Description of the event

With 2024H1, the company achieved operating income of 23.25 billion yuan, an increase of 7.8% year on year; achieved net profit due to mother of 1.04 billion yuan, an increase of 19.8% year on year; deducted non-net profit of 0.83 billion yuan, an increase of 5.4% year on year. With 2024Q2, the company achieved operating income of 12.1 billion yuan, a year-on-year increase of 9.0%; achieved net profit due to mother of 0.63 billion yuan, an increase of 23.2% over the previous year; deducted non-net profit of 0.45 billion yuan, an increase of 0.7% over the previous year.

Incident comments

Shares are gradually picking up, and revenue growth is under pressure. With 2024Q2, the company achieved a volume of 5.982 billion units, a year-on-year increase of 30.8%, and the market share gradually rebounded; operating income reached 12.1 billion yuan, up 9.0% year on year, and net profit to mother was 0.63 billion yuan, up 23.2% year on year, after deducting 0.45 billion yuan of non-net profit, up 0.7% year on year.

Costs have been significantly optimized, and competition has dragged down gross profit. With 2024Q2, the company's single-ticket express revenue reached 2.02 yuan, a year-on-year decrease of 12.8% (corresponding decrease of 0.3 yuan), mainly due to increased competition in the industry, miniaturization, and adjustments in payment settlement. The company's single ticket cost optimization was remarkable. 2024H1, the company's single ticket transportation/transit costs were 0.39/0.31 yuan respectively, a year-on-year decrease of 0.15/0.08 yuan. Increased capacity utilization released scale effects, and the company's refined management drove a sharp reduction in costs.

However, considering the intensification of competition in the industry, gross profit per ticket fell 0.06 yuan year on year in the second quarter.

Expense optimization has made efforts, and interest costs have been reduced. For 2024Q2, the company's expenses decreased by 19.3% year on year, corresponding to the year-on-year decrease of 0.05 to 0.09 yuan in single ticket fees, and the fee rate dropped by 1.5 pct to 4.3% year on year. Among them, sales/management/R&D/finance expense ratios decreased by 0.3/0.3/0.2/0.7 pct year on year, respectively. The sharp decline in financial expenses is mainly due to the company's active reduction in the size of interest-bearing debt and the increase in interest income.

The core business was consolidated without contribution growth. In 2024Q2, the company's single ticket core profit (net profit deducted) reached 0.075 yuan, a year-on-year decrease of 23.0% and a month-on-month decrease of 4.0%. The core profit gradually stabilized, and the volume returned to growth. 2024Q2, the company's non-recurring profit and loss increased sharply to 0.18 billion, mainly due to: 1) the sale of Debon shares and achieved a profit of about 0.05 billion yuan; 2) after withdrawing from Debon's board of directors, long-term equity investments were converted to transactional financial assets to generate one-time income.

The share is growing again, and we expect UE to improve. In recent years, the company has made efforts in management adjustments and refined management, sacrificing a certain price in exchange for renewed share growth, and increased capacity utilization has promoted significant cost optimization. In the future, it is expected that the company's single-ticket profit will steadily improve, and promote the release of core profit flexibility. The company's net profit for 2024-2026 is estimated to be 2.11/2.56/3.28 billion, corresponding PE of 9.6/7.9/6.2X, respectively, to maintain a “buy” rating.

Risk warning

1. Price competition in the industry has intensified;

2. Industry volume growth falls short of expectations;

3. Oil prices and labor costs have risen sharply.