YUNDA HOLDING(002120)：PREANNOUNCED QOQ GROWTH IN 4Q22 IMPROVES;WATCH EPS GROWTH

　　Preannounced per parcel net profit in 4Q22 to be Rmb0.12-0.16
　　Yunda Holding (Yunda) preannounced its 2022 results: Attributable net profit stood at Rmb1.31-1.50bn, implying a YoY change from -11.4% to 1.7%; recurring net profit was Rmb1.24-1.42bn, implying a YoY change from -11.9% to 1.2%. The firm expects its attributable net profit in 4Q22 to rise 148-237% QoQ (or a YoY change from -22.0% to 6.0%) to Rmb543-737mn, and its recurring net profit to increase 229-341% QoQ to Rmb538-722mn (implying a YoY change from -22.7% to 3.7%). Yunda’s QoQ growth is notable, and its results are in line with our expectations. The firm previously announced that its parcel volume in 4Q22 dropped 17.3% YoY or 1.7% QoQ to 4.49bn.
　　Per parcel results: We expect its per parcel net profit to be Rmb0.12-0.16, and the median of the per parcel net profit to be Rmb0.14, implying a YoY and QoQ growth of Rmb0.01 and Rmb0.09. We estimate that its per parcel recurring net profit stood at Rmb0.12-0.16, and the median grew Rmb0.01 YoY or Rmb0.10 QoQ to Rmb0.14.
　　Trends to watch
　　Industry: Parcel volume will likely see double-digit growth in 2023; per parcel price to remain stable under regulations. We believe that as COVID-19 policies are optimized, online consumption demand for physical goods and consumer confidence will likely recover. According to China’s State Post Bureau, parcel collection and delivery volume rose 5.1% and 10.0% YoY during this Chinese New Year (CNY) holiday (January 21-27, 2023) compared to the situation in 2022. The absolute parcel volume during the 2023 CNY holiday is relatively small, but we think this shows that the parcel volume growth is recovering. Moreover, in our April 14, 2022 report, Analyzing express delivery industry from market, platform, regulatory perspectives, we reaffirm our opinions that regulations will continue to play a dominant role, that competition will likely ease, and that per parcel price will likely remain stable in 2023.
　　Company: Revenue benefited from product structure optimization; sound cost management and control boost profit. Although Yunda’s parcel volume was under pressure in 2022, its per parcel revenue remained relatively high, demonstrating how the firm has optimized its product strategy. In our opinion, as parcel volume growth recovers, the firm’ revenue will likely further benefit from its optimized products and service portfolio as well as its broad based clientele. Given its sound cost control and management, we expect the firm to report encouraging earning growth due to the following factors.
　　The firm’s capex was large for three years, and we believe that it will likely fall gradually. In 1-3Q22, the firm’s capex was Rmb2.3bn, much lower than the Rmb5.5bn in 1-3Q21.
　　We expect economics of scale to appear if parcel volume recovers and production capacity utilization rate increases.
　　We also expect its fuel cost and expenses on equipment for COVID-19 prevention to decrease.
　　The firm will likely further optimize its expense management. G&A and sales expenses may drop under efficient management, and financial cost will also likely trend downward due to financial improvement. Overall, we expect the firm’s per parcel earnings to continue to grow and its EPS to be more attractive.
　　Financials and valuation
　　We keep our 2022 and 2023 revenue and earnings forecasts unchanged, and introduce our 2024 revenue and earnings forecasts of Rmb65.213bn and Rmb3.629bn. The stock is trading at 13.3x 2023e and 10.7x 2024e P/E. We maintain OUTPERFORM and our TP at Rmb20.10, implying 20x 2023e and 16x 2024e P/E, offering 49.6% upside.
　　Risks
　　Parcel volume growth disappoints; fluctuating market landscape.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。