2024 results beat our expectations; 1Q25 results in line

Hichain Logistics announced its 2024 and 1Q25 results. In 2024, revenue fell 9.7% YoY to Rmb1.65bn and attributable net profit rose 4.4% YoY to Rmb293mn, beating our expectations by about 5%, mainly because profit margin of the automation integration business was better than our expectations.

In 1Q25, revenue fell 0.4% YoY to Rmb401mn and attributable net profit rose 1.0% YoY to Rmb57.717mn, in line with our expectations.

Trends to watch Demand recovery in consumer electronics industry drove growth of

the firm’s 3C business in 2024. Revenue from the 3C supply chain business rose 5.6% YoY to Rmb1.36bn in 2024. According to Canalys, shipments in the global PC market totaled 263mn units in 2024, up 1% YoY. According to Counterpoint Research, global PC shipments grew 6.7% YoY in 1Q25, with Lenovo’s shipments up 11% YoY. We believe the firm’s 3C business will continue to grow in 2025