Investment Rating - Buy (Maintained) [3] Core Views - The company's business structure optimization and refined management have driven rapid growth in performance [3] - The company's freight volume increased by 18.5% YoY in Q3 2024, with revenue growing by 21.2% YoY to 3.04 billion CNY [4] - Gross profit surged by 66.7% YoY to 480 million CNY, with gross margin improving by 4.3 percentage points to 15.6% [4] - Net profit attributable to shareholders rose by 27.9% YoY to 190 million CNY, with net margin increasing by 0.3 percentage points to 6.2% [4] Business Performance - The number of freight partners and agents increased by 14.3% YoY to approximately 32,000 in Q3 2024 [7] - Terminal customers served by the company and its partners exceeded 5.8 million in H1 2024, up from over 5 million in the same period last year [7] - Average freight volume per outlet increased by 3.7% YoY to 117 tons in Q3 2024 [7] - The company's product competitiveness improved, with average shipment time reduced to less than 64 hours in September 2024, down from 68 hours in H1 2024 [7] - The loss rate per 100,000 shipments decreased to 0.03 in Q3 2024 from 0.04 in H1 2024, and complaints per 100,000 shipments dropped to 39.2 from 51 [7] Business Structure Optimization - The company's freight structure continued to optimize, with 0-70kg mini parcels growing by 37.3% YoY, 70-300kg small LTL (Less Than Truckload) growing by 22.6% YoY, and 300kg+ large LTL growing by 6.6% YoY in Q3 2024 [10] - The average weight per shipment decreased from 109kg in H1 2022 to 81kg in Q3 2024, reflecting significant optimization in freight structure [10] Cost Management and Profitability - The company reduced 55 less efficient small distribution centers in 2023 and optimized its fleet management, leading to a significant decrease in core costs [13] - Unit trunk line cost decreased from 0.317 CNY/kg in Q3 2023 to 0.297 CNY/kg in Q3 2024, and unit distribution center cost dropped from 0.168 CNY/kg to 0.140 CNY/kg [13] - The company's gross margin reached 15.6% in Q3 2024, up 4.2 percentage points YoY [13] - Management expense ratio remained low, with Q3 2024 at 7.3%, down from 9.9% in H1 2022 [14] Strategic Focus - The company is implementing the "Five Best" strategy, focusing on cost optimization, quality improvement, stable delivery times, fast service response, and dense network coverage [15] - The strategy aims to enhance customer retention and attract new customers, driving long-term growth in both volume and profitability [15] Financial Forecasts - Revenue is expected to grow by 17% YoY to 11.6 billion CNY in 2024, 16% YoY to 13.5 billion CNY in 2025, and 13% YoY to 15.24 billion CNY in 2026 [19] - Net profit attributable to shareholders is projected to increase by 105% YoY to 803 million CNY in 2024, 24% YoY to 1 billion CNY in 2025, and 15% YoY to 1.15 billion CNY in 2026 [19] - The company's PE ratio is expected to be 10.79x in 2024, 8.67x in 2025, and 7.53x in 2026 [19]

Key Takeaways Industry and Company * **Company**: Anheng Logistics * **Industry**: Logistics and Express Delivery Core Points and Arguments 1. **Robust Performance**: Despite challenging macro and competitive environments, Anheng Logistics maintained steady operations and continued the trend of revenue and profit growth in Q3 2024. Total revenue reached 3.044 billion yuan, up 21.2% year-on-year, with a gross profit of 476 million yuan, up 66.7% year-on-year. [1] 2. **Profitability**: Adjusted pre-tax profit and net profit achieved stable growth, reaching 2.84 billion yuan and 2.18 billion yuan, respectively. The adjusted net profit margin in Q3 was 7.2%. [2] 3. **Network Expansion**: Anheng Logistics continued to focus on network expansion and building a加盟 network ecosystem. As of September 2024, the company had 6,812 information outlets, an increase of 1,118 year-on-year. This expansion effectively drove volume growth and optimized service levels and cost capabilities. [3] 4. **Quality Improvement**: The company's iron triangle grassroots organization provided strong organizational support for service responsiveness. The iron triangle, as the service empowerment service organization for outlets, adhered to the 520 standard of 5-minute response, 2-hour resolution, and 0 repeat complaints, ensuring timely response to outlet requests. [4] 5. **Cost Optimization**: Anheng Logistics achieved cost optimization through continuous intensive management. Unit transportation costs and unit distribution costs decreased by 6.3% and 16.7%, respectively. [5] 6. **Volume Growth**: Total volume in the first nine months of 2024 was 10.16 million tons, up 19.7% year-on-year. The growth in volume was mainly driven by the expansion of marketing channels and the integration of Jinding outlets into the Anheng system. [6] 7. **Price Stability**: Anheng Logistics maintained a stable price strategy, with no price cuts or increases during peak seasons. This stability provided certainty for both outlets and customers, further enhancing the competitiveness of Anheng's products and network ecosystem. [7] 8. **Cost Reduction**: Unit transportation costs and unit distribution costs decreased by 20 yuan per ton and 38 yuan per ton, respectively, mainly due to the continuous promotion of economic operations and the