JIAYOU INTERNATIONAL LOGISTICS(603871)：SECURES CHINA-AFRICA CROSS-BORDER LOGISTICS CONTRACT

　　What's new
　　According to an announcement on August 9, Jiayou International Logistics received a Notification of Award from CITIC Metal (HK) Limited and Gold Mountains (H.K.) International Mining Company Limited for cross-border logistics and transportation services for copper products to be transported from the Democratic Republic of the Congo (DRC) through warehouses in Zambia to designated ports in Africa. The firm won bids of US$18.92mn and US$18.97mn.
　　Comments
　　Jiayou has made significant progress in expanding its presence in Africa. According to the official website of Zijin Mining Group, the Komoa copper mine in DRC is the world's fourth largest copper mine, with a combined annual production capacity of more than 450,000t of copper. Zijin Mining and Ivanhoe Mines (CITIC Metal is its single largest shareholder) are important shareholders of the Komoa copper mine. We believe this marks the firm's significant progress in the cross-border multimodal transport business between China and Africa. Its early deployment in the Kasumbalesa-Sakania road and land port projects has paid off. If the contract is successfully fulfilled, Jiayou's earnings should increase.
　　Closer business cooperation with Zijin. Zijin owns the Kolwezi and Kamoa copper mines in DRC. We believe further expansion of the cooperation between the two companies will bring stable earnings growth to the firm's cross-border logistics business and improve the operating efficiency and profitability of the firm's northbound and southbound logistics services in Africa.
　　The land port model is being replicated; Jiayou's development model again proves competitive. As a cross-border logistics company, Jiayou's core competitiveness lies in strengthening its presence in core logistics nodes to control key logistics resources. The company adheres to a development strategy that focuses on the construction of inland cross- border corridors in countries and regions. It uses core infrastructure as the foundation to removes barriers in the full-chain cross-border logistics business. Such a model has been replicated in China-Mongolia, China- Asia, and China-Africa logistics. We believe that winning the cross-border logistics contract once again proves the competitiveness of Jiayou's　development model, and we are upbeat about the long-term growth potential of the firm's cross-border logistics business.
　　Financials and valuation
　　We leave our 2023 and 2024 earnings forecasts unchanged. The stock is trading at 13.4x 2023e and 10.4x 2024e P/E. Maintain OUTPERFORM. Given the falling risk appetite in the market, we cut our TP 7.2% to Rmb23.18 (adjusted for capital reserve conversion), implying 18.0x 2023e and 13.9x 2024e P/E, offering 33.9% upside.
　　Risks
　　Geopolitical risks; disappointing economic growth.
【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。

   【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。