Key investment points
Core view: at present, the market is not fully priced for the repair of express stocks. The core concern is the continuity of supervision and the disturbance of the epidemic. Through observation and speculation, we believe that the year-on-year growth rate of profit in the off-season remains high and continues to show profit elasticity. The express market in 22 years may exceed expectations again. Reiterate the "buy" rating of Yunda Holding Co.Ltd(002120) , Yto Express Group Co.Ltd(600233) , and China Express.
21 year franchise express investment logic review. In the report "deduction or exceeding expectation of this round of express market" released in September 2021, we mentioned that the express industry ushered in the repair market. This round of market began with policy regulation and developed from the change of leading strategy. It was catalyzed with the increase of dispatch fee, which will be indirectly verified in the peak season, accompanied by the possibility of increasing concentration. At present, all logic has been fulfilled. According to the performance express, in the fourth quarter of 2021, Yuantong realized a net profit attributable to its parent company of 1.14 billion yuan, a year-on-year increase of 199%, showing significant profit elasticity.
Looking forward to 22 years, the current market concerns lie in two points: 1 Sustainability of regulatory intensity. The business model of franchised express determines the endogenous price war power in the industry. Previously, the introduction of express policies was based on the protection of the core rights and interests of express brothers. With the gradual improvement of the living environment of express workers, the market is worried about the stability and sustainability of policy supervision. 2. Impact of epidemic situation on business volume. Recently, the epidemic in Shanghai and other places has intensified. According to the data of the State Post Office, 660 million packages were collected during the Qingming Festival, a year-on-year decrease of 13%. The market is worried that the decline in the growth rate of parts will affect the capacity utilization of enterprises and drag down the performance of the whole year.
We believe that this round of Express repair market may exceed expectations.
\u3000\u30001. The probability of industry supervision continues. On January 7, the Ministry of transport issued the management measures for express delivery market (Revised Draft) (Draft for comments), which clearly stated that "express delivery services shall not be provided at a price lower than the cost without justifiable reasons". Subsequently, the express delivery policies of various provinces and cities were issued one after another. On March 1, the regulations on the promotion of the express industry of Zhejiang Province was officially implemented. This is the first local regulation with the theme of promoting the development of the express industry in China. It marks the first time that there are legislative norms in the express management and lays the foundation for the continuation of the policy. The strong regulatory trend of the express industry has not weakened, and the specific effect depends on the implementation and enterprise strategy.
\u3000\u30002. The strategy of major enterprises has not changed, and the industry will still be in a state of weak competition. At present, the head enterprise maintains the peak season strategy, and the annual guidance continues to focus on improving service quality and stabilizing the franchisee network, focusing on the improvement of long-term comprehensive strength. The new express player Jitu is in the integration period after the acquisition of Baishi. The integration of express outlets is not easy. It is expected that Jitu will moderately weaken the price subsidy in 22 years.
\u3000\u30003. The epidemic affects the business volume, but the profit impact is limited, or create a better buying time point. The profit of express delivery enterprises depends on the single ticket net profit and business volume, but the influence weight is significantly different. At present, the single ticket net profit is a more important factor. According to our calculation, the impact of business volume on the annual profit of the express industry in 22 years is only 20%, while the impact of single ticket net profit is 80%. If the epidemic continues in the second quarter, resulting in a negative growth of 10% in the business volume of the express industry, the impact on the annual profit will be between 5% - 10%. In the period when the quantity of parts in the whole industry is relatively low, the effect of grabbing quantity at low price is poor, and the enterprise will increase the unit price and pursue profit. We believe that if the growth rate of short-term parts declines, it will affect market expectations or create a better buying time point.
The easing of the price war will be verified in the off-season, and the annual profit is expected to continue to exceed expectations. The second quarter is the traditional off-season of the express industry, which is usually the time when the price war in the industry is the most intense. In the second quarter of 2021, the price war in the express industry was unprecedentedly fierce. The single ticket net profit of Yuantong and Yunda decreased to 0.06 and 0.05 yuan respectively, and the corresponding Express unit price was 2.09 and 2.03 yuan. This means that even if there is a downward trend in the off-season price in 2022, it only needs to be slightly improved year-on-year, which will bring significant profit elasticity and drive the annual profit to continue to exceed expectations. Since late March, the growth rate of express business has slowed down, and this round of Express repair market has ushered in the first off-season. The re emergence of price war in some regions and the price correction in some regions caused by the regulatory game between local governments are normal phenomena. Under the condition of continuous overall supervision, the profit probability of the express industry in 2022 continues to show significant elasticity. In addition, in the state of weak competition, the cost rise caused by oil price fluctuations is also easier to be transmitted to the demand side and increase profit toughness.
Recommended targets: Yunda Holding Co.Ltd(002120) , Yto Express Group Co.Ltd(600233) , Zhongtong express. Under the continuous situation of administrative supervision, the head express enterprise strategy continues. We expect that the express industry will continue to show profit elasticity in 2022. During the overall repair of the industry, β Benefits outweigh α In terms of income, among the leading enterprises, the enterprises with relatively less income in the early stage may show better income and space in the future.
Risk warning events: the implementation of relevant policies is still uncertain, and the price war may still intensify; Risk of the impact of the epidemic on business; Risk of oil price fluctuation; If the long-term cost curve of the industry is flat, it will not be conducive to the differentiation between enterprises.