benefits of structural adjustments in 2023. [8] 9. **Profit Growth**: Adjusted pre-tax profit and net profit in the first nine months of 2024 were 8.62 billion yuan and 6.48 billion yuan, respectively, with growth rates of 66.4% and 59.5%. [9] 10. **Cash Flow**: As of September 30, 2024, Anheng Logistics had cash and cash equivalents of 16.4 billion yuan. Operating cash flow for the first nine months exceeded 15 billion yuan. [10] 11. **Capital Expenditure**: Anheng Logistics continued to implement prudent capital management strategies and严格控制 capital expenditures. As of September 30, 2024, the company's interest-bearing liabilities were 1.6 billion yuan, a decrease of about 4.1 billion yuan from the end of 2023. [11] 12. **Automation**: Anheng Logistics successfully launched the first phase of two automated conveying lines in Xiaoshan and Zhengzhou. These lines have achieved a peak processing capacity of 40,000 pieces per day and a return rate of less than 3%. [12] Other Important Points * Anheng Logistics has a strong competitive advantage in the 300 kg and below segment, with a market share of over 27% in the加盟 system. [13] * Anheng Logistics plans to invest 4 to 5 billion yuan in capital expenditures in 2025, mainly for vehicle replacement, expansion of automated conveying lines, and digitalization. [14] * Anheng Logistics will maintain a stable price strategy in 2025, with flexibility in certain regional or product categories. [15] * Anheng Logistics will continue to focus on network expansion, quality improvement, and cost optimization to maintain its growth momentum. [16]

Investment Rating - Buy (Maintained) [1] Core Views - The company's cargo volume continues to grow, and profitability maintains rapid growth [1] - The company's strategic transformation has significantly improved profitability, and the scale effect is expected to further enhance unit gross profit [2] - The company's long-term development potential is promising, driven by service price increases and efficiency improvements [2] Financial Performance - In Q3 2024, the company achieved total revenue of RMB 3,044.1 million, a year-on-year increase of 21.2% [1] - Gross profit was RMB 476.3 million, up 66.7% year-on-year [1] - Adjusted pre-tax profit was RMB 284.1 million, a year-on-year increase of 39.2% [1] - Adjusted net profit was RMB 218.4 million, up 28.0% year-on-year [1] - Net profit was RMB 189.6 million, a year-on-year increase of 24.8% [1] Cargo Volume and Market Expansion - In Q3 2024, the company's cargo volume reached 3.73 million tons, up 18.5% year-on-year and 5.3% quarter-on-quarter [1] - The growth in cargo volume is attributed to the company's focus on service quality, network expansion, and enhanced franchise network ecosystem [1] - As of September 2024, the company had approximately 32,000 freight partners and agents, an increase of 4,000 compared to the same period in 2023 [1] - Mini-parcel (70 kg or less) and small-parcel (70-300 kg) cargo volumes grew by 37.3% and 22.6% year-on-year, respectively, driven by the "3300 policy" and e-commerce growth [1] Revenue and Cost Analysis - In Q3 2024, the company's LTL (Less Than Truckload) revenue per ton was RMB 815, up 2.3% year-on-year but down 0.7% quarter-on-quarter [3] - The quarter-on-quarter decline in revenue per ton is due to cost-oriented pricing strategies and the "3300 product policy" [3] - Cost per ton in Q3 2024 was RMB 687, down 2.7% year-on-year but up 0.9% quarter-on-quarter [3] - The company improved efficiency through centralized procurement and route optimization, reducing trunk transportation costs to RMB 297 per ton, down 1.8% quarter-on-quarter [3] - Distribution center costs were RMB 140 per ton, down 17% year-on-year but up 0.9% quarter-on-quarter [3] Future Outlook - The company is expected to achieve adjusted net profits of RMB 845 million, RMB 1.066 billion, and RMB 1.276 billion in 2024, 2025, and 2026, respectively [2] - The corresponding P/E ratios are 10.1x, 8.0x, and 6.7x for 2024, 2025, and 2026, respectively [2] - Long-term growth is expected to be driven by service quality improvements, cargo structure optimization, and cost efficiency [3] Market Performance - The company's closing price was HKD 7.90, with a one-year high/low of HKD 9.28/HKD 3.23 [2] - The total market capitalization was HKD 9,175.17 million, with a circulating market capitalization of HKD 9,175.17 million [2]

Revenue Growth - Revenue for the three months ended September 30, 2024, reached RMB 3,044.2 million, a 21.2% increase compared to the same period in 2023[2] - Total revenue increased by 21.2% from RMB 2,511.7 million in Q3 2023 to RMB 3,044.2 million in Q3 2024, driven by a rise in cargo volume from 3,152 thousand tons to 3,734 thousand tons and an increase in service price per ton from RMB 797 to RMB 815[8] - Value-added services revenue grew significantly by 64.7% from RMB 409.1 million in Q3 2023 to RMB 673.7 million in Q3 2024, contributing 22.1% to total revenue[8] - Delivery services revenue increased by 19.1% from RMB 665.2 million in Q3 2023 to RMB 792.2 million in Q3 2024, accounting for 26.0% of total revenue[8] Profitability - Gross profit increased by 66.7% to RMB 476.3 million in Q3 2024, up from RMB 285.8 million in Q3 2023[2] - Adjusted net profit rose