Shentong Express Co., Ltd. (hereinafter referred to as "Shentong Express" or "the Company") announced on the evening of April 25 that the company held a 2023 and 2024 first quarter results briefing on the same day. At the meeting, Shentong Express revealed that in 2023, the company's single-ticket express revenue will be 2.23 yuan, a year-on-year decrease, mainly affected by comprehensive factors such as the improvement of the company's product structure, the decline in average weight, and the implementation of market policies.
Screenshot of Shentong Express announcement
Shentong Express introduced the operation of 2023 and the first quarter of 2024 to investors. In 2023, the company adheres to the development concept of "righteous operation and long-termism", firmly adheres to the strategic goal of "building China's leading economic express delivery", adheres to the business strategy of "business scale, service experience and profit" and balances development, and continues to deepen "digital and intelligent operation and refined management", and the company has successfully achieved steady improvement in business volume, timeliness, quality and profitability. Specifically:
In terms of business volume, in 2023, the company will complete business volume of 17.51 billion pieces, a year-on-year increase of 35.2%, and its market share will be about 13.3%, an increase of nearly 1.6 percentage points year-on-year.
In terms of service experience, the company continued to strengthen its own capacity building around the brand strategy of "Fashentong, Good Speed and Saving", completed 37 capacity improvement projects and 18 transformation and optimization projects, purchased new high-speed cross-belt sorters and high-capacity trunk vehicles, and increased the production capacity from the normal daily average of 50 million orders to 60 million orders. In 2023, the company's timeliness and quality will be significantly improved, among which the fastest monthly timeliness has been shortened to about 44 hours, and the gap with its head peers has been significantly narrowed.
In terms of 2023 results:
The company achieved operating income of 40.92 billion yuan, a year-on-year increase of 21.5%, of which express revenue was 39.1 billion yuan, a year-on-year increase of 20.0%. In 2023, the revenue of single-ticket express delivery will be 2.23 yuan, a year-on-year decrease, mainly affected by comprehensive factors such as the improvement of the company's product structure, the decline in average weight, and the implementation of market policies.
The company's operating cost was 39.21 billion yuan, a year-on-year increase of 21.8%, of which the express cost was 37.57 billion yuan, a year-on-year increase of 20.4%, and the single express cost was 2.15 yuan, a year-on-year decrease of about 11%. The company continued to promote refined operation management and digital intelligence capacity building, continued to give full play to the scale effect brought by unit growth, and achieved positive results in cost reduction.
In addition, the proportion of the company's sales, management, R&D, and financial expenses in operating income will be reduced from 3.5% in 2022 to 3.2% in 2023, and the expenses during the period will be effectively controlled.
In 2023, the company will achieve a net profit attributable to the parent company of 341 million yuan, a year-on-year increase of 18.4%, and a net profit of 339 million yuan, a year-on-year increase of 9.9%.
In the first quarter of 2024, the company completed 4.587 billion business volumes, a year-on-year increase of 36.7%, achieved a net profit attributable to the parent company of 190 million yuan, a year-on-year increase of 43.2%, and deducted a net profit of 186 million yuan, a year-on-year increase of 48.7%.
The following are the main contents of the investor relations activities:
1. How does the company view the next industry order volume and price trend, and where does the industry increment mainly come from?
Reply: With the rise of new e-commerce models such as live e-commerce, interest e-commerce, and social e-commerce, consumer demand has gradually migrated from the "people looking for goods" of shelf e-commerce to the "goods looking for people" of social e-commerce, the traffic conversion rate and the frequency of consumption have increased significantly, and retail demand has also rapidly shifted to online. According to data from the National Bureau of Statistics, physical online retail sales will increase by 8.4% year-on-year in 2023, and the penetration rate of online shopping will increase to 27.6%. Next, from the perspective of user duration, consumer goods, experience upgrades, infrastructure improvement, and cost-effective advantages of online shopping, the penetration rate of e-commerce still has a lot of room for improvement.
In addition, as express companies continue to improve their logistics infrastructure through investment in automation equipment and digital construction, they continue to improve the performance efficiency and improve the service experience, which is conducive to facilitating consumers to choose express delivery services.
Therefore, in the context of the expected macroeconomic growth rate, the company expects that the order volume of the express delivery industry is expected to maintain double-digit growth in 2024. In the first quarter of 2024, the industry achieved a business volume of 37.1 billion pieces, a year-on-year increase of 25%, showing good growth resilience.
In terms of price, since 2024, the industry has introduced policies such as "new express delivery regulations" to encourage and guide the industry towards high-quality development, express delivery companies pay attention to the construction of service quality and differentiated capabilities, and also pay more attention to the sustainable development of operations, and the intensity of express price competition has eased. As a result, the company believes that prices will remain relatively stable this year, but there are seasonal price fluctuations such as off-peak seasons.
