Key points of investment:

Incident: Yongtaiyun released its 2023 annual results report. The company's overall performance was slightly lower than expected. Affected by fluctuations in international shipping container freight rates and the boom in the chemical industry, the company achieved net profit of 150 million yuan attributable to parent company owners in 2023, a decrease of 48.97% compared with the same period last year.

The overall chemical industry is under pressure in 2023, and the 24-year boom is expected to recover. The 2023 China Chemical Product Price Index declined compared to 2022. According to iFind data, the average value of China's chemical product price index in 2023 was about 4679.1 points, down about 12% from 2022. The overall trend is low. According to data from the National Bureau of Statistics, the cumulative total amount of fixed asset investment completed in China's chemical raw materials and chemical products manufacturing industry increased by 14% year-on-year from January to January 2024. New chemical production capacity continues to be released, and the boom is expected to recover.

The number of operating boxes in the cross-border chemical logistics supply chain sector increased 27% year over year, and the high increase in business volume gave a certain edge to the decline in gross profit per box. The single-box gross profit of the cross-border chemical logistics supply chain sector in '22 benefited from maintaining a high base throughout the industry boom cycle, which was under overall pressure in '23. The total number of service boxes in the company's various business segments in 2023 was 2481,000 TEU, including 145,500 TEU of service boxes in the cross-border chemical logistics supply chain, 53,600 TEU of service boxes in the warehousing sector, and 49,000 TEU of service boxes in the transportation sector. Looking at the cross-border chemical logistics supply chain sector, business volume increased 27% year over year.

The bottom of the cycle promotes strategic layout and waits for the results of the recovery of the industry boom cycle. In 2023, the company announced the bankruptcy and restructuring of three companies, including Ningbo Yongshunan, Shaoxing Changrun Chemical, Hunan Hongsheng Logistics Co., Ltd., and the Ruibolong acquisition project, continuously integrating scarce hazardous chemical storage and transportation capacity resources in the industry, and relying on riverside, coastal, port and chemical industry clusters to carry out a national core basic logistics resource layout, which will help the company quickly seize scarce and dangerous qualifications in the industry. It uses favorable policies and location advantages to enhance the company's core competitiveness.

Based on the company's 2023 annual performance report, maintain a “purchase” rating: Combined with the company's 2023 annual report, considering the phased operating pressure brought on the company by the decline in international shipping container freight rates and the pressure on the prosperity of the chemical industry, we lowered the company's 2024-2025 container volume and individual revenue. Assuming that the year-on-year growth rate of the company's cross-border chemical logistics supply chain in 24-25 was 50% and 30% year-on-year (the original assumption was 50% and 40%). The revenue of a single box in both years was 103,000 yuan/TEU (originally assumed that the revenue of a single box in 24-25 was all 1.17 million yuan/TEU). Based on the above assumptions, we lowered the company's profit forecast for 24 and 25 and added a profit forecast for 26 years. The net profit for 2024-2026 is estimated to be RMB2.05, 2.70, and 352 million yuan respectively (originally assumed 24-25 profit forecasts were RMB2.80 and 380 million), and the corresponding PE was 13/10/7 times, respectively. The current stock price fully reflects pessimistic expectations that the decline in freight rates will intensify and the prosperity of the chemical industry will decline. The company's business volume level continues to grow and the business continues to expand this year. We believe that the company is expected to reap profits in 24, and the current market value corresponds to the PE valuation 13X in 24 (April 10, 2024 data). Considering that the company and Hongchuan Smart are enterprises in the hazardous chemical warehousing and logistics industry, Hongchuan Smart was selected as a comparable company. According to iFind's unanimous expectations, Hongchuan Smart's 2024 PE valuation is 16X. Based on Hongchuan Wisdom, considering that the company is currently in a period of strong investment, construction, mergers and acquisitions, and the business continues to expand, we believe that the company's reasonable PE valuation ratio in 2024 is 16X, corresponding to a target market value of 3.3 billion yuan and 23% space, maintaining Yongtai Transport's “buy” rating.

Risk warning: Risk of safe operation, risk that third-party hazardous chemical logistics demand falls short of expectations.