by 28.0% to RMB 218.5 million in Q3 2024, compared to RMB 170.7 million in Q3 2023[2] - Unit gross profit per ton increased by 40.7% to RMB 128 in Q3 2024, up from RMB 91 in Q3 2023[6] - Adjusted pre-tax profit per ton rose by 16.9% to RMB 76 in Q3 2024, compared to RMB 65 in Q3 2023[6] - Gross profit margin improved from 11.4% in Q3 2023 to 15.6% in Q3 2024, primarily due to reduced unit costs in trunk transportation and distribution centers, and increased unit gross profit in value-added services[12] - Operating profit increased from RMB 201.6 million in Q3 2023 to RMB 269.6 million in Q3 2024, with the operating profit margin rising from 8.0% to 8.9%[15] - Net profit rose to RMB 189.6 million in Q3 2024, with a net profit margin of 6.2%, compared to RMB 152.0 million and a 6.1% margin in Q3 2023[18] - Adjusted net profit for the three months ended September 30, 2024, was RMB 218,457 thousand, an increase from RMB 170,655 thousand in the same period in 2023[20] - Adjusted pre-tax profit for the three months ended September 30, 2024, was RMB 284,136 thousand, up from RMB 204,077 thousand in the same period in 2023[20] - Net profit margin for the three months ended September 30, 2024, was 6.2%, slightly higher than 6.1% in the same period in 2023[21] - Adjusted net profit margin for the three months ended September 30, 2024, was 7.2%, compared to 6.8% in the same period in 2023[21] - Adjusted pre-tax profit margin for the three months ended September 30, 2024, was 9.3%, up from 8.1% in the same period in 2023[21] Operational Performance - Total freight volume grew by 18.5% to 3,734 thousand tons in Q3 2024, up from 3,152 thousand tons in Q3 2023[4] - The number of freight partners and agents increased to approximately 32,000 by September 2024, up from over 28,000 in September 2023[4] - Total number of shipments surged by 37.9% to 45,914 thousand in Q3 2024, compared to 33,302 thousand in Q3 2023[5] - The average shipment duration was optimized to within 64 hours by September 2024[5] - The company's loss rate decreased to 0.03 per 100,000 pieces, and the complaint rate dropped to 39.2 per 100,000 shipments in Q3 2024[5] Costs and Expenses - Operating costs increased by 15.4% from RMB 2,225.9 million in Q3 2023 to RMB 2,567.9 million in Q3 2024, driven by higher costs in trunk transportation, value-added services, and delivery services[11] - General and administrative expenses rose by 41.0% from RMB 157.1 million in Q3 2023 to RMB 221.5 million in Q3 2024, mainly due to increased employee bonuses and marketing activities[13] - Financial costs decreased by 18.5% from RMB 16.3 million in Q3 2023 to RMB 13.3 million in Q3 2024, as the company repaid part of its vehicle loans and other bank loans[16] - Income tax expenses increased from RMB 33.4 million in Q3 2023 to RMB 65.7 million in Q3 2024, in line with the company's profit growth[17] Financial Position - Cash and cash equivalents as of September 30, 2024, were RMB 1,644.5 million, indicating strong liquidity[21] - The company's revenue during the reporting period primarily came from daily business operations, including payments received from customers[21] Cautionary Notes - The financial and business data provided are based on internal records and management accounts and have not been reviewed or audited by auditors[22] - The company cautions shareholders and investors that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties[22]

Freight Volume and Shipments - Total LTL freight volume in the first half of 2024 reached 6.4 million tons, compared to 5.3 million tons in the same period of 2023, representing a 20.8% increase[22] - The total number of shipments increased by 28.0% to 72.4 million in the first half of 2024, up from 56.5 million in 2023[22] - Total freight volume increased by 20.5% to 6.4 million tons in H1 2024 compared to 5.3 million tons in H1 2023[51] - Total number of shipments increased by 28.0% to 72.4 million in H1 2024 compared to 56.5 million in H1 2023[51] - Total freight volume increased by 20.5% from 5.3 million tons in H1 2023 to 6.4 million tons in H1 2024[55][57] - Total number of shipments rose by 28.0% from 56.5 million in H1 2023 to 72.4 million in H1 2024[55][57] Freight Weight and Categories - The average freight weight per shipment decreased from 94 kg in the first half of 2023 to 89 kg in the first half of 2024[22] - Freight volume of mini freight (≤70 kg) increased by 25.6%, light freight (70–300 kg) by 19.6%, and bulk freight (>300 kg) by 18.6% in H1 2024[54] - Average freight weight per shipment decreased from 94 kg in H1 2023 to 89 kg in H1 2024[54] - Mini-parcel (≤70 kg) volume grew by 25.6%, small-parcel (70-300 kg) by 19.6%, and large-parcel (>300 kg) by 18.6% in H1 2024 compared to H1 2023[55][57] Shippers and Freight Partners - The company served over 5.8 million shippers as of June 30, 2024, compared to over 5.0 million as of June 30, 2023, a 16% increase[23] - The company had over 31,000 freight partners and agents as of June 30, 2024, compared to over 28,000 as of June 30, 2023, representing an increase of approximately 10.7%[29][30] Operational Efficiency and Service Quality - The company served over 5.8 million shippers as of June 30, 2024, with a 5.8% decrease in average shipment time to within 68 hours