Sealand's transportation industry investment strategy for 2025: focus on domestic demand recovery + balancing with external demand structure adjustment.

Sealand released a research report stating that repairing domestic demand and achieving balance, adjusting the structure of external demand, may become the main trading logic. Given that there are opportunities for layout in multiple mainlines in the transportation industry, the industry's "recommended" rating is maintained. Among them, Repair: Recommend e-commerce express delivery, aviation, and chemical logistics for sectors with strong fundamental resilience or undervalued growth; Balance: Dividend yield supports winning rate, while fundamentals have a certain repair elasticity, recommend direct express delivery, bulk supply chain, and logistics real estate; Structure: Under the impact of tariffs, changes may occur in the structure of external demand. In the short term, focus on seizing export opportunities, while in the long term, look at investment opportunities in related sectors under the framework of going overseas. Sealand's main viewpoints are as follows: Repair of domestic demand + balance, adjustment of external demand structure, or become the main trading logic Review of 2024: After September 24, 2024, there was a shift in momentum, with the logistics and aviation sectors significantly outperforming the Shanghai and Shenzhen 300 Index. Previously, dividend sectors with better performance clearly underperformed. It is expected that after September 24, 2024, the repair may be completed earlier than the fundamentals, and the divergence between reality and expected pace of repair may be the main disagreement in the market, but the spiral cycle of weak reality and expectation may have been interrupted. Outlook for 2025: Repair of domestic demand: Focus on sectors with strong fundamental resilience or undervalued growth, recommend e-commerce express delivery, aviation, and chemical logistics. E-commerce express delivery: The continuous price competition in express delivery is essentially supply and demand and pattern. Based on the current industry growth rate and pattern, it is expected that the price competition will continue in 2025. Preferred valuations in the bottom range, in 2025, e-commerce express delivery leaders ZTO Express and YTO Express Group with continuous management alpha are expected to regain market share. Focus on STO Express Co., Ltd. and YUNDA Holding Group with continuous improvement in fundamentals. Aviation: Aircraft introduction constraints + passenger demand still resilient, and business demand expected to continue to rebound with economic policy efforts, the inflection point in supply and demand in the industry is approaching. In addition, the increasing contradiction between supply and demand in the industry will stimulate the improvement of airline ticket revenue management, combined with improvement in fuel costs, profit elasticity is expected. Recommended airlines with large cyclical upside potential are Air China Limited, China Southern Airlines, China Eastern Airlines Corporation; China Express Airlines, the domestic feeder airline leader; Juneyao Airlines with both beta and alpha characteristics; Spring Airlines, the leader of low-cost airlines. Chemical logistics: The chemical logistics industry is under pressure, to a certain extent affected by the strong periodic fluctuations in the demand side of the chemical industry, and the top enterprises maintain high capital expenditure, with short-term performance pressure; but in the medium term, with the structural dividend of demand and capacity integration and consolidation running smoothly, the growth path of top enterprises is still clear, with quantity and profit having elasticity; in the long term, chemical logistics enterprises can break through the growth "ceiling" by leveraging their own resource endowment and synergy effects, through expanding the supply chain and expanding regionally. Currently, there is a mismatch between demand cycle direction and supply, but in the context of loose policy orientation, it may not be appropriate to be overly pessimistic about demand, and the valuations of top enterprises have adjusted to a reasonable range, waiting for moderate demand recovery, performance growth, and valuation flexibility are expected to return. Recommended to pay attention to Guangdong Great River Smarter Logistics with low valuation and high winning rate; Xingtong Shipping with strong operating alpha; and Nanjing Shenghang Shipping Co., Milkyway Intelligent Supply Chain Service Group, Yongtaiyun Chemical Logistics with strong demand elasticity. Balanced domestic demand: Dividend yield supports winning rate + fundamental repair elasticity, recommend direct express delivery, bulk supply chain, logistics real estate. Direct express delivery: Review of S.F. Holding's historical stock price, major market trends are often based on upward demand, high-growth performance often brings rebound opportunities. After the company transitions from expansion to profitability, it is in a development stage of stable growth and profitability improvement for CKH HOLDINGS. With