Open a precedent to join the model, timely strategic adjustment to achieve industry leadership. 1) Anneng Logistics, founded in 2010, is a truckload freight enterprise under the freight partner model (joining mode). The company takes the lead in introducing the joining model into the truckload express industry to achieve rapid expansion. It has become a leading enterprise thanks to its founding team's accurate strategic vision, stable and excellent management system and the help of the capital market. 2) timely strategic adjustment to achieve industry leadership. The company has also stepped into a detour, that is, it entered the express delivery market in 16 years, then stopped its losses and returned to its main business in 19 years, actively adjusted its price strategy and launched an offensive to take the lead in product layering and accurate positioning.

China's largest joining mode express service provider, network-based express head enterprise. 1) omni-directional, diversified, cost-effective truckload transportation solution. Starting from the needs of customers, the company continues to innovate and launch industry advantage products such as timed, Anxinda, precision less-than-truckload express, Prudential and Mini e-commerce series specifically aimed at e-commerce customers. 2) the leading national scale express network in the industry. By the end of April 2021, an Neng Logistics had 151self-operated distribution centers across the country, including 10 core hubs with an average daily capacity of more than 57 million tons and 43 transit hubs with an average daily capacity of more than 2400 tons; the self-operated fleet has more than 4200 transport trucks and trailers, and 2700 trunk transport routes are connected (92% are bilateral routes). At the same time, there are more than 29400 freight partners and agents at the end, including 7000 freight partners (first-tier franchisees) and 22400 agents (second-and third-tier franchisees). 3) the freight volume is leading in the industry, with a compound growth rate of 31%. The freight volume of an Neng Logistics from 2018 to 2020 was 733,814 and 10.21 million tons respectively, and the average daily cargo volume reached 2.57,2.89 and 38400 tons respectively. From 2015 to 2020, the compound growth rate of total freight volume reached 31% in 2020 compared with the same period last year. 25.5% cargo volume in the first four months of 21 years increased by 3.6 million tons, an increase of 71.4%.

Financial data: revenue continues to grow and profits improve. 1) income: from 2018 to 2020, the income was 53.3,53.4 and 7.08 billion yuan respectively, and the income in the first four months of 21 years was 2.837 billion yuan, an increase of 127% over the same period last year. (note:

The income from delivery services will be adjusted from net to full from July 2020). The company's less-than-truckload business income includes transportation (including transit operations), value-added services and delivery services, accounting for 63%, 20% and 17% respectively in 2020. 2) cost: trunk transportation costs account for more than 50%, and labor costs account for 30%. 3) the gross profit per ton is gradually improved. The gross profit per ton increased gradually from 85 yuan in 2018 to 110 yuan in the first four months of 21 years, and the adjusted net profit per ton increased from 220 yuan in 2018 to 51 yuan in the first four months of 2021. 4) stop the loss-making express delivery business and rebound the profit level. The gross profit margin of Anneng Logistics from 2018 to 2020 was-11%, 13% and 15% respectively. The net profit from 2018 to 2020 was-21.16,2.15 and 218 million yuan, respectively, and the net profit margin was-39.7%,-4.0% and 3.1% respectively. After the adjustment, the net profit reached 650 million yuan and the net interest rate was 9%. In the first four months of 21, the gross profit margin was 14%, with a net loss of 2.25 billion yuan, which was mainly due to the loss of fair value changes caused by convertible preferred shares. After adjustment, the net profit reached 183 million yuan (corresponding to 6.5% net interest rate).

Investment suggestions: 1) profit forecast: we expect the company to achieve net profit of-16.7,7.1 and 980 million yuan respectively from 2021 to 2023, and an adjusted net profit of 540 million yuan in 21 years. 2) Investment suggestion: with reference to overseas experience, the express business can achieve a certain level of net interest rate, and there is a possibility that the gap existing in our country can be remedied. Considering the difference between the current and overseas environment, we give the company 15PE valuation in 2022, corresponding to the market capitalization of RMB 10.6 billion in 2022, corresponding to about HK $12.9 billion, the target price is HK $11.1, and the expected space is 61% higher than the current price, taking into account factors such as liquidity in the H-share market. For the first time, coverage gives a "recommended" rating.

Risk tips: macroeconomic fluctuations, business volume growth is not as expected, industry price competition intensified.