compared to the first half of 2023[32] - The timely fulfillment rate increased from 72.1% in the first half of 2023 to 73.5% in the first half of 2024[32] - The loss rate decreased by 95.3%, from 0.8 in the first half of 2023 to 0.04 in the first half of 2024[32] - The company reduced the number of self-operated sorting centers while maintaining national coverage, optimizing line-haul routing and reducing sorting costs[35][36] - The company's self-operated fleet consisted of over 3,600 high-capacity line-haul trucks and approximately 6,000 trailers as of June 30, 2024[42] - Network outlets covered approximately 99.2% of counties and townships in China as of June 30, 2024[42] Revenue and Profitability - Total revenue increased by 16.2% from RMB 4,550.2 million in H1 2023 to RMB 5,288.9 million in H1 2024[63] - Transportation services revenue accounted for 53.5% of total revenue in H1 2024, down from 56.4% in H1 2023[60] - Value-added services revenue increased to 20.3% of total revenue in H1 2024, up from 17.7% in H1 2023[60] - Unit price for total services decreased from RMB 854/ton in H1 2023 to RMB 824/ton in H1 2024[63] - Transportation service unit price decreased from RMB 482/ton in H1 2023 to RMB 441/ton in H1 2024 due to cost-oriented pricing strategy[63] - Dispatch service unit price decreased from RMB 221/ton in H1 2023 to RMB 216/ton in H1 2024 due to the "3300-product policy"[63] - Total revenue increased to RMB4,410.9 million for the six months ended June 30, 2024, up from RMB3,997.9 million in the same period in 2023, driven by growth in line-haul transportation, value-added services, and dispatch services[66][67] - Line-haul transportation revenue grew to RMB1,964.5 million in H1 2024, up from RMB1,739.3 million in H1 2023, with unit cost decreasing from RMB327/ton to RMB306/ton due to fleet efficiency improvements[70] - Sorting centre costs decreased to RMB927.1 million in H1 2024 from RMB1,004.0 million in H1 2023, with unit cost dropping from RMB188/ton to RMB144/ton due to operational optimizations[70] - Value-added services revenue increased to RMB223.4 million in H1 2024 from RMB176.7 million in H1 2023, with unit cost rising from RMB33/ton to RMB35/ton due to higher shipment volumes[71] - Dispatch services revenue rose to RMB1,295.9 million in H1 2024 from RMB1,077.9 million in H1 2023, with unit cost remaining stable at RMB202/ton[72] - Gross profit increased to RMB878.0 million in H1 2024 from RMB552.3 million in H1 2023, with gross profit margin improving from 12.1% to 16.6%[73] - Unit gross profit rose from RMB104/ton in H1 2023 to RMB137/ton in H1 2024, driven by higher freight volume and operational efficiency[74] - Gross profit increased to RMB 878.0 million with a gross margin of 16.6% for the six months ended June 30, 2024, compared to RMB 552.3 million and 12.1% in the same period of 2023, driven by increased freight volume, optimized product policies, and improved unit profit[75] - Operating profit rose to RMB 579.8 million with an operating profit margin of 11.0% for the six months ended June 30, 2024, compared to RMB 287.7 million and 6.3% in the same period of 2023[85][86] - Net profit for the six months ended June 30, 2024, was RMB 402.4 million with a net profit margin of 7.6%, compared to RMB 169.3 million and 3.7% in the same period of 2023[92][95] - Adjusted net profit for the six months ended June 30, 2024, was RMB 429.96 million, compared to RMB 235.77 million in the same period in 2023[100] - Adjusted EBITDA for the six months ended June 30, 2024, was RMB 1,027.00 million, compared to RMB 886.71 million in the same period in 2023[100] - Net profit margin for the six months ended June 30, 2024, was 7.6%, compared to 3.7% in the same period in 2023[103] - Adjusted net profit margin for the six months ended June 30, 2024, was 8.1%, compared to 5.2% in the same period in 2023[103] - Adjusted pre-tax profit margin for the six months ended June 30, 2024, was 10.9%, compared to 6.9% in the same period in 2023[103] - Adjusted EBITDA margin for the six months ended June 30, 2024, was 19.4%, compared to 19.5% in the same period in 2023[103] Costs and Expenses - Unit price for transportation services decreased by 8.5% to RMB 441/ton in H1 2024 compared to RMB 482/ton in H1 2023[51] - Unit sorting centre cost decreased by 23.4% to RMB 144/ton in H1 2024 compared to RMB 188/ton in H1 2023[51] - Unit adjusted net profit increased by 52.3% to RMB 67/ton in H1 2024 compared to RMB 44/ton in H1 2023[51] - General and administrative expenses decreased to RMB 341.1 million for the six months ended June 30, 2024, from RMB 347.4 million in the same period of 2023, primarily due to reduced business operation expenses and share-based payment expenses[78][79] - Finance costs decreased by 33.3% to RMB 32.4 million for the six months ended June 30, 2024, from RMB 48.6 million in the same period of 2023, mainly due to reduced interest on bank and other loans[88][89] - Other income and gains decreased to RMB 42.9 million for the six months ended June 30, 2024, from RMB 82.8 million in the same period of 2023, primarily due to the expiration of VAT weighted deductions[81][83] - Income tax expense increased to RMB 147.9 million for the six months ended June 30, 2024, from RMB 78.1 million in the same