20211222-招银国际-安能物流-09956.HK-Largest_express_freight_network_operator_in_China_LTL_market_46页_2mb

ANE (9956 HK) Summary

Core Content

ANE is a leading player in China's Less-Than-Truckload (LTL) freight market, recognized as the largest express freight network operator in terms of total freight volume for the fourth consecutive year. With a market share of 17.3% in 2020, ANE has demonstrated consistent growth, achieving a CAGR of ~31% from 2015 to 2020, significantly outperforming the industry average.

Main Points

• Market Position: ANE is the largest LTL express freight network in China, with a growing market share and a robust freight volume.
• Growth Drivers: The company benefits from the rapid development of the digitalized supply chain, increasing demand for flexible and efficient LTL services, and the trend of industry consolidation.
• Business Model: ANE operates an efficient freight partner platform model, where it controls mission-critical sorting and line-haul processes, while partners and agents manage local outlets and provide feeder services.
• Financial Forecast: ANE is projected to achieve a freight volume CAGR of 30% from 2021E to 2023E, reaching 22.6 million tons in 2023E. Core net profit is expected to grow by 22% in 2021E, 32% in 2022E, and 34% in 2023E, driven by volume growth, resilient unit gross profit, and lower expense ratios.
• Valuation: The target price is set at HK$16.8, based on a 15.8x 2022E P/E ratio, implying an 8x 2022E EV/EBITDA, which is in line with the industry average.
• Industry Outlook: China's LTL market is highly fragmented, with a CR10 of only 5.7% in 2020. The market size reached RMB1.5tn in 2020, growing at a CAGR of 5.6% from 2015 to 2020. The LTL segment is expected to grow faster than the express parcel and FTL segments, driven by B2B supply chain upgrades and the rise of B2C heavy-goods e-commerce.
• Market Consolidation: The freight partner platform model is gaining traction in China, allowing for faster growth and market consolidation compared to the traditional direct model. ANE is a pioneer in this model and is well-positioned to benefit from industry consolidation.

Key Financials

Metric	FY19A	FY20A	FY21E	FY22E	FY23E
Revenue (RMB mn)	5,338	7,082	10,334	12,929	16,279
YoY Growth (%)	0	33	46	25	26
Core Net Income (RMB mn)	224	642	782	1,031	1,384
Core EPS (RMB)	N/A	N/A	0.67	0.89	1.19
YoY Growth (%)	N/A	N/A	N/A	31.9	34.2
EV/EBITDA (x)	N/A	N/A	5.9	3.9	2.9
P/E (x)	N/A	N/A	10.4	7.9	5.9
P/B (x)	N/A	N/A	7.4	4.2	2.7

Competitive Landscape

• Market Share: ANE's market share increased from 12.3% in 2015 to 17.3% in 2020.
• Key Players: Other major players include SF Express, BEST Inc., ZTO Freight, Yimidida, Yunda, and Deppon.
• Network Coverage: ANE has the broadest network coverage, with 147 sorting centers and 1,500 self-owned trucks.
• Gross Margin: ANE's gross margin is competitive, reflecting its efficient operations and technology-driven model.

Growth Potential

• ANE plans to expand its freight partner and agent base to increase freight volume and market share.
• The company aims to enhance its cost advantage through higher loading rates, reduced transit ratios, and the expansion of its self-owned high-capacity truck fleet.
• ANE is expected to benefit from the ongoing digitalization of the logistics sector and the increasing demand for comprehensive and efficient LTL services.

Risk Factors

• Uncertain capabilities of maintaining the freight partner platform model.
• Economic slowdown and policy changes in China.
• Inability to adapt to evolving market trends.
• Fierce industry competition.
• High dependence on brand reputation and customer trust.
• Reliance on freight partners and agents, which may pose operational and financial risks.
• Continuous adverse impacts from the COVID-19 outbreak.

Conclusion

ANE is a key player in the LTL freight market, with a strong growth trajectory and a competitive business model. The company is well-positioned to capitalize on the ongoing consolidation and digitalization of the logistics sector. With a target price of HK$16.8, based on a 15.8x 2022E P/E ratio, the research initiates with a BUY rating, highlighting the strong potential for future growth and value creation.