AnE Logistics achieves another milestone in high-quality growth, with comprehensive growth in volume, revenue, and net profit in Q1 2024

According to the Wise Finance APP, on May 22, the king of express delivery, AnE Logistics (09956), held its first quarter performance conference for 2024, following the impressive annual performance announcement in 2023 two months ago. AnE Logistics once again saw revenue, profit, scale, and other metrics exceed expectations, achieving a strong start to the year.

During the reporting period, it achieved a total operating income of 2.378 billion RMB, a year-on-year increase of 15.2%; the total volume of less-than-truckload freight reached 2.88 million tons, a year-on-year increase of 21.7%; gross profit reached 382 million RMB, a significant increase of 77.6% year-on-year, with a gross profit margin of 16.1%, up by 5.7 percentage points year-on-year, reaching its best historical level; adjusted pre-tax profit was 280 million RMB, a sharp increase of 133.7% year-on-year; adjusted net profit was 209 million RMB, a remarkable increase of 173.9%. It can be seen that AnE Logistics is deeply advancing its strategic transformation centered on "quality and profit", not only further solidifying its profitability, but also achieving core operating data far beyond market expectations, while practicing high-quality growth in various aspects such as cost, quality, efficiency, service, and network coverage.

Comprehensive improvement in operating indicators, AnE Logistics strides towards the "Five Best" goal

As the largest franchised express delivery network in China, the greatest challenge in advancing transformation lies in whether the strategic direction is highly matched with the execution at all levels. Therefore, at the beginning of the transformation, AnE Logistics headquarters proposed the development goal of "Five Best": optimal cost, best quality, most stable efficiency, fastest service response, and densest network coverage, providing more specific goals and outcome measurement standards for the transformation.

The performance data for the first quarter not only confirmed the correctness of its strategic transformation, but also indicated that AnE is making great strides towards the "Five Best" goal.

In terms of cost control capability, AnE Logistics is deeply promoting lean management, reducing costs by improving the operational efficiency of distribution centers and fleet transportation, and continuously controlling expenses. On one hand, starting from the distribution end, it comprehensively improves in terms of personnel, site, and equipment; on the other hand, it focuses on transportation, continuously optimizing route planning and production allocation, and rationalizing the allocation of tractors, trailers, and drivers according to different routes; fine fleet management reduces leakage of various costs (personnel, fuel, roads). In the first quarter of this year, AnE's unit cost of trunk transportation was 310 RMB/ton, a year-on-year decrease of 8%, and the unit cost of distribution centers was 151 RMB/ton, a year-on-year decrease of 27.1%, reducing costs to release greater profit potential for AnE.

In terms of service quality, AnE further deepened the brand concept of "Use AnE, Deliver Good Goods", by reducing transfers to improve operational standardization; optimizing route planning to enhance transfer efficiency and improve service quality and timeliness. In the first quarter of this year, the loss rate (number of lost items per hundred thousand items) decreased to 0.06, the damage rate (number of damaged items per hundred thousand items) decreased to 8.67, and the average delivery time in March was shortened to within 70 hours.

The outstanding service quality also allowed AnE to attract demand for small and medium-sized kilogram segment goods with higher profit margins, continuously improving the weight structure of goods. Data shows that the average weight per ticket in the first quarter was 91 kilograms, a year-on-year decrease of 2.9%, with a significant increase in small and medium kilogram segment goods, where the volume of mini tickets and small tickets increased by 24.8% and 20.8% respectively, further solidifying profitability In addition, ANE Logistics continues to optimize its organizational structure, shifting its headquarters from a control-oriented model to an empowerment-oriented model, shortening the management radius at the operational level, continuously upgrading organizational efficiency, and making the network ecosystem healthier. The company pioneered the "Iron Triangle" grassroots organization in the industry, empowering network points with a combination of marketing, operations, and customer service to promptly address issues encountered during operations.

The practical support policies that can be implemented have also attracted more franchisees. As of the end of the first quarter of 2024, the company's freight partners and freight agents have exceeded a total of 29,500, ranking first in the fast freight network for many years and increasing network density. Even in Tibet, ANE has achieved full coverage. Benefiting from optimized network structure and increased average shipment volume, the company's shipment volume has significantly increased year-on-year, maintaining a leading position in the industry.