period of 2023, in line with profit growth[91][94] Network and Infrastructure - The company had 82 self-operated sorting centers as of June 30, 2024, covering approximately 99.2% of counties and townships in China[34][36] - Out of 82 sorting centers, 36 were key transit hubs with full coverage of China and 18 were transit hubs primarily responsible for interprovincial freight transfer[39] - Key transit hubs handled approximately 21.7 million tons of freight volume in H1 2024[40] Strategic Investments and Capital Allocation - The company completed the acquisition of a 2.7903% equity interest in Shanghai ANE for RMB 338.7 million in April 2024[117] - No material acquisitions or disposals of subsidiaries, associates, and joint ventures during the reporting period[118] - No plans for material investments and capital assets as of June 30, 2024[119] - Bank loans and other borrowings secured by mortgages over motor vehicles with a net carrying amount of RMB99.7 million[120] - ANE Hong Kong acquired 2.7903% equity in Shanghai ANE Juchuang Supply Chain Management Co., Ltd. for RMB338.7 million[121] - Capital commitment of the Group amounted to RMB11.7 million as of June 30, 2024[125] - No material contingent liabilities as of June 30, 2024[124] - No foreign currency hedging policy in place, but management monitors foreign exchange exposure[126] - The company plans to invest HK$403.7 million in building, upgrading, and acquiring 5 to 10 key transit hubs in strategic locations by December 2025 to accommodate high-volume growth and improve network structure[168][169][170] - An investment of HK$302.8 million will be made in the line-haul truck fleet, including the purchase of 2,000 to 3,000 modern and high-capacity truck tractors and trailers, to enhance operational efficiency[171][172][173][174] - The company allocated HK$201.8 million (20% of net proceeds) for technology innovations, with HK$172.1 million remaining unutilized as of June 30, 2024, and an expected utilization timeframe by December 2025[177][179] - HK$100.9 million (10% of net proceeds) is designated for upgrading sorting network technologies and automated facilities, with HK$78.6 million still unutilized as of June 30, 2024[179] - The company plans to deploy AI-enabled autonomous decision-making systems in sorting network management, with an allocation of HK$20.2 million (2% of net proceeds)[179] - HK$80.7 million (8% of net proceeds) is allocated for sorting automation, focusing on AI vision monitoring systems, dynamic volume weighing devices, and IoT devices[179] - The company will invest HK$100.9 million (10% of net proceeds) in intelligent transportation management systems and autonomous driving technologies, with HK$93.5 million utilized as of June 30, 2024[191][192] - Autonomous driving technologies will receive HK$20.2 million (2% of net proceeds) to improve transportation safety and reduce costs[194][195] - A total of HK$100.9 million (10% of net proceeds) is allocated for working capital and other general corporate purposes, with HK$11.6 million utilized as of June 30, 2024[196][197] - The total net proceeds allocated for various uses amount to HK$1,009.2 million, with HK$377.8 million remaining unutilized as of June 30, 2024[197] Financial Position and Liquidity - The company's cash and cash equivalents remained relatively stable at RMB 1,400.8 million as of June 30, 2024, compared to RMB 1,407.9 million as of December 31, 2023[110] - The company's gearing ratio as of June 30, 2024, was 7.7%, a significant decrease from 19.1% as of December 31, 2023[113] - The Company raised gross proceeds of approximately HK$1,113,454,000 (equivalent to approximately RMB916,606,000) from the global offering, with net proceeds of approximately HK$1,009.2 million (equivalent to RMB830.8 million)[154] - As of the end of the Reporting Period, the balance of unutilized net proceeds amounted to approximately HK$377.8 million, which the Company intends to use according to the proportions and timetable disclosed in the Prospectus[155] - The Company's net price per share from the global offering was approximately HK$12.58, calculated after deducting underwriting commissions and other estimated expenses[154] Corporate Governance and Employee Management - The Group had 3,031 employees as of June 30, 2024, a 3.5% decrease from 3,142 employees as of December 31, 2023[150] - The Group's remuneration structure includes salary, bonus, and allowance elements, with compensation programs designed to reward employees based on performance against specified objective criteria[151] - The Company has adopted a code of conduct for Directors' securities transactions that is no less exacting than the Model Code, and all Directors confirmed compliance during the Reporting Period[149] Strategic Focus and Future Plans - Strategic focus on improving operational efficiency, service quality, and timeliness to drive high-quality growth[131][133] - Plans to accelerate investment in digitalization and expand product offerings to capture growth opportunities[134][135] - Integration of "green transportation" into daily operations to reduce carbon emissions and improve ESG disclosure[136][137]