a high level of performance realization and the potential for increased dividends, the mid-term focus is on the investment value brought by the company's stable growth in performance + shareholder returns; the long-term focus is on the first growth curve time goods centered around Ezhou Airport, the second growth curve supply chain and international marginal changes. Bulk supply chain: Bulk supply chain connected to commodity cycles, weak upstream demand in 2024 affecting commodity liquidity, weak basis differences in black series affecting arbitrage space, and enterprises facing different degrees of pressure on fundamentals. Currently, the valuations of top enterprises are continuously declining, with some top enterprises having PB<1, with repair space, and some enterprises having high dividend yields expressing strong defensive attributes. Considering policy support, the bottom of demand may have been established, if the subsequent recovery in upstream business climate, it is expected to drive the fundamental recovery of top enterprises, with cyclical flexibility. The sector has both offensive and defensive capabilities, and it is recommended to focus on Xiamen ITG Group, Xiamen C&D Inc., Xiamen Xiangyu. Logistics real estate: Overall pressure on logistics real estate in 2024, but there are also structural opportunities. Benefiting from e-commerce driving, the logistics real estate in the Pearl River Delta urban agglomeration shows a strong demand and supply situation, with high rental rates and occupancy rates. Looking ahead, logistics real estate in the Pearl River Delta urban agglomeration is expected to continue to maintain a high level of prosperity. In addition to rental income, asset appreciation is also an important source of income and profit for logistics real estate apart from SHENZHEN INT'L as the national leading logistics real estate developer, the company continually promotes the release of REITs in logistics parks, while also starting the transformation and upgrading project of South China logistics park in 2023. According to the bank's calculation, this project is expected to bring SHENZHEN INT'L a net profit of 13.756 billion yuan. The company's actual dividend ratio has always been maintained at around 50%. If the company continues to maintain a 50% dividend ratio, based on the market value as of December 27, 2024, it is expected that SHENZHEN IThe dividend yields for NT'L in 2024 and 2025 are 8.6% and 11.5% respectively, highlighting the investment value under high dividend payout. Guangzhou Jiacheng International Logistics has seized the opportunity in cross-border warehouse resources, benefiting from the growth in cross-border e-commerce. The rapid utilization of new production capacity has contributed to an increase in performance with strong certainty.External demand structure: Under the impact of tariffs, changes in the external demand structure may bring investment opportunities. In the short term, there may be opportunities to capture export markets, while in the long term, there may be investment opportunities in related sectors under the framework of going global. Short-term focus on "capturing export markets": If the United States imposes tariffs on China, there may be opportunities to capture export markets before the tariffs take effect, which could lead to short-term elasticity in volume and price for shipping and air freight. Key areas to focus on include Eastern Air Logistics and COSCO Shipping Holdings. Medium to long-term focus on "going global": Trade uncertainties may accelerate the development of China's manufacturing industry towards ASEAN. 1) Beibu Gulf Port, as the nearest gateway for exports to ASEAN, is expected to benefit in the short and medium term from the incremental effects of the ASEAN outbound and the land-sea new corridor. In the long term, it is expected to benefit from the transformation of traffic flow brought about by the completion of the Pinglu Canal in September 2026. 2) S.F. Holding and YTO INTL EXP mainly cover the Asian region and can provide end-to-end customized international supply chain services, directly benefiting from China's capacity and brand internationalization towards ASEAN. 3) Jitu Express is a leading express company in Southeast Asia with presence in the Middle East and Latin America, expected to benefit from the globalization of overseas e-commerce platforms like TEMU, driving rapid growth. Risk factors: 1) Macro factors: Significant economic fluctuations, geopolitical conflicts, energy crises, deep recessions in Europe and the US, significant fluctuations in oil prices and exchange rates, large-scale natural disasters, differences between the Chinese market and the international market, etc. 2) Industry factors: Business growth below expectations, major policy changes, intensified competition, industry accidents, etc. 3) Company factors: Cash flow interruption leading to bankruptcy, low-priced issuances leading to significant dilution of shares, cost control below expectations, concerns about company performance falling short of expectations. 4) Calculations are for reference only; actual disclosed data should be relied upon.