Incident: The company announced 2024Q3 results. In 24Q1-3, revenue was 10.613 billion yuan, an increase of 34.25%, and net profit to mother was 2.329 billion yuan, a decrease of 0.53%. After deducting non-return net profit of 2.283 billion yuan, an increase of 6.12%. Single 24Q3 achieved revenue of 3.847 billion yuan, an increase of 40.17%; net profit attributable to mother was 0.881 billion yuan, an increase of 176.73%; net profit not attributable to mother was 0.864 billion yuan, an increase of 177.21%.

Comment:

As the core of the global small commodity supply chain, the Yiwu market continues to be booming, and the “Belt and Road” countries, ASEAN, Latin America and other regions are leading the growth. From January to August 2024, Yiwu's total import and export value reached 444.06 billion yuan, up 17.2% year on year; of these, exports were 393.58 billion yuan, up 17.2% year on year; imports were 50.48 billion yuan, up 17.3% year on year. Import, export and import values accounted for 12.7%, 15.2% and 5.6% of the province's shares, respectively, increasing by 1.1, 1.1 and 0.6 percentage points respectively. From January to August 2024, Yiwu's imports and exports to Africa, Latin America and ASEAN amounted to 81.22 billion yuan, 75.3 billion yuan and 42.37 billion yuan respectively, up 17.3%, 27.0% and 27.6% year-on-year respectively. Total imports and exports to the “Belt and Road” countries were 274.97 billion yuan, an increase of 18.8% over the previous year, accounting for 61.9% of Yiwu's total import and export value during the same period.

The company has anchored the strategic goal of “a world-class integrated international trade service provider” and has accelerated to become a leading global commercial enterprise that empowers mass trade in small commodities. The main business continued to grow significantly in 24Q3, exceeding the company's expectations.

24Q3's main business profit was about 0.994 billion yuan, a year-on-year increase of more than 108%. Innovative business aspects:

1) The GMV of the 24Q3 Chinagoods platform exceeded 60.8 billion yuan, a year-on-year increase of more than 16%; 2) “Yiwu Pay” added more than 20 billion yuan in cross-border payment transactions from January to September 2024, an increase of more than 770% over the previous year. The payment company 24Q1-3 achieved domestic transactions of 60.2 billion yuan, cross-border transactions exceeding 20 billion yuan, overall revenue exceeding 80 million yuan, net profit exceeding 30 million yuan, the company's basic gross margin of more than 80%, operating costs have stabilized, and the cross-border RMB business model is more mature. The company's operating results exceeded expectations, and the transformation into a comprehensive trade service provider accelerated.

Profit forecast: We expect the company's revenue for 2024-2026 to be 14.4/16.3/19.1 billion yuan, up 27%/14%/17%; net profit attributable to mother will be 3.038/3.48/4.482 billion yuan respectively, up 14%/15%/29%; EPS will be 0.55/0.63/0.82 yuan respectively, corresponding to the closing price of October 21, PE 21/18/14X.

Risk factors: Fluctuations in macroeconomic factors at home and abroad, changes in international trade policies.