Investment Rating - The report maintains an "Outperform" rating for ANE (Cayman) (9956 HK) with a target price of HKD 11.55, up from the previous target of HKD 8.95 [4][7] Core Views - ANE Logistics demonstrated strong growth in 24Q2, with revenue increasing by 16.2% YoY to RMB 5.289 billion and adjusted net profit surging by 82.4% YoY to RMB 430 million [3][7] - The company's profitability improved significantly, with gross margin reaching 16.6% in 24Q2, a 4.5 percentage point increase from 12.1% in 23Q2 [3][7] - ANE Logistics is expected to achieve total revenue of RMB 12.35 billion in 2024, representing a 24.6% YoY growth, with an adjusted net profit margin of 6.8% and net profit of RMB 840 million [4][7] Financial Performance - In 24H1, ANE Logistics' total freight volume reached 6.42 million tons, up 20.5% YoY, with 24Q2 volume at 3.55 million tons, a 19.7% YoY increase [3] - The company optimized its freight structure, increasing the proportion of high-margin goods and reducing the average weight per ticket by 5.3% [3] - Unit operating costs decreased by 8.4% YoY in 24Q2, with trunk line transportation costs down 6.4% and sorting center costs down 23.4% [3] Network and Infrastructure - As of 24H1, ANE Logistics operated 83 self-owned sorting centers, optimizing its network by focusing on main hubs and eliminating inefficient small sorting centers [3] - The company's increased network density improved coverage and service quality [3] Valuation and Forecast - The report values ANE Logistics at 10X based on current market value, but suggests a fair valuation of 15X, corresponding to the target price of HKD 11.55 [4][7] - Gross margin is expected to improve further, reaching 14.0% in 2024E, 15.3% in 2025E, and 16.2% in 2026E [6] - Adjusted EBIT margin is projected to grow from 7.3% in 2023 to 11.5% in 2026E, while net margin (non-HKFRS) is expected to increase from 5.1% in 2023 to 8.6% in 2026E [6]

Investment Rating - Buy (Maintained) [3] Core Views - Strategic transformation has shown significant results, with both quality and efficiency improving notably, leading to a substantial increase in profitability [3] - Channel expansion has yielded initial results, with a significant increase in cargo volume: H1 2024 cargo volume reached 6.42 million tons, up 20.5% YoY, with Q2 cargo volume at 3.55 million tons, up 19.5% YoY and 23.3% QoQ [3] - Cost optimization has been effective, with H1 2024 cost per ton decreasing by 8% YoY to 687 yuan, and Q2 cost per ton at 681 yuan, down 6% YoY and 2% QoQ [4] - The company is expected to achieve adjusted net profits of 848 million yuan, 1.027 billion yuan, and 1.179 billion yuan for 2024, 2025, and 2026, respectively, with corresponding P/E ratios of 9.3x, 7.7x, and 6.7x [4] Financial Performance - H1 2024 revenue reached 5.289 billion yuan, up 16.2% YoY, with adjusted net profit of 430 million yuan, up 82.4% YoY [3] - Q2 2024 revenue was 2.911 billion yuan, up 17.1% YoY and 22.4% QoQ, with adjusted net profit of 221 million yuan, up 38.6% YoY and 5.8% QoQ [3] - Revenue growth is expected to be 17.4% in 2024, 10.7% in 2025, and 8.7% in 2026, with gross margins of 16%, 16%, and 17%, respectively [5] - Adjusted EPS is forecasted to be 0.63 yuan, 0.77 yuan, and 0.89 yuan for 2024, 2025, and 2026, respectively [5] Operational Highlights - The company has over 31,000 freight partners and agents as of June 2024, up from over 28,000 in June 2023 [3] - LTL (Less Than Truckload) revenue per ton was 824 yuan in H1 2024, down 4% YoY, with Q2 LTL revenue per ton at 821 yuan, down 2% YoY and 1% QoQ [3] - The company has implemented cost-oriented pricing strategies and the "3300 Product Policy," which waives special area surcharges for goods weighing between 3 kg and 300 kg [3] Cost Optimization - H1 2024 cost per ton was 687 yuan, down 8% YoY, with Q2 cost per ton at 681 yuan, down 6% YoY and 2% QoQ [4] - Line-haul transportation cost in Q2 was 303 yuan per ton, down 2% QoQ, and distribution center cost was 139 yuan per ton, down 20% YoY and 8% QoQ [4] - Cost improvements are expected to continue due to scale growth and base effects [4] Valuation and Forecast - The company is expected to achieve adjusted net profits of 848 million yuan, 1.027 billion yuan, and 1.179 billion yuan for 2024, 2025, and 2026, respectively [4] - ROE is forecasted to be 23%, 22%, and 20% for 2024, 2025, and 2026, respectively [5] - Adjusted P/E ratios are expected to be 9.3x, 7.7x, and 6.7x for 2024, 2025, and 2026, respectively [5]

Investment Rating - The report initiates coverage on Aneng Logistics (9956 HK) with a "Buy" rating, citing its position as a leading player in the franchised LTL (Less-than-Truckload) express market and its potential for growth driven by service quality improvements [3][5] Core Views - The LTL express market is expected to grow steadily, with the franchised LTL express market projected to reach RMB 97 3 billion by 2027, growing at a CAGR of 9 1% from 2022 to 2027 [3] - Aneng Logistics, as the leader in the franchised LTL express market, has shown significant profit improvement under its strategic transformation, with gross margin increasing from 8% in 2022 to 16% in Q1 2024 [3] - The company's strategic focus on quality and profit-driven growth has led to enhanced franchisee loyalty and improved unit revenue and cost efficiency [3] Industry Overview - The LTL market is segmented