Ge Long Hui·2025-08-30 03:18Core Viewpoint - Sinotrans reported a decline in revenue and mixed performance across its business segments, but investment income from REITs significantly boosted net profit in 2Q25, leading to a slight beat of expectations [1][5]. Financial Performance - In 1H25, Sinotrans' revenue decreased by 10.37% YoY to Rmb50.52 billion, while net profit attributable to shareholders was Rmb1.95 billion, resulting in an EPS of Rmb0.27, up 0.10% YoY [1]. - In 2Q25, revenue fell 16.6% YoY but increased 12.5% QoQ to Rmb26.75 billion, with gross profit growing 4.2% YoY and 24.9% QoQ [1]. - Net profit attributable to shareholders in 2Q25 grew 14.0% YoY and 101.9% QoQ to Rmb1.30 billion, slightly exceeding expectations due to REIT issuance [1]. Business Segment Analysis - Sea freight forwarding experienced solid volume and profit, while integrated logistics services and DHL-Sinotrans faced earnings pressure [2]. - In 1H25, revenue from freight forwarding fell 15.5% YoY to Rmb29.63 billion, with operating profit down 1.2% YoY to Rmb1.22 billion [3]. - Business volumes for sea freight, air freight, and railway freight forwarding changed by +6%, -14%, and -25% YoY, respectively [3]. - DHL-Sinotrans' revenue in 1H25 fell 12% YoY to Rmb8.76 billion, with net profit down 39% YoY to Rmb912 million due to tariff policies and rising costs [4]. - Integrated logistics services saw revenue decline by 5.9% YoY to Rmb14.32 billion, with operating profit down 22.4% YoY to Rmb318 million [4]. Investment Income and Cash Flow - Investment income surged 182.5% YoY to Rmb863 million in 2Q25, primarily due to the issuance of REITs, which raised Rmb1.31 billion [5]. - Net operating cash inflow reached Rmb168 million in 1H25, a significant improvement from an outflow of Rmb1.65 billion in 1H24 [5]. - Cash and cash equivalents increased by 31% YoY to Rmb11.7 billion, attributed to better receivables management and optimized debt structure [5]. Dividend and Valuation - The firm declared an interim dividend of Rmb0.145 per share, maintaining a stable DPS since 1H23, with a payout ratio of 76.7% in 1H25 [6]. - The disposal of Loscam International could enhance net profit by Rmb1.35 billion and generate Rmb4.44 billion in cash, potentially increasing full-year dividends by 17% YoY [7]. - Sinotrans' A-shares are currently trading at 11.5x 2025e and 11.1x 2026e P/E, while H-shares are at 8.7x 2025e and 8.2x 2026e P/E [7].