ANE Logistics stock price steadily rising: Double drive of steady performance growth and prominent market position

On August 15, China's leading express delivery company ANE Logistics announced its performance for the first half of 2024. The data shows that the company achieved operating income of 5.289 billion yuan, a year-on-year increase of 16.2%; during the same period, the total volume of less-than-truckload freight reached 6.42 million tons, achieving a 20.5% year-on-year growth; adjusted net profit was 430 million yuan, a significant increase of 82.4% year-on-year; in terms of gross profit, ANE Logistics recorded a gross profit of 878 million yuan in the first half of the year, a substantial increase of 59.0% year-on-year, with a gross profit margin increasing to 16.6%, up by 4.5 percentage points year-on-year.

The continued strong performance has also received positive feedback in the capital market. After the market closed on August 16, ANE Logistics' stock price closed at 7.38 Hong Kong dollars. Its stock price has steadily climbed from 4.68 Hong Kong dollars per share at the beginning of 2023 to the current level, with an increase of up to 58.33%. In the current environment of slowing macroeconomic growth, ANE Logistics' "double rise" performance in terms of performance and stock market not only confirms its solid and high-quality growth in business operations but also indicates that ANE Logistics has become a model for stable and healthy development in the Chinese express delivery industry. Its leading position in the express delivery industry continues to be consolidated, potentially leading and accelerating the industry's shift from pursuing "scale supremacy" and "price wars" to "profit and quality" in the "value war."

Stable Performance with Progress, Strong Ability for High-Quality Growth

Returning to the company's operations, the strong performance displayed by ANE Logistics in the first half of the year is rooted in its profound business foundation. In 2023, ANE Logistics established the development vision of "optimal cost, best quality, stable timeliness, fastest service response, and densest network coverage," focusing on "profit and quality," and initiated multidimensional internal transformations such as cost optimization, organizational restructuring, refined management, and network ecology.

In the first half of 2023, ANE Logistics' transformation and restructuring efforts yielded significant results, achieving total operating income of 4.55 billion yuan, a year-on-year increase of 9.9%; with a 6.2% year-on-year growth in annual operating income and successfully turning losses into profits. Entering 2024, the revenue growth rate in the first quarter was 15.2%, followed by a 16.2% revenue growth in the first half of the year, demonstrating a sustained and steady improvement in profitability. The current performance of ANE Logistics is the result of the effective release of its strategic transformation achievements, indicating further enhancement of its infrastructure capabilities in cost optimization, network ecology, and other aspects.

On the cost side, in the first half of 2024, ANE Logistics implemented measures such as continuous refined fleet management and optimized trunk routes, leading to a 6.4% year-on-year decrease in unit trunk transportation costs and a 23.4% year-on-year decrease in unit distribution center costs, laying a solid foundation for stable operations.

In terms of improving service quality, ANE Logistics adheres to the brand concept of "Delivering Good with ANE," with the loss rate decreasing from 0.8 in the first half of 2023 to 0.04 in the same period of 2024, a decrease of 95.3%; the damage rate also decreased from 36.0 to 8.3, a decrease of 77.1%. With the comprehensive improvement in service quality, ANE Logistics' complaint rate has also significantly decreased, from 532 complaints per hundred thousand shipments in the first half of 2023 to 51 complaints in the same period of 2024 The decrease reached as high as 90.3%.

While focusing on improving "quality", ANE's "efficiency" is also continuously optimized. The average delivery time in the first half of the year was shortened by 5.8% compared to the same period in 2023, reduced to less than 68 hours, marking a substantial progress in ensuring timely delivery of goods by ANE Logistics, with significantly enhanced service stability.

Improving network ecology and enhancing market competitiveness

In the current express delivery market, a clear trend can be observed: the express delivery industry is in a stock market stage, transitioning from scale expansion to concentrated integration, with the aggregation of resources becoming more prominent. Against this backdrop, ANE Logistics is gradually consolidating its market leadership position with its extensive network coverage, efficient operational system, and continuous optimization measures.

In the first half of 2024, the domestic road freight volume showed a certain slowdown trend. Public data shows that the year-on-year growth rate of domestic road freight volume in the first half of the year was only 4.0%, a significant decrease from the 7.5% in the same period last year. Despite industry challenges, ANE Logistics has shown strong growth momentum by achieving a total of 6.42 million tons of less-than-truckload freight volume in the first half of the year, a year-on-year increase of 20.5%, far exceeding the overall industry growth rate. This performance not only highlights ANE Logistics' ability to achieve high-quality growth internally, but also demonstrates its strong competitiveness in the context of accelerated industry consolidation and increasingly prominent resource aggregation effects.

