2024 and 1Q25 earnings miss our expectations

Jiayou International Logistics announced its 2024 and 1Q25 results: In 2024, the firm’s revenue rose 25.1% YoY to Rmb8.75bn and net profit attributable to shareholders grew 22.9% YoY to Rmb1.28bn. In 1Q25, the firm’s revenue rose 15.0% YoY to Rmb2.29bn and net profit attributable to shareholders fell 14.8% YoY to Rmb0.26bn, missing our expectations due to pressure on earnings cause by sluggish demand for Mongolian coal.

Trends to watch Mongolian coal prices fell YoY and QoQ in 1Q25; we think pressure on the firm’s coal supply chain business will remain in 1H25. Based

on data from sxcoal.com, the average price of the Ganqimaodu No.5 Mongolian raw coal fell 40.1% YoY and 18.8% QoQ to Rmb888/t in 1Q25, with the average short-term freight rate dropping 49.6% YoY and 34.9% QoQ to Rmb58/t, continuing the downward trend since 4Q24. Although Mongolian coal prices have not declined MoM since April, we believe the firm's Mongolian coal business will remain under pressure on a YoY basis in 2Q25 due to the high base for earnings in 2Q24.

Cross-border multimodal transport and African land port businesses

grew steadily. In 2024, the firm’s revenue from the cross-border multimodal transport business rose 22.2% YoY to Rmb2.45bn with gross profit growing 31.5% YoY to Rmb0.75bn and gross margin rising 2.2ppt YoY, mainly thanks to the improving logistics system for Chinese and Mongolian markets and the maturing of logistics network in Africa. In 2024, the firm’s African land port business generated revenue of Rmb0.49bn (+16.4% YoY) and gross profit of Rmb0.28bn (+7.3% YoY). The firm's land port network has started to take shape with its own vehicles and the acquired BHL fleet in operation. We are upbeat on the firm’s development of a large-scale logistics network in Africa over the long term, as the firm improves its presence in Zambia and Tanzania.

The firm has stepped up efforts to pay dividends, raising its dividend

payout ratio for 2024 to 53.5%. The firm announced a dividend of Rmb0.7/sh (implying total dividend payout of Rmb0.68bn), accounting for　　53.5% of its 2024 attributable net profit (up 20ppt from 2023). The firm's DPS of Rmb0.7 implies a dividend yield of 5.0% for its current share price.

Financials and valuation

As the Mongolian coal supply chain business is under pressure, we are more cautious about the Mongolian coal business in 2025 and 2026.

Therefore, we lower our 2025 and 2026 earnings forecasts by 10.1% and 10.4% to Rmb1.35bn and Rmb1.68bn, implying YoY growth of 5.5% and 24.6%. As we lower our earnings forecasts, we also cut our target price by 10.1% to Rmb17.92/sh, implying 13.0x 2025e and 10.4x 2026e P/E, offering 28.6% upside. The stock is trading at 10.1x 2025e and 8.1x 2026e P/E. We maintain OUTPERFORM rating.

Risks

Operations of African ports disappoint; Mongolian coal prices continue to fall sharply.