Matters:

Recently, the National Development and Reform Commission issued the “Overall Plan for Deepening Comprehensive International Trade Reform in Yiwu City, Zhejiang Province” (hereinafter referred to as the Plan), which has been approved by the State Council. The plan proposes specific elements such as deepening the reform of market procurement trade, speeding up the integrated reform of domestic and foreign trade, and improving the modern trade logistics system.

Guoxin Retail's view: 1) At the industry level, the implementation of the plan further reflects Yiwu's position as an important international trade window. The relevant policy content will help further facilitate Yiwu's imports and exports, boost the trade ecosystem, and introduce an increase in import and export trade volume. 2) At the company level, the main marketing business of Commodity City benefits from the continued prosperity of Yiwu trade and provides strong support for rent increases and trade service businesses. In addition, the plan uses Commodity City as the pilot unit to advance the positive import list pilot project, aiming to reach 100 billion yuan in import trade volume in Yiwu by 2025 and 300 billion yuan in 2023, an increase of 358% over 65.5 billion yuan in 2023. As the only pilot unit in the early stages, the company's self-operated import trade business and third-party service business for importers are expected to benefit.

Overall, the plan focuses on Yiwu's international trade reform, further deepening the development of Yiwu's export trade, and focusing on facilitating the prosperity of import trade. As a key market management and trade service provider enterprise, the company will accelerate the construction of a new market platform marked by a global digital trade center, accelerate the leap from traditional trade patterns to digital trade ecology, comprehensively enhance the company's dominant position in the global market for small commodity trade, and bring about steady growth in performance. Considering the company as a pilot unit to advance the positive import list pilot project, which will help bring about growth in import-related business, we raised the company's net profit forecast for 2024-2026 to 2.967/3.582/4.904 billion yuan (2.807/3.336/4.269 billion yuan, respectively), corresponding PE was 26.5/22/16 times, respectively, maintaining the “superior to the market” rating.

Risk Alerts

Trade sentiment in Yiwu declined; global digital trade center construction fell short of expectations; store occupancy rates fell short of expectations; payment transaction flows fell short of expectations or financial compliance risks occurred.