As a leading enterprise in the express delivery industry, ANE Logistics is committed to building a "rich ecological" network of profitable branches by implementing the "520" service standard, strengthening the "iron triangle" service mechanism, and continuously optimizing its network ecology. This is the key to its market competitiveness. As of June 30, 2024, ANE Logistics has 82 self-operated distribution centers nationwide, with 36 core transit hubs, connected by carefully planned 2360 mainline transportation routes, totaling over 31,000 branches. It ranks first in the scale of domestic express delivery network alliances, with a national township coverage rate of 99.2%. The extensive network coverage not only enhances ANE Logistics' operational efficiency but also gives it a competitive edge in the market.

Facing market changes, ANE Logistics actively innovates. In May 2024, ANE Logistics upgraded its "3300" product and introduced the "0 surcharge" policy, eliminating the "special area surcharge within 300 kilograms" and striving to eliminate blind spots and achieve a service standard of "9996 timeliness". The strong product competitiveness formed as a result not only effectively meets the needs of large e-commerce and small and medium-sized enterprise customers, reduces customer shipping costs, but also enables rapid market expansion.

According to data after the policy was introduced, from May to June this year, the volume of goods in the 3-300 kg segment increased by about 28% year-on-year, with the mini tickets in the 3-70 kg segment growing at a rate of over 30%, which is in line with expectations and demonstrates the effectiveness of the policy. Even in the industry's off-season, the growth trend remains unchanged, fully validating the market appeal of the 3300 product In the process of promoting network construction, ANE Logistics has clearly put forward measures in dimensions such as "adhering to customer value" as the core, continuously deepening adherence to effective scale, adhering to stable branch operations, addressing pain points of branches, adhering to digitalization and keeping pace with the times, etc., effectively alleviating the operational pressure of branches, enhancing the operational capabilities of branches, realizing the intelligence and efficiency of logistics services, laying a solid foundation for ANE's long-term development, and providing strong impetus for it to stand out in the fiercely competitive logistics market.

Guided by the "Iron Triangle" and rich ecological network construction strategy, ANE Logistics is steadily moving forward, committed to building a healthy and sustainable logistics ecosystem. This strategy not only lays a solid foundation for ANE's long-term development, but also provides strong impetus for it to stand out in the fiercely competitive logistics market.

Favored by Investment Institutions, Market Value Recognized

Based on the effective execution of the development strategy and the performance in the first half of 2024, several well-known investment institutions have highly praised the future development of ANE Logistics. CITIC Securities, CICC, JP Morgan, and Citigroup have all given high praise for its future development. CITIC Securities explicitly pointed out in its research report that as the largest full-network express delivery company in terms of volume in China, ANE Logistics' healthy network ecosystem and leading market product strategy have created favorable conditions for sustained growth in scale and optimization of cargo weight structure. Coupled with the company's excellent cost control capabilities, this has significantly boosted profitability, hence a "buy" rating was given.

ANE Logistics is also confident in its long-term development outlook and has updated its full-year 2024 performance guidance. It is expected that in the full year of 2024, cargo volume will grow by around 15% year-on-year, revenue growth will be basically in line with cargo volume growth, gross profit margin will be around 16%, and adjusted pre-tax profit will be around 1.05 billion RMB.

In addition, ANE Logistics has actively implemented a shareholder return plan. In June of this year, it officially announced a stock repurchase plan, planning to use no more than 150 million Hong Kong dollars for repurchases. Within just a few months, it has accumulated repurchases of approximately 27 million Hong Kong dollars in stocks, with smooth progress. This measure not only reflects ANE's confidence in future development but also creates more value for shareholders.

Driven by solid financial performance and firm confidence in future performance growth, ANE Logistics stated that despite the continuous changes in the market environment and competitive landscape, "today's ANE has relative competitive advantages in cost and quality, and also has sufficient ability to respond flexibly." In the next stage, the company will continue to focus on the strategy of "effective scale growth with equal emphasis on profit and quality," return to the essence of operations, continue to exert efforts from the directions of customer value, cost optimization, and profitability, and maintain steady growth.

Looking ahead, with comprehensive strength and market leadership position, ANE Logistics is expected to continue to maintain high-quality development in the new era of express delivery "value war," creating greater value for shareholders. The market value of ANE Logistics may see further release.

Keyword reading: ANE Logistics