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会员
机构：中金公司
研究员：Wenjie ZHANG/Qibin FENG/Xin YANG
Jiayou International Logistics (Jiayou) preannounced its 1H24 results: Attributable net profit grew 48-58% YoY to Rmb746-796mn, with the median increasing 53% YoY to Rmb770mn. The firm estimates that its attributable net profit in 2Q24 grew 45-62% YoY to Rmb438-489mn and median attributable net profit increased 54% YoY to Rmb460mn, beating market consensus forecast of 20% YoY growth. We attribute the strong growth to: 1) Growth of the Mongolian coal business; and 2) development of the cross-border logistics business in Africa after the consolidation of BHL’s fleet.
Trends to watch
Mongolian coal business continued to grow rapidly. According to Bayannur Daily1, import and export volumes at Ganqimaodu port had increased 28.26% YoY to around 20.06mnt as of June 24, exceeding the target of 20mnt 39 days earlier than last year. Data from www.moncoal.com shows that daily average vehicle traffic at Ganqimaodu rose 21.7% YoY in 1H24. We believe the high import and export volumes at the port (by historical standards) fueled the growth of Jiayou’s Mongolian coal business and bolstered the rapid YoY growth of its warehousing business in Ganqimaodu.
In addition, the equity-based cooperation with Mongolian Mining Corporation (MMC) in coal development and the signing of a long-term coal cooperation agreement further cemented Jiayou’s core competitiveness in the cross-border logistics market between China and Mongolia and boosted its profit.
Solid business presence in Africa; cross-border logistics business growing steadily in the DRC. Data from the General Administration of Customs shows that China's imports of refined copper, anode copper, and copper grits and concentrates from the Democratic Republic of the Congo (DRC) totaled 858,000t in 5M24, up about 29.3% YoY. Specifically, China imported about 541,000t of refined copper from the DRC, up 75.8% YoY. We believe the strong copper ore imports have laid a solid foundation for the firm's business operations.
According to corporate filings, the vehicle traffic and freight volume at the Kasa dry port in the DRC grew steadily in 1H24. In 2Q24, Jiaoyou completed its acquisition of the vehicle fleet of BHL, marking a successful expansion of its inland transportation network in Africa. The firm established distribution and logistics hubs in different countries in central and southern parts of Africa and increased the stowage factor for cross- border transportation. In addition, Jiayou’s cross-border marine transportation business in Africa also benefited from rising ocean shipping rates.
Results beat; we are upbeat on the firm’s long-term competitive advantages in the logistics market for commodity resources. The firm's customers are mainly from the copper concentrate and coking coal industries. As Chinese mining companies increase their overseas investment, we expect demand for cross-border logistics services for commodities to increase steadily. In our view, Jiayou may further expand its presence in the cross-border logistics market, optimize its business model, and strengthen competitive advantages in the central part of Mongolia, the central part of Africa, Central Asia, and the central part of South America, supporting its long-term earnings growth.
Financials and valuation
As the firm’s businesses in Mongolia and Africa both beat our expectations, we raise our 2024 and 2025 earnings forecasts 8.3% and 7.5% to Rmb1.52bn and Rmb1.82bn, implying YoY growth of 45.9% and 20.3%. Our 2025 earnings forecast has not factored in the firm’s gains from the Sakania port in Zambia. The stock is trading at 11.1x 2024e and 9.2x 2025e P/E. As the firm issued four additional shares to shareholders for every 10 shares in June, we lower our target price 28.6% to Rmb22.89, implying 14.8x 2024e and 12.3x 2025e P/E, offering 33.1% upside. We maintain an OUTPERFORM rating.
Risks
Lower-than-expected coal imports from Mongolia; disappointing business integration in Africa.