The company disclosed the 2024 mid-year report, with operating income of 4.86 billion US dollars, an increase of 20.6% over the previous year; the group's net profit reached 0.03 billion US dollars, turning a loss into a profit for the first time. Looking at the subregion, the China/Southeast Asia/Emerging Markets achieved segment revenue of 3/1.52/0.29 billion US dollars, +36.1%/+22.0%/+119.6% year-on-year, and adjusted pre-tax segment profit of 0.06/0.13/ -0.02 billion US dollars. The Chinese region achieved profit for the first time. The loss in the new market narrowed sharply from -0.07 billion US dollars in the same period last year to -0.02 billion US dollars. We are optimistic that the profitability of the company's domestic business will gradually recover and that overseas market share will continue to increase, and maintain the company's buying rating.

Key points to support ratings

The 24H1 express delivery business increased by nearly 40%, and net profit corrected for the first time in the first half of the year. 2024H1, the company's express delivery business reached 11.01 billion units, +38.3% year over year. Looking at the regional level, the express delivery business volume in China/Southeast Asia/New Markets was +37.1%/+42.0%/63.9% year over year. In the first half of the year, the company's revenue reached 4.86 billion US dollars, up 20.6% year on year. Looking at the subregion, China/Southeast Asia/Emerging Markets achieved segment revenue of 3/1.52/0.29 billion US dollars, +36.1%/+22.0%/+119.6%, adjusted pre-tax segment profit 0.06/0.13/ -0.02 billion US dollars. The Chinese region achieved profit for the first time, and new market losses narrowed sharply from -0.07 billion US dollars in the same period last year to -0.02 billion US dollars Billions of dollars. The group's profit in the first half of the year reached 0.03 billion US dollars, turning a loss into a profit for the first time? The market share of each region continues to increase, and the market share of the Southeast Asia region has increased significantly. In the first half of 2024, the company's market share in Southeast Asia was 27.4%, up 2.0 percentage points from 25.4% in 2023; the market share in China was 11.0%, up 1.1 percentage points from 9.9% of the comparable caliber in the first half of 2023; and the market share in the new market was 6.1%, up 0.1 percentage points from 6.0% in 2023. Overall, the company's advantages in the Southeast Asia region are expanding. We are optimistic that the company will learn advanced domestic express delivery industry management experience to empower the Southeast Asia region. The company's market share in the Southeast Asia region is expected to continue to increase in the future.

The scale effect of logistics infrastructure gradually became apparent, and the cost of a single ticket in China declined in the first half of the year. As of the end of June this year, the company had about 8,000 network partners and about 1,900 outlets around the world, operated 237 transit centers, equipped with 254 automated sorting lines, and operated more than 4,100 trunk lines and more than 9,900 mainline vehicles, including more than 5,700 own trunk line vehicles. The company's single ticket revenue in the Chinese market in the first half of 2024 was $0.34, the same as in the first half of 2023. The cost of a single ticket fell from $0.34 in the first half of 2023 to $0.32 in the first half of 2024. Among them, the single ticket transportation cost was 0.07 US dollars, down 0.01 US dollars from 0.08 US dollars in the first half of 2023; the single ticket sorting cost was 0.05 US dollars, corresponding to the single ticket sorting cost in the first half of 2023, 0.06 US dollars. We believe that as the company's business volume continues to rise, the scale effect of the logistics infrastructure invested a lot in the early stages is gradually showing. While the company's single ticket revenue in the Chinese region remained relatively stable in the first half of this year, the decline in single ticket costs led to a marked recovery in domestic business profitability.

valuations

The company's business volume continues to rise. Under the effect of scale, the single ticket cost of the domestic business has declined, profitability has increased, and the market share of the Southeast Asian region continues to grow. Therefore, we adjusted our previous profit forecast. We expect the company's net profit to be 0.56/2.248/3.34 billion yuan in 2024, turning a year-on-year loss into profit in 2024, +301.3%/+48.6% year-on-year in 2025-2026, and EPS of 0.06/0.25/0.38 yuan/share, corresponding to PE 87.4/21.8/14.7 times, respectively, to maintain the company's purchase rating.

The main risks faced by ratings

Demand growth fell short of expectations, industry competition intensified, labor costs rose, and economic recovery fell short of expectations.