Core views:
Jiayou International announced a preliminary increase in results for the year 24. 24H1, the company expects to achieve net profit of 0.746-0.796 billion yuan, a year-on-year increase of 48%-58%; net profit after deducting non-return to mother of 0.739-0.789 billion yuan, an increase of 49.56-59.76% year-on-year. Among them, in 24Q2, the company expects to achieve net profit of 0.438-0.489 billion yuan, a year-on-year increase of 45.42%-62.12%, and the performance exceeded expectations.
Trade between China and Mongolia is booming, and the China-Africa business boom continues. According to the performance forecast, in January-May '24, bilateral trade volume between China and Mongolia reached 51.9 billion yuan, +14.9%, and the import and export volume of Erlianhot and Ganqimaodu ports all reached new highs. According to the General Administration of Customs, China's cumulative coal imports from January to May '24 reached 30.5496 million tons, +31.27% over the same period. Trade between China and Mongolia remained strong, driving the cross-border logistics market to continue its good development trend. As the largest warehousing market share at Ganqimaodu Port, the company reached an equity cooperation for coal development and signed a long-term coal cooperation agreement with Mongolian Mining Corporation, exploring a competitive “resource+trade+logistics” business model, further consolidating the company's core competitiveness in the China-Mongolia market and enhancing profit margins. In terms of the China-Africa business, traffic and freight volume of the 24H1 dry port project in the Democratic Republic of the Congo (DRC) increased steadily. At the same time, after completing the acquisition of cross-border transportation companies in Africa, the company further deepened the African inland transportation business network layout, expanded the fleet size, established distribution logistics nodes, and built a transportation network in central and southern Africa integrating highways, ports, logistics nodes, and ports. The results of Africa's major logistics landscape are beginning to show, and brand influence is gradually expanding, forming the company's second growth curve.
Profit forecasting and investment advice. Considering that the company's performance has once again exceeded expectations and the growth logic continues, we raised our profit forecast. We expect EPS to be 1.43, 1.66, and 1.87 yuan/share for 24-26, respectively. Referring to comparable company valuations, the company will be given a PE valuation of 18 times in 24 years, corresponding to a reasonable value of 25.77 yuan/share, maintaining a “buy” rating.
Risk warning. Geopolitical risks, Mongolian coal import demand falls short of expectations, dry port project fee reduction or traffic falls short of expectations, delays in project construction and falling short of expectations in climbing progress, and uncertainties related to macro-level prosperity.