The main ideas in this report
The company is a leading e-commerce express delivery company in China. Taking '23 as an example, the company's revenue was 38.419 billion yuan, of which express delivery services amounted to 35.488 billion yuan (accounting for 92.4%). The company completed 30.202 billion express delivery orders in '23, an increase of 23.8% over the previous year, with a market share of 22.9%. The company has continued to rank first in express delivery business market share since 2016.
Industry beta: Online consumption is the core driving force. There is room for continuous optimization of all costs of online channels, which will drive the continued increase in e-commerce penetration rate and the continuous growth of e-commerce express delivery. We expect the compound growth rate of express delivery orders in 2024-2026 to 17.1%.
Company α: From cost leadership to service success. In the first phase of Zhongtong Express, it took the lead by taking the lead in external financing. In the second phase of Zhongtong Express, with asset advantages and management advantages, Zhongtong Express's rate entered a positive cycle of “comparative advantage of unit volume - comparative advantage of unit cost - comparative advantage of profit - comparative advantage of capital expenditure”. In the third phase of Zhongtong Express, the company led its peers in dividend payments and repurchase amounts over the years, achieving leading shareholder feedback.
Profit forecast and investment suggestions: We expect Zhongtong Express's revenue for 2024-2026 to be $4,3083.64 million, $47,988.67 million and $53064.75 million, with net profit to mother of $10256.01 million, $11481.25 million, and $12866.32 million (EPS is $12.62, $14.12 and $15.83, respectively), corresponding to the closing price of HK$173.6 on May 14, 2024 (the exchange rate is HK$1.92 = $0.92), PE is 12.66 times, 11.31x and 10.09x. We believe that there is room for continuous optimization of all costs of online channels, which will drive the e-commerce penetration rate to continue to increase and e-commerce express delivery to continue to grow. From the company's perspective, Zhongtong Express is in the third stage, that is, from leading management to leading shareholder feedback. First coverage, giving a “buy” rating.
Risk warning: Macroeconomic growth falls short of expectations, implementation of regulatory policies in grain-producing regions falls short of expectations, and the expansion of community group buying categories exceeds expectations.