Description of the event

Shentong Express released its 2024 three-quarter report: in the first three quarters of 2024, the company's revenue was 33.49 billion yuan, up 14.2% year on year; net profit to mother was 0.65 billion yuan, up 195.2% year on year. 2024Q3, the company's revenue was 11.92 billion yuan, up 16.3% year on year; net profit to mother was 0.215 billion yuan, 2.74 million yuan in the same period last year. The forecast Q3 results were 0.179-0.227 billion yuan, and the Q3 results were close to the forecast limit.

Incident comments

Growth momentum is strong, and the share continues to rise. 2024Q3, the company's volume increased 27.9% year on year, and the share increased 0.8 pct year on year to 13.5%. 2024Q3, the company's unit price was 2.01 yuan, down 0.11 yuan (5.2%) year on year and 0.01 yuan month on month.

Price competition intensified during the off-season, and the company continued to lead the growth rate, and its share continued to increase, driving express delivery revenue up 21.3% year on year.

Costs have been significantly optimized, and gross profit per ticket has improved. 2024Q3, the company's gross profit per ticket increased by 0.04 yuan year-on-year, and decreased by 0.02 yuan month-on-month. The cost of a single ticket was 1.92 yuan, a year-on-year decrease of 0.24 yuan, and a month-on-month increase of 0.01 yuan. The company's growth momentum was strong. Combined with the continuous investment of new production capacity, the scale effect drove a significant improvement in costs.

Expense control is good, and net profit per ticket has increased. 2024Q3, the company's single ticket fee decreased by 0.01 yuan year on year to 0.06 yuan, and remained flat from month to month. Other earnings for the third quarter fell 0.04 billion year on year, mainly due to adjustments in VAT deduction policies. The company's non-net profit deducted from a single ticket in Q3 increased by 0.04 yuan year-on-year to 0.034 yuan, and decreased by 0.01 yuan month-on-month.

Cash flow continued to improve, and capital expenditure remained stable. 2024Q3, the company's net cash flow from operating activities was 0.87 billion yuan, an increase of 17.3% over the previous year; high performance led to an improvement in cash flow. 2024Q3, the company's capital expenditure was about 0.83 billion yuan, down 22.1% year on year. The cumulative capital expenditure for the first three quarters was about 2.35 billion yuan, up 10.0% year on year, and capital expenditure remained stable.

Management reform dividends have been released, starting a positive cycle of quantitative capital and profit. The results of the company's management transformation have been shown, and the operating capacity and network quality have all ushered in improvements. As stated in our in-depth report “Shentong Express: Through ups and downs, the path to recovery”, the company has seized historical opportunities, focused on main business operations, continued to push forward management reforms and make up for production capacity shortfalls. It has already passed a fundamental inflection point and entered a dividend period of management change. At the 2024 Shentong Network Conference, President Wang Wenbin announced to the entire network: “Shentong already has a throughput capacity of 75 million units per day.” Shentong successfully made up for the shortfall in production capacity, led the volume growth rate for many quarters, and entered a positive cycle of capital and profit. Profit flexibility is being unleashed at an accelerated pace, and the market share is expected to continue to increase. It is estimated that in 2024-2025, the company's net profit to mother will be 1/1.43/1.64 billion yuan respectively, corresponding to PE of 16.6/11.6/10.2X, maintaining a “buy” rating.

Risk warning

1. E-commerce express delivery demand falls short of expectations;

2. Increased competition in the express delivery market;

3. Oil prices and labor costs have risen sharply.