Key points of investment
The largest integrated logistics service provider in Asia. From redeeming revenue to redeeming profits, the company is a direct-managed integrated logistics service provider independent of e-commerce platforms. It is the largest in Asia and the fourth largest in the world, and has typical procyclical attributes. The company's free cash flow recouped in 2022, transitioning from cashing out revenue to cashing out profits. Through endogenous+epitaxial two-wheel drive, the company has fully expanded to form a comprehensive logistics business layout covering full timeliness, full weight, and full temperature. It has the advantage of “SkyNet+Ground Net+Information Network” network scale, and has developed into a leader in various core segments of China's logistics industry. The company's capital expenditure contracted continuously from 2022 to 2023. The peak capital expenditure period has passed, and free cash flow has recovered.
Express logistics business: improving the quality and efficiency of time-sensitive parts, express transport/same-city transfers, improving the efficiency of economic parts, steady growth in the time-efficiency market, and the transformation of emerging businesses into profit has reached an inflection point. 1) Time-sensitive components: High barriers, main profit force, steady growth. Short-term macroeconomic recovery is expected to drive revenue growth and profit, and medium-term service scenario expansion+manufacturing upgrading is expected to maintain steady growth in volume. 2) Economic components: Structural optimization, efficiency improvement, profit transformation is imminent. Retail e-commerce has moved into a stage of stock development, and the growth rate of express delivery volume has slowed down. The company continues to improve its economic product structure, divest low-margin products, and improve the gross profit of a single ticket by 21Q4. It is expected that the business will turn into profit soon. 3) Express shipping:
Dual-brand operation, turning profit for the first time in '22, and increasing profits in '23. The real economy is driving steady growth in the size of the trillion-dollar LTL market. The market is in the stage of deep inventory integration. The direct-managed high-end express market has entered a duopoly battle, and pattern optimization is driving freight rate recovery. 4) Same city: First full year profit in 2023. SF Express Tongcheng is the largest third-party real-time delivery service platform in China. The instant delivery industry is expected to maintain a growth rate of about 25% in the short term. The full-scenario model+technology empowerment will jointly drive business volume growth, and the revenue side structure of Tongcheng's business will continue to be optimized.
Supply chain and international business: After the rapid expansion of the second growth curve 21Q4 and Kerry Logistics, the company has the most comprehensive layout of cross-border logistics core nodes. It has end-to-end service capabilities for collection, trunk transportation, customs clearance, overseas warehouses, and terminal delivery (some Southeast Asian countries), deeply explores Southeast Asian flows, expands the US and Europe, and continues to improve the international network layout. The supply chain and international business contributed 34% of revenue and 28% of net profit in '22. Due to falling international air and sea freight rates in '23, the business lost 500 million yuan.
Ezhou Airport+SF Airlines: Consolidate domestic timeliness barriers. It is also a new starting point for connecting with the international community. SF has 87 freighters. Although the total flight volume advantage is outstanding, the international capacity share is relatively low, and there is still room for improvement in loading rate. The company participated in 46% of the operation of Ezhou Huahu International Airport, the largest cargo hub in Asia. The company's air network switched from point-to-point to an axle and spoke network centered around Ezhou Airport, which not only helped improve the timeliness of express delivery across provinces, but also increased the scale effect of increasing loading rate, and effectively breaking through time bottlenecks and expanding international business.
Profit forecasting and valuation
Net profit due to mother for 24-26 is estimated to be 93.10.5 billion yuan, and 11.9 billion yuan, respectively. Considering that the company ushered in an inflection point in operation and leading premiums, it was covered for the first time and given a “buy” rating.
Risk warning:
The macroeconomy falls short of expectations, volume falls short of expectations, and market competition heightens risks.