Core views:

China's leading integrated logistics company with multi-year end results. SF Express was founded in 1993. As a pioneer in the private express delivery industry in China, the company spent 30 years watering the logistics soil, gradually internalized its product strength into brand power, and established a leading position. Since becoming the leader, SF Express has not stopped developing. The company diversified and expanded into collaborative businesses such as express shipping, cold chain, and international. The company's revenue CAGR surpassed the industry by 23% in the past 5 years. As the new business gradually gained a leading position in the industry, profit margins also entered the repair channel. The net profit margin improved by 1.1 pp year-on-year in 21-23, and the multi-year layout entered the harvest period.

The granularity of time-sensitive basic plate products has increased, and the pricing curve is gradually steeper. Time-efficient express delivery is positioned at the high-end and is suitable for monetizing brand power and product power. Compared to overseas giants, it's not hard to find that the pricing curve for the scheduled delivery business is quite steep, and the increase in product granularity can effectively optimize the customer unit price level.

However, in terms of hardware conditions, SF Express relies on Ezhou Airport and the leading fleet size to have the possibility of product stratification, reduce costs and increase efficiency in lower economic business, and optimize the pricing curve by raising prices for high-end time-sensitive businesses.

International business is looking for a blue ocean in the Red Sea, combining importance to create a second growth curve. The international logistics market has vast space, but it is not a blue ocean. International giants such as UPS and FedEx have been deeply involved here for more than half a century. Although SF Express's global strategy is still in its infancy, the first battle was successful. The company integrated Kerry Logistics and aviation resources to achieve a transition from light to heavy, expanding coverage from regional to global, and extending its competitive advantage from international logistics to international express delivery. In the midst of this trillion-dollar international circuit, the growth ceiling of SF Express opened, and the second growth curve gradually became clear.

Profit forecasting and investment advice. EPS for 24-26 is estimated to be 2.06, 2.37, and 2.68 yuan/share, respectively. Referring to comparable company valuations, the company will be given a 24-year PE valuation of 20 times, corresponding to a reasonable value of 41.13 yuan/share, and a “gain” rating.

Risk warning. The recovery of the macroeconomic environment fell short of expectations, the promotion of lean cost control fell short of expectations, the expansion and operation of international business fell short of expectations, the growth of new business fell short of expectations, and the rise in production capacity at Ezhou Airport fell short of expectations.