The company disclosed its 2024 Q3 results. As of Q3, the company's revenue reached 35.509 billion yuan, up 8.14% year on year; net profit to mother reached 1.408 billion yuan, up 20.93% year on year. With 2024Q3, the company achieved operating income of 12.257 billion yuan, up 8.84% year on year; net profit to mother reached 0.367 billion yuan, up 24.25% year on year. Since the growth rate of the company's express delivery business was higher than the growth rate of the industry, while actively reducing costs to release profits, we maintained the company's holdings increase rating.

Key points to support ratings

The growth rate of the company's express delivery business volume is higher than the growth rate of the industry, and cost reduction grasps the dividends of the trend towards smaller express delivery.

In Q1-Q3, the company's express delivery business volume was 16.943 billion units, up 27.7% year-on-year, higher than the industry's growth rate of 5.7pct. Among them, in Q3, the company's express delivery business volume was 6.019 billion units, an increase of 23.72% over the previous year. In Q1-Q3, the company's revenue in Q1-Q3 was 2.10 yuan, a year-on-year decrease of 15.32%. The price-for-volume strategy worked. At the same time, the company gave full play to the economies of scale brought about by the increase in volume. In Q1-Q3, the company's single ticket cost was 1.89 yuan, a year-on-year reduction of 15.06%. The benefits of the quantitative cost reduction strategy were obvious, effectively relieving the pressure brought about by price competition in the express delivery industry and helping the company seize the dividends of the trend towards smaller express delivery.

Net profit to mother increased 24.25% year over year, and profitability gradually increased. The company's 2024Q3 revenue was 12.257 billion yuan, up 8.84% year on year; net profit to mother was 0.367 billion yuan, up 24.25% year on year; net profit after deducting non-return to mother was 0.34 billion yuan, up 88.45% year on year. 2024Q1-Q3, the company's revenue was 35.509 billion yuan, up 8.14% year on year; net profit to mother was 1.408 billion yuan, up 20.93% year on year; net profit after deducting non-return to mother was 1.172 billion yuan, up 20.86% year on year. The company's strategy of exchanging price for volume and reducing costs with volume worked, and operating profits continued to grow. At the same time, the company launched new intelligent sorting equipment to improve scanning speed and achieve energy saving and consumption reduction. The company's profitability is expected to continue to increase in the future.

Continuously improve digital capabilities and actively deploy low-altitude economic fields. The company implements a comprehensive digital strategy. Through digital tools, the company efficiently collaborates with the core resources of the entire network to achieve integrated digital intelligent management and control of the entire network in terms of operation timeliness, operation efficiency, and operation quality. Based on handling and delivery, the company carries out flexible equipment upgrades and transformation with digital support, giving full play to the advantages of package handling and grid warehouses, continuously improving package response efficiency and package efficiency, improving sorting, trunk line and delivery timeliness, reducing damage rates, and effectively restoring service quality to an advantageous position in the industry. For a long time, the company attached great importance to investing in digital intelligence research and development. The company directly wholly owns Jiaxing Yunhe Technology Co., Ltd. and actively explores ways to shorten transportation times, including drones. By the end of the 3rd quarter of '24, the company was piloting drones in some regions and was actively developing the low-altitude economy.

valuations

Due to the significant decline in the company's single ticket revenue, we adjusted the company's profit forecast. The company's net profit for 2024-2026 is 2.075/2.405/2.857 billion yuan, +27.7/ +15.9%/+18.8% year over year, and EPS is 0.72/0.83/0.99 yuan/share, corresponding to PE 11.3/9.8/8.2 times, respectively, to maintain the company's holdings increase rating.

The main risks faced by ratings

Demand growth fell short of expectations, competition among industries intensified, labor costs rose, and economic recovery fell short of expectations.