Results for the second quarter of 2024 showed steady growth. In the first half of 2024, the company achieved operating income of 20.69 billion yuan, a year-on-year increase of 10.5%; realized net profit to mother of 4.04 billion yuan, a year-on-year decrease of 4.1%; and achieved adjusted net profit of 5.03 billion yuan, an increase of 13.0% year-on-year. Among them, in the second quarter, the company achieved operating income of 10.73 billion yuan, a year-on-year increase of 10.1%; realized net profit to mother of 2.61 billion yuan, an increase of 3.3% over the previous year; and achieved adjusted net profit of 2.81 billion yuan, an increase of 10.9% over the previous year.
The company's strategic focus shifted to service quality. The year-on-year decline in unit prices narrowed in the second quarter, and the growth rate of business volume also slowed. In the second quarter of 2024, the company continued to focus on a balanced growth strategy and promoted the transformation from high quantity to high quality. The company achieved 8.45 billion units in the second quarter, up 10.1% year on year, and the growth rate slowed down. Due to the intense industry price war in the second quarter, the company's market share fell 2 percentage points to 19.6% compared to the same period last year, but it is still far higher than that of its peers. Due to the positive impact of the increase in the proportion of high-value non-e-commerce items offsetting the decline in unit prices due to incremental subsidies and reduced package weight, the single ticket price for the company's core express delivery service in the second quarter was 1.24 yuan, which was basically the same as the previous year.
Affected by short-term expansion and upgrading of production capacity, the company's single-ticket operating costs were limited year-on-year optimization in the second quarter, and single-ticket express profits were steady year-on-year. The company's single ticket transportation costs and single ticket transit costs for the second quarter were 0.39 yuan and 0.26 yuan respectively, with year-on-year changes of -6.8% and +4.6%, respectively. The reduction in single-ticket transportation costs is mainly due to scale effects, optimization of trunk route planning, and increased loading rates; there has been a slight increase in single-ticket transit costs, mainly due to increases in labor remuneration and related depreciation and amortization costs due to the expansion of automated equipment and facilities upgrades. As the price of a single ticket remained flat year on year, the company finally achieved net profit of 0.33 yuan (after adjustment) of 0.33 yuan in the second quarter, which remained flat year on year, up 0.02 yuan from month to month, and showed steady performance. The company's capital expenditure for the second quarter was 1.28 billion yuan, a significant year-on-year decrease (2.2 billion yuan in the same period in 2023). The company's capital expenditure high has passed, and the capital expenditure level is expected to continue to decline throughout 2024.
Risk warning: Price competition worsens; e-commerce express delivery demand growth is lower than expected.
Investment advice: Maintain a “buy” rating.
Considering the impact of impairment of equity investment, we slightly adjusted the company's profit forecast. We expect net profit to be 9.9/11.71/13.36 billion yuan for 2024-2026 (24-25 adjustment range -1.2%/-1.1%), respectively, up 13.2%/18.2%/14.1% year-on-year, respectively. Zhongtong Express has been balancing the balance between service quality, business scale, and profit growth for a long time. We believe that short-term market share fluctuations are the company's efforts for long-term sustainable development. At this stage, the company's long-term investment value is prominent, maintaining the company's “buy” rating. Currently, the PE valuation of the stock price corresponding to 24-25 EPS is 12X and 10X, respectively.