JIAYOU INTERNATIONAL LOGISTICS(603871)：2022 RESULTS NEAR HIGH END OF PREANNOUNCED RANGE;LAND PORT PROJECT BEATS EXPECTATIONS

　　2022 results beat our expectations
　　Jiayou International Logistics (Jiayou) announced that total revenue rose 24.2% YoY in 2022 to Rmb4.83bn, and revenue from core business (excluding revenue from non-coking coal business, public-private partnership (PPP) construction, and others) increased 96.5% to Rmb3.94bn. Gross profit from core business rose 92.2% YoY in 2022 to Rmb930mn. Attributable net profit increased 98.6% YoY to Rmb681mn, approaching the upper limit of its preannounced range and beating our expectations.
　　In 4Q22, revenue fell 23.9% YoY to Rmb1.02bn, and net profit attributable to shareholders jumped 126.0% YoY to Rmb214mn. The firm's apparent revenue fluctuated, affected by revenue from coal supply chain business and PPP construction. Earnings increased markedly thanks to ramp-up of the coal business in Mongolia and operation of the land port projects.
　　Trends to watch
　　Various business lines show strong momentum; land port projects beat expectations. By business: 1) Coal supply chain trade: Revenue from the coking coal business reached Rmb1.80bn in 2022, and gross profit rose 84.2% YoY to Rmb314mn, accounting for 33.8% of total gross profit (largely flat YoY). 2) Cross-border multimodal transport: In 2022, revenue rose 69.4% YoY to Rmb2.04bn, and gross profit rose 72.0% YoY to Rmb539mn, with gross margin at 26.4% (largely flat YoY). 3) Land port projects: In 2022, the firm's highway under the Kasumbalesa-Sakania land port project in the Democratic Republic of Congo (DRC) commenced operation and the port started trial operation. The project generated revenue of Rmb101mn, gross profit of Rmb77mn, and net profit of Rmb57mn, beating market expectations.
　　1Q23 operating data impressive; earnings likely to beat expectations. Data from sxcoal.com shows that the average number of vehicles cleared at Ganqimaodu port rose 610% YoY and 16.0% QoQ to 852 in 1Q23. Short-haul freight rates averaged Rmb316 in 1Q23, higher than the pre-pandemic average. According to corporate filings, Jiayou's cross-border integrated logistics business volume grew 288% YoY over 2M23, total number of vehicles rose 225% YoY, and supply chain trade business volume jumped 623% YoY. We believe the firm’s 1Q23 could beat expectations, backed by strong operating data.
　　Land port business model validated; core competitiveness enhanced further. Jiayou is a cross-border logistics company featuring a high level of scarcity. With land port asset investment at the core of its future development, the company continues to expand its presence in core links along the logistics value chain. Following the success of the Ganqimaodu port, the Sakania project in DRC is making progress, and the Dilolo project is on track to be built in DRC. The company keeps strengthening its competitive advantages to provide impetus for sustainable development.
　　Financials and valuation
　　We largely maintain our 2023 and 2024 earnings forecasts. The stock is trading at 15.4x 2023e and 12.0x 2024e P/E. We maintain OUTPERFORM rating and target price of Rmb33.30, implying 18.5x 2023e and 14.3x 2024e P/E, and offering 19.8% upside.
　　Risks
　　Geopolitical risks; weaker-than-expected economic growth.
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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。