2. The company's outlook for the future industry pattern, based on industry expectations, what kind of competitive strategy will the company take?
Re: In 2023, the order volume of China's express delivery industry will reach 132 billion pieces, setting a new record high, making it the world's largest express delivery market. Combined with the current situation, express delivery companies also attach great importance to high-quality and sustainable development, continuously improve their management efficiency and operational capabilities, improve consumer service experience, and enhance their core competitiveness. Therefore, we believe that the industry landscape will remain relatively stable in the near term.
In 2024, the company will continue to adhere to the troika of "business scale, service experience and profit" to keep pace with and develop in a balanced manner. Business volume is the foundation of the express delivery industry, and the company's goal in terms of business volume is to achieve a growth rate higher than the industry business volume. In 2024, the company will be positioned as the "Year of Focus on Experience", continue to focus on the improvement of full-link timeliness and service quality, and implement refined management based on digital and intelligent management and control tools and business scale improvement.
3. The company's order volume will still maintain a high growth rate in 2023, how will the company balance the unit volume and profit in the future?
Re: In 2023, the company's express delivery order volume will be 17.51 billion pieces, a year-on-year increase of 35.2%, and the growth rate is still relatively good. From the perspective of the development trend of the industry, through a series of policies such as "new express regulations", the focus of industry competition has shifted from price competition to value competition; from the perspective of users, end consumers pay more and more attention to the service quality and customer experience of express products, and the demand for the express delivery industry has also shifted from basic services to refined services, and express companies have launched product stratification and service stratification.
In terms of profits, the company pursues steady growth in profitability, broadening profit margins by improving revenue, reducing costs, and controlling expenses.
4. In 2023, the cost of a single ticket will decrease significantly, what measures has the company taken to reduce costs?
Re: In 2023, the cost of a single ticket in the company's express delivery business will be 2.15 yuan, a year-on-year decrease of 11%. Mainly based on the following reasons:
(1) Continue to promote the three-year 10 billion production capacity improvement project: In 2023, with the production capacity improvement projects in Nanning, Taizhou, Guiyang and other places put into operation, the normalized production capacity of the whole network has reached more than 60 million orders, and at the same time, the company has promoted the investment of 236 sets of automation equipment in its franchised outlets, with a total investment of 286 million yuan, and the production capacity scale of the whole network has been greatly improved, with sufficient capacity utilization and obvious economies of scale.
(2) In terms of sorting cost: optimize the layout of the transfer center, as of the end of 2023, the company has 71 directly affiliated transfer centers, and the number of transfers has been reduced through measures such as dynamic adjustment of routes and increasing the proportion of direct routes; by the end of 23, it has 240 sets of cross-belt sorting equipment, and has improved the processing efficiency of small and special-shaped parts through the introduction of side-slide sorters, and the development of multi-layer ultra-high-speed cross-belts and team piece-counting tools, so as to promote the improvement of the man-efficiency, timeliness and ping efficiency of the transfer center.
(3) In terms of transportation costs: At the end of 2023, the company had approximately 5,992 self-owned trunk vehicles, an increase of 1,166 units year-on-year. Through the pre-warning of cargo volume, we optimized the transportation capacity structure and continued to increase the proportion of self-owned vehicle transportation capacity.
(4) Delivery cost: With the rapid rise of the company's order volume, the density of terminal delivery has increased. At the same time, the company continued to promote the refinement of dispatch through the precise delivery of network policies, and the cost of dispatch decreased by 10% year-on-year, further narrowing the gap with its peers.
5. What is the company's capacity planning and capital expenditure in 2024?
Reply: In 2024, the company will reasonably formulate production capacity planning according to the industry and the company's volume expectations, and the normal throughput capacity is expected to increase to an average of more than 75 million orders per day during the year, and several hub-level transshipment centers will usher in delivery, including Changsha, Changshu, Hefei, Jinhua, etc.; Capital expenditure is expected to remain at more than $2 billion in 2024.
6. We are concerned that the capital market is paying more and more attention to dividends, so what is the company's plan for dividends in the future?
Reply: In 2023, under the condition of steady growth of the company's business volume and steady increase in profitability, the company plans to distribute a cash dividend of 0.20 yuan (tax included) to all shareholders for every 10 shares, and the total cash dividend is expected to be about 30 million yuan, and the company actively implements share repurchases.
Looking forward to the future, the company will formulate relevant shareholder return plans based on the demand of the express delivery industry, the company's position in the pattern, its own profitability, comprehensive capital expenditure plan and working capital needs, and continuously improve the return to investors.
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Review: Tan Lugang