into full-network, regional, and dedicated line models, with the full-network model expected to account for 10% of the LTL market by 2027, up from 7 2% in 2022 [15] - The franchised model, which allows for rapid network expansion, is expected to dominate the full-network LTL market, with the top 5 players increasing their market share from 2 6% in 2018 to 5 6% in 2022 [17] Company Strategy and Performance - Aneng Logistics has undergone a strategic transformation since 2022, focusing on quality and profit-driven growth, which has resulted in improved operational efficiency and cost optimization [21][29] - The company's unit LTL revenue increased to RMB 818/ton in 2023, up 6 6% YoY, and further improved to RMB 827/ton in Q1 2024 [29] - Aneng Logistics has optimized its cost structure through route planning, fleet management, and hub layout adjustments, leading to a reduction in unit transportation and hub costs [30] Financial Projections - The report forecasts Aneng Logistics' adjusted net profit to be RMB 848 million, RMB 1 027 billion, and RMB 1 179 billion for 2024, 2025, and 2026, respectively, with corresponding P/E ratios of 9 3x, 7 7x, and 6 7x [3][5] - Revenue is expected to grow at a CAGR of 12 5% from 2023 to 2026, driven by volume growth, pricing improvements, and cost optimization [36] Key Assumptions - The company's business volume is expected to grow steadily, benefiting from industry consolidation and optimized franchisee ecosystems [6] - Pricing improvements are anticipated due to the company's focus on the LTL express market, with enhanced service capabilities driving unit revenue growth [6] - Cost optimization is expected to continue, with unit costs projected to decline as the company benefits from economies of scale and operational efficiency improvements [6]

Investment Rating - Buy (maintained) [1] Core Views - ANE Logistics achieved strong growth in both volume and profitability in H1 2024, with a 20.5% YoY increase in cargo volume and a 145.1% YoY increase in net profit attributable to shareholders [2] - The company's gross margin reached 16.6%, up 4.5 percentage points YoY, and net profit margin attributable to shareholders reached 7.4%, up 3.9 percentage points YoY [2] - ANE Logistics' "Five Best" strategy (lowest cost, best quality, most stable timeliness, fastest service response, and densest network coverage) is driving long-term growth [9] Business Performance - In H1 2024, ANE Logistics handled 642.1 million tons of cargo, a 20.5% YoY increase, and generated revenue of RMB 5.289 billion, a 16.2% YoY increase [2] - Gross profit in H1 2024 was RMB 880 million, a 59.0% YoY increase, and net profit attributable to shareholders was RMB 390 million, a 145.1% YoY increase [2] - In Q2 2024, the company handled 355 million tons of cargo, a 19.5% YoY increase, and generated revenue of RMB 2.911 billion, a 17.1% YoY increase [2] Network Expansion and Service Quality - ANE Logistics expanded its network to over 31,000 freight partners and agents in H1 2024, an 11% YoY increase, serving over 5.8 million end customers [4] - The company improved service quality, reducing average shipment time to under 68 hours (a 5.8% YoY decrease), and significantly lowering loss, damage, and complaint rates [4] - Point-to-point cargo volume per outlet increased to 207 tons in H1 2024, a 9% YoY increase [6] Product and Business Structure Optimization - ANE Logistics optimized its product structure, with 0-70kg mini parcels growing 25.6% YoY and 70-300kg small LTL growing 19.6% YoY in H1 2024 [7] - The average shipment weight decreased from 109kg in H1 2022 to 89kg in H1 2024, reflecting a shift towards higher-margin products [7] - The company plans to focus on 0-300kg products, which require higher service quality and offer better profitability [7] Cost Control and Profitability Improvement - ANE Logistics reduced unit core costs in H1 2024, with unit trunk line costs decreasing to RMB 0.306/kg and unit hub costs decreasing to RMB 0.144/kg [8] - The company's gross margin reached a record high of 17.0% in Q2 2024, up 3.5 percentage points YoY [8] - Management expense ratio decreased from 9.9% in H1 2022 to 6.4% in H1 2024, contributing to improved profitability [8] Financial Forecasts - Revenue is expected to grow to RMB 11.6 billion in 2024, RMB 13.5 billion in 2025, and RMB 15.2 billion in 2026 [9] - Net profit attributable to shareholders is forecasted to reach RMB 801 million in 2024, RMB 997 million in 2025, and RMB 1.151 billion in 2026 [9] - The company's PE ratio is projected to decrease from 9.82x in 2024 to 6.83x in 2026 [9] Industry Position and Strategy - ANE Logistics is a leading franchise-based express logistics company in China, benefiting from the accelerated penetration of LTL logistics [9] - The company's "Five Best" strategy is expected to drive long-term growth in both volume and profitability [9] - ANE Logistics is well-positioned to capitalize on the growth opportunities in the zero-load logistics market [9]

