In a complete natural year of integration with JD.com LogisticsMultivideopokerWhat changes have taken place in Debang, and what business collaboration will Debang and JD.com have in the future?

Recently, Debang shares (603056MultivideopokerSH, with a share price of 16.63 yuan and a total market capitalization of 17.078 billion yuan) released the 2023 annual report and the first quarter report of 2024, which showed that Debang's operating income in 2023 was 36.279 billion yuan, an increase of 15.57% over the same period last year, and the company's net profit reached 746 million yuan, an increase of 13.32% over the same period last year. In the first quarter of 2024, the company continued the growth trend of last year, with operating income of 9.295 billion yuan, an increase of 25.31% over the same period last year, and net profit of 93 million yuan, an increase of 27.74% over the same period last year.

A reporter from the Daily Business News noted that the synergy of the integrated business of Debang and JD.com also continues to deepen. According to the financial report, Debang provided 3.223 billion yuan in transportation services to the related party JD.com Group in 2023, compared with 19.69 million yuan in the same period in 2022. Since Debang was acquired by Guanxuan JD.com Logistics in July 2022, Debang has brought more increments to JD.com in the process of business integration. According to the financial report, Debang plans to provide 7.788 billion yuan of labor services to JD.com Group and its related parties in 2024, and "the volume of cooperation business is expected to increase in 2024."

In the past two years, with the continuous upgrading of the competition situation in the express market, the pace of industry integration is accelerating, listing, mergers and acquisitions, integration, is becoming the norm of the industry. The industry believes that the deep involvement of capital in integration may also accelerate the speed of industry integration, which brings new uncertainty to the competition in the express market.

Judging from the financial results that have been released by the leading enterprises in the express industry, over the past year, Anneng, SF Express and Zhongtong Express have been catching up with each other in business volume and revenue competition, and Anneng Logistics has turned its annual profits into profits after the strategic transformation. Now that Debon is back on the right track of business growth, what variables will it bring to the express market?

Express revenue increased by 18.19%. Express business fell for the first time since 2018.

The financial report shows that Debang continues to adjust its express business development strategy according to market competition and changes in customer demand. In 2023, the company's express business revenue reached 32.28 billion yuan, an increase of 18.19% over the same period last year. In 2023, the revenue of Debang express business reached 2.728 billion yuan, a decrease of 11.22% compared with the same period last year.

Under the new strategy, Debang's express business in the first quarter of 2024 is also growing further, while the express business continues to shrink. According to the financial report, the operating income of Debang's express business in the first quarter of 2024 was 8.373 billion yuan, an increase of 29.64% over the same period last year. The operating income of express business was 542 million yuan, down 22.04% from the same period last year.

It is worth mentioning that Debon's performance has suffered a massive decline since it announced its name change and entered the express business in 2018, and now Debon has once again focused its business development on the express business. Debang said in the financial report that the company actively promotes the upgrading of products and services, continuously improves the delivery quality, strengthens the building of sales capacity, and achieves year-on-year growth in product revenue in the high-kilogram section; at the same time, the orderly promotion of the superimposed network integration project promotes the further growth of express revenue.

To refocus its business on express, Debon faces fiercer competition.

McKinsey's "2023 LTL Logistics Industry Insight report" shows that the domestic level 1.5 trillion LTL market is facing structural transformation and upgrading and is striding into the "integration period" of the stock market. From the market pattern, the competition is still fierce, in addition to Anneng, Zhongtong Express covetously eyeing the position of the boss, the competitiveness of Shun Feng Express and Debang Express should not be underestimated.

Revenue from SF Express, which is also directly operated, reached 33.08 billion yuan in 2023, up 18.5 per cent from a year earlier, according to previously released financial results. In response to questions from investors, SF Express said that SF Express will balance the relationship between good volume and resources in 2024, pay attention to the strategy of the off-peak season, optimize the product comparison structure, and improve the utilization rate of people, cars, fields and lines. in the aspects of high-efficiency aviation large parts, including high-kg land transport industrial large parts, through a more flexible model and a more competitive cost structure, seek market increment.

According to the "Top 30 list of China's Top 30 non-truckload Enterprises in 2023" released by the Transport Federation Research Institute, the combined income of the top 10 enterprises accounted for 85.6% of the total income of the top 30 enterprises from 69.3% in 2017 to 85.6% in 2023. The gap between the head enterprises and the tail enterprises is gradually widening, the concentration of the industry is increasing, and the Matthew effect is becoming more and more obvious. But on the whole, compared with the mature less-than-truckload market in the United States, there is still a lot of room for improvement in the concentration of the industry in China.

The financial report also revealed that by the end of 2023, Debang had basically achieved full coverage of cities at or above the prefecture level, with the coverage of villages and towns reaching 93.94%, the company's total yield increased by 3.2 percentage points compared with the same period last year, 218 trunk routes were straightened, and the duration of the whole link was shortened by 5.23 hours.

Yunda is still the second largest shareholder to see whether it will be sold after the lifting of the ban.

As can be seen from the financial results, the integration of Debang and JD.com is still going on. The financial report mentioned that in the second half of 2023, Debang promoted the network convergence project and fully took over some of the assets of the 83 transfer centers of JD.com Logistics through asset acquisition, thus realizing the further expansion of the express network.

The further integration and business collaboration of Debang and JD.com in 2024 has also become a key direction in 2024. Debang said in its annual report that it will promote the network integration with JD.com 's logistics express business in an orderly manner in 2024. Anxin Securities Research News pointed out that the express industry is experiencing the transition from extensive growth to fine management in the past. In the future, with the further deepening of the cooperation between Debang shares and JD.com Logistics, the business increment and synergy of Debang shares may be further released.

It is worth mentioning that in Debon's shareholder structure, Yunda is still Debang's second largest shareholder, and the financial report shows that Yunda Express owns 6.52% of Debang's shares.

According to public information, Yunda Express bought a stake in Debang as a strategic investor in April 2021. After Yunda invested in Debon, the two didn't seem to have a big spark in business. In July 2022, JD.com announced the completion of delivery of a 66 per cent stake in the 8.979 billion yuan acquisition of Debang, which became a subsidiary of JD.com Logistics. When the acquisition bill was voted on, Yunda representatives abstained.

April 13 this year. Debang announced that some of the restricted shares of the company are about to be lifted, and the number of shares released this time is 66.9575 million, accounting for 6.52% of the total share capital of the company. The circulation date of the shares to be lifted is April 22nd, 2024. The type of shares to be lifted is the lifting of the ban on the placement of shares by directional additional issuers. Yunda will continue to hold or empty Debang shares, which deserves the attention of the industry.

According to the announcement of that year, Yunda bought shares in Debon by subscribing for the non-public offering shares of Debon at 614 million yuan. According to the current share price of 16 yuan, without considering dividends, Yunda's investment income reached 74%. So far, however, neither side has taken any further action.

For the future strategic focus, Debang mentioned in the financial report that with the increasing online penetration of large goods, the company's revenue composition from the e-commerce platform has maintained good growth. The company will continue to cultivate traditional e-commerce channels, continue to strengthen friendly cooperation with traditional e-commerce platforms and platform merchants, expand new cooperation models and cooperation opportunities, and strengthen the penetration of high-growth channels. Pay close attention to the business development of emerging e-commerce and content e-commerce, and accelerate ecological cooperation with them. At the same time, by optimizing the courier e-commerce parts subsidy policy, improving e-commerce parts service indicators and other measures to better support the expansion of e-commerce channel customers.