Financial Report for Q3 2024: Double Victory of Profit Growth and Strategic Layout

The leading Chinese express delivery company ANE (00956) once again submitted a financial report that surprised the market. On November 15, 2024, this logistics giant punctually released its financial report for the third quarter of 2024. The data shows that the operating income for the reporting period was 3.044 billion yuan, an increase of 21.2% year-on-year; adjusted net profit was 2.18 billion yuan, an increase of 28.0% year-on-year; gross profit reached 476 million yuan, an increase of 66.7% year-on-year; and gross profit margin increased to 15.6%, up 4.2 percentage points year-on-year. Looking ahead with a historical perspective, ANE's gross profit margin and net profit have continued to improve over the past few years. In 2023, the company's gross profit margin was 12.8%, but by the first half of 2024, the gross profit margin had increased to 16.6%. This significant improvement reflects the company's success in cost control, operational efficiency, and product structure optimization. These impressive data undoubtedly injected a dose of confidence into the market. On that day, ANE's stock price rose by 2.15%, closing at 8.07 Hong Kong dollars, giving it a market value of 9.373 billion yuan, just a step away from a market value of 10 billion yuan. Strong profitability behind Since the third quarter of 2022, ANE has been leading the industry in a strategic transformation that has lasted for two years. Guided by the vision of "optimal cost, best quality, stable timeliness, fastest service response, and densest network coverage," ANE focuses on the strategy of "effective scale growth with equal emphasis on profit and quality." Through lean management, introduction of new technologies, and comprehensive empowerment of franchisees, the company has continuously improved operational efficiency and service quality, achieving performance beyond market expectations. The success of this strategy is first manifested in the growth of freight volume. In the third quarter of this year, ANE achieved a total freight volume of 3.73 million tons, an increase of 18.5% year-on-year, continuing the strong performance of the first half of the year. For the entire first three quarters, the company's total freight volume increased by 19.7% year-on-year, with total ticket sales increasing by 31.7% year-on-year. The increase in freight volume directly drove the growth in revenue, with the company achieving operating income of 3.044 billion yuan in the third quarter, an increase of 21.2% year-on-year. In terms of cost control, ANE has made great efforts. By optimizing route planning and production configuration, promoting fleet refinement management, and implementing measures such as the introduction of automated sorting conveyor lines in some distribution centers, the company has effectively reduced unit transportation costs and unit distribution costs. Specifically, unit transportation costs decreased by 6.3% year-on-year, and unit distribution costs decreased by 16.7% year-on-year. These measures have not only improved the company's gross profit margin and net profit margin, but also laid a solid foundation for its future market competition. Optimization of the freight volume structure is also a key factor in enhancing ANE's profitability. The company's focus on its flagship 3300 products, with the "9996" timeliness standard as its action goal, has steadily improved service quality and timeliness. The high growth rate of small kilogram segment products has significantly driven the company's profitability, with the growth rates of mini-small tickets (0-70kg) and small tickets less than 300kg reaching 29.9% and 20.7% respectively, significantly higher than the total freight volume growth rate. In the third quarter, the average loss rate per hundred thousand items decreased by 75.3% year-on-year, the average number of reported complaints per hundred thousand tickets decreased by 90.8% year-on-year, and the average time per waybill decreased by 7.3% year-on-year, optimizing to within 64 hours by September 2024. These improvements reflect ANE's efforts to enhance service quality. To further strengthen its product capabilities, ANE has also proposed multiple market subsidies measures. For example, adhering to the principle of "no price increase during peak seasons" to maintain price stability throughout the year, providing special area surcharges for tickets weighing 3-300 kilograms, enhancing end-of-line service capabilities, continuously subsidizing the market and customers. These measures not only increase customer satisfaction but also enhance ANE's competitiveness in the market. In terms of network ecology construction, ANE continues to build a "rich ecosystem" network, flattening the organization to improve management efficiency, strengthening the "iron triangle" organization empowerment capabilities, and empowering franchisees in all aspects such as technology, management concepts, and policy systems, continuing to strengthen network points. As of the end of September, the company's total number of freight partners and agents is approximately 32,000, ranking first in the scale of domestic join fast delivery networks. This vast network scale not only increases ANE's coverage and operational efficiency, but also provides it with abundant customer resources and market potential. How to evaluate ANE's current valuation? In the past nearly 11 months, ANE's stock price has generally maintained an upward trend in 2024. As of the day before the financial report was released, the company's stock price had steadily increased from 5.26 Hong Kong dollars per share at the beginning of the year to 8.07 Hong Kong dollars per share, representing a 45% increase. This increase not only reflects the market's recognition of ANE's fundamentals but also reflects the market's optimistic expectations for the future development of the express delivery industry. However, when investors decide whether to invest in ANE, they also need to consider factors such as the company's valuation level, industry development trends, market competition landscape, and macroeconomic environment. These factors may all have important impacts on the company's stock price. From the financial report perspective, ANE's third-quarter financial report for 2024 shows that the company has achieved remarkable results in profitability, volume growth, and the strategy of high-quality growth of CKH HOLDINGS. These achievements are attributable to the firm implementation of various measures under the guidance of a long-term perspective and continuous efforts in cost control, product development, and network construction. Taking into account the upcoming year-end stocking and economic stimulus, and considering that ANE's revenue and net profit are likely to achieve a 20% growth, and its leading position in the fast delivery industry continues to strengthen. According to the collected research reports, currently, including China Citic Bank, Haitong Securities, Anxin Securities, Guohai Securities, Huatai Securities and other brokerage firms have covered ANE in their research reports, all of them are optimistic about SH's future market share, revenue, and profit growth. In its analysis, Sealand mentioned that ANE's operational efficiency is likely to seize opportunities in the changing market trends, and among all network express delivery companies, ANE has taken the lead in accelerating penetration of the small-ticket less-than-truckload market and has alreadyPenetrating the market share of less-than-truckload receipts by 22.8%. Analysis by iFind indicates that ANE's net profit margin and EBITDA margin are significantly higher than those of the other two main competitors, making it the strongest in terms of comprehensive profitability. Additionally, its PE ratio is more than 30% lower than the other two, leading to expectations of significant valuation improvement in the future.Based on comprehensive financial data and brokerage research reports, ANE has a solid leading position in the express delivery industry, with high development certainty. The company has achieved a significant improvement in profitability through strategic adjustments and cost control. In the competitive landscape of the express delivery industry, high-quality growth has become the main theme, and top companies like ANE are expected to see growth in both scale and profits.