Financial Performance - For the six months ended June 30, 2024, the company reported revenue of RMB 5,288,871 thousand, a 16.2% increase from RMB 4,550,157 thousand in the same period of 2023[2] - Gross profit for the same period was RMB 877,972 thousand, representing a significant increase of 59.0% compared to RMB 552,282 thousand in 2023[2] - Adjusted net profit reached RMB 429,961 thousand, an increase of 82.4% from RMB 235,770 thousand year-on-year[2] - Operating profit increased from RMB 287.7 million for the six months ended June 30, 2023, to RMB 579.8 million for the same period in 2024, with an operating margin rising from 6.3% to 11.0%[27] - Net profit for the six months ended June 30, 2024, was RMB 402.4 million, with a net profit margin of 7.6%, compared to RMB 169.3 million and 3.7% for the same period in 2023[31] - Adjusted EBITDA for the six months ended June 30, 2024, was RMB 1,027.0 million, compared to RMB 886.7 million for the same period in 2023[32] - Basic and diluted earnings per share for the parent company were both RMB 0.34, compared to RMB 0.14 in the same period last year, reflecting a 142.9% increase[46] - The company's net profit attributable to ordinary shareholders for 2024 was RMB 390,662,000, compared to RMB 159,385,000 in 2023, representing a significant increase[71] Operational Metrics - The total cargo volume for the first half of 2024 was 6.4 million tons, a 20.5% increase from 5.3 million tons in the same period of 2023[3] - The average weight per shipment decreased from 94 kg in the first half of 2023 to 89 kg in the first half of 2024[3] - The company expanded its network to serve over 5.8 million end customers, up from 5.0 million in the previous year[3] - The company increased its number of freight partners and agents to over 31,000, compared to over 28,000 a year earlier[5] - The average delivery time improved to within 68 hours, a 5.8% reduction from the previous year[6] - The total freight volume increased by 20.5% to 6.4 million tons in the first half of 2024, compared to 5.3 million tons in the same period of 2023[16] - The average daily handling volume at core transfer hubs was approximately 4,529 tons, with a total freight handling volume of about 21.7 million tons in the first half of 2024[10] Cost Management - Operating costs rose by 10.3% from RMB 3,997.9 million to RMB 4,410.9 million, with significant increases in trunk transportation costs from RMB 1,739.3 million to RMB 1,964.5 million and value-added service costs from RMB 176.7 million to RMB 223.4 million[21] - The average unit transportation cost decreased by 6.4% to RMB 306 per ton, while the average unit cost of distribution centers dropped by 23.4% to RMB 144 per ton[14] - The unit operating cost decreased by 8.4% from RMB 750 per ton to RMB 687 per ton, reflecting improved fleet efficiency[21] - The company has implemented cost optimization strategies through centralized procurement and route optimization, contributing to improved cost efficiency[21] Strategic Initiatives - The company aims to enhance service quality and operational efficiency while expanding its market share in the logistics sector[4] - The company plans to pilot an automated sorting system at distribution centers to enhance sorting efficiency in response to the growth of e-commerce[13] - The company is focusing on less-than-truckload (LTL) business while treating full truckload (FTL) as a supplementary service to better utilize its fleet[18] - Future strategies include enhancing operational efficiency and service quality, focusing on customer value, and accelerating digital investments[40][41][42] - The company aims to expand its product matrix and explore potential growth opportunities while adhering to sustainable development practices[43] Financial Position - Total assets as of June 30, 2024, were RMB 5,583,577,000, compared to RMB 5,776,054,000 as of December 31, 2023[49] - Current assets increased to RMB 3,199,871,000 from RMB 3,116,315,000, showing a growth of 2.7%[49] - Current liabilities decreased to RMB 1,997,776,000 from RMB 2,156,462,000, indicating a reduction of 7.4%[50] - The net asset value increased to RMB 3,050,242,000 from RMB 2,974,219,000, reflecting a growth of 2.5%[51] - The debt-to-equity ratio as of June 30, 2024, was approximately 7.7%, down from 19.1% as of December 31, 2023[36] - The company reported cash and cash equivalents of RMB 1,400.8 million as of June 30, 2024, compared to RMB 1,407.9 million as of December 31, 2023[36] Governance and Compliance - The company has maintained compliance with corporate governance codes and has no changes in the board of directors during the reporting period[76] - The company has established various committees, including a remuneration committee and a strategic committee, to enhance governance[88] - The audit committee has reviewed the interim financial performance for the six months ending June 30, 2024, and confirmed compliance with relevant accounting standards[87] - The independent auditor, Ernst & Young, conducted a review of the interim financial data and did not issue a certification for the preliminary announcement[87] Employee and Community Engagement - The company employed 3,031 staff as of June 30, 2024, a decrease of 3.5% from 3,142 employees at the end of 2023[79] - The company’s incentive plans are linked to employee performance, ensuring alignment with strategic goals and objectives[79] - The board expresses gratitude to shareholders, management, employees, business partners, and customers for their support and contributions[89]