3) SHEIN: Sanshui, Foshan and Heshan, Jiangmen, provides cross-border export warehouse and quality inspection warehouse agency operation services, and adds cross-border e-commerce reverse logistics services (import);

4) World-renowned new e-commerce: providing intelligent warehousing, quality inspection, proxy operation, customs, domestic mainline and intercontinental air charter flights, etc.

The Hainan Digital Intelligence Logistics Center will be opened, and an overseas warehouse will be built to consolidate the full link advantages 1) The Jiacheng International (Hainan) Multifunctional Digital Intelligence Logistics Center in Haikou City, Hainan Province will soon begin trial operation, mainly for duty-free logistics services.

2) The company will build overseas warehouses in Hong Kong, Macau, Southeast Asia, Japan, South Korea, the US, Canada, Mexico, etc., to provide services such as rapid delivery, return and exchange, transfer, reprinting or labeling, packaging, transit, etc.

Profit forecasting and valuation

By setting up three-dimensional smart logistics parks by sea, land, and air in important transportation hub cities across the country and the world, Jiacheng International has established a national/global network to improve logistics links and better provide customized integrated logistics services throughout the entire supply chain for manufacturing and cross-border e-commerce customers. Considering the estimated annual expenditure of about 40 million yuan in interest on debt conversion, we expect the company to generate revenue of 1.33/1.446/1.602 billion yuan in 24/25/26, an increase of 9%/9%/11%, net profit to mother 0.202/0.252/0.316 billion yuan, an increase of 23%/25%/25%. The price-earnings ratio corresponding to the current market value is 16/13/10X, with both growth and certainty, maintaining a “buy” rating.

Risk warning: Cross-border e-commerce boom falls short of expected risk; project development progress falls short of expected risk.