Performance recognized by multiple parties, ANE enters the fast lane of high-quality development

Over the years, ANE Logistics has rooted itself in the development logic of fast freight industry and domestic customer needs, continuously breaking through itself with its strong genes of transformation, and always maintaining its leading position in the fast freight industry. In November 2021, in its 11th year of entrepreneurship, with its innovative freight partner platform model, ANE Logistics solidified its position as the largest freight volume scale, becoming the "King of Fast Freight" and the first fast freight enterprise listed on the Hong Kong stock market in China. In September 2022, less than a year after listing, sensing changes in the external environment keenly, ANE Logistics once again took the lead in initiating a transformation centered on "quality and profit," actively breaking through the industry competition indicators originally based on shipment volume, and pioneering the path of high-quality development in fast freight. In just over a year, it has shown a trend of sustained and comprehensive high-quality growth in the fast freight industry.

Recognizing changes in the environment is not easy, and it is even more difficult to adapt to changes and successfully find new growth opportunities. ANE Logistics' outstanding performance in transformation has won widespread external recognition. Since the release of its annual report at the end of March, ANE Logistics has successively received company research reports from well-known brokerage institutions such as CICC, GF Securities, JP Morgan, and Haitong Securities.

CICC stated that ANE's costs have been significantly optimized in 2023, and it is expected that under the drive of scale effects in 2024, the company's cost reduction still has "bullets," and it will also provide strong pricing competitiveness, leading to a potential rapid growth in shipment volume, continuous increase in market share, and attractive current valuation. In its first coverage report, GF Securities stated that by optimizing the weight of single-ticket shipments, the company reduced costs by 11%. Against the backdrop of product homogeneity in the fast freight industry, low cost has become the key to attracting traffic, and ANE Logistics' market share is expected to increase. The report also predicts that ANE Logistics' market value will reach a PE valuation of 14 times in 2024, giving it a "buy" rating.

Industry views believe that the less-than-truckload fast freight industry is accelerating towards high dimensionality, and high-quality growth will become a new industry theme. In this context, ANE's transformation centered on "quality and profit," under the company's long-termism, has shown tremendous development potential, not only leading the company into the fast lane of development but also setting an excellent transformation benchmark for the industry, leading industry growth According to data from the China Federation of Logistics and Purchasing, the total social logistics value in the first quarter of this year reached 88.0 trillion yuan. Calculated at comparable prices, it increased by 5.9% year-on-year, accelerating by 0.5 percentage points compared to the previous year's fourth quarter and increasing by 2 percentage points compared to the same period last year. The industry as a whole is showing a trend of recovery and improvement. McKinsey also pointed out in a related report that under the background of China's economic transformation and upgrading, benefiting from the new commercial supply chain in China, the transportation demand for the four underlying needs of the production end, retail end, commercial end, and e-commerce end is trending towards "high frequency" and "small batch". Represented by AnE Logistics, full-network express delivery with advantages such as wide coverage and high standardization has become the most marketable and scalable value in the domestic less-than-truckload industry, with the most long-term growth potential and scale efficiency, and is most likely to lead the industry with a scale of 50 billion.

It is revealed that based on the comprehensive improvement of service capabilities, AnE will focus on the high-margin kilogram segment to promote differentiated and quality scale growth. AnE Logistics has recently upgraded its "3300" product, fully exempting special surcharges within 300 kilograms, and at the same time launched a higher "9996" time standard to speed up the product's timeliness throughout, optimizing the service perception of reaching customers. Through these two measures, AnE can dig deep into the 3-300 kilogram segment with large demand space, fast market growth, and high gross margin space, enhance the market competitiveness of its flagship products, and win the market with service.

Regarding future plans, AnE Logistics stated that the next step will focus on the "Five Best" strategy, carry out standardized training for network services, continuously improve operational standardization, reduce losses, damages, and complaints; actively promote the digitization of network points, continuously enhance the company's empowerment level for network points, and promote high-quality growth of network points; through continuous innovation to explore growth potential, conduct pilot applications of automated assembly line equipment, promote new energy and intelligent driving pilots; practice carbon neutrality, innovate pilot projects to cultivate AnE's new productive forces. Through this series of measures, the company will drive solid revenue growth, continuously improve profit levels, build a "AnE moat" far from pure price competition, and lead the industry towards benign competition and high-quality development.

Overall, the first quarter performance has laid a foundation for AnE Logistics' long-term high-quality development, and with the continuous advancement of effective reforms, the continuously released performance is expected to bring a new round of growth to the company. Referring to the market values of logistics giants such as JD Logistics and SF Express, there is still significant room for valuation improvement for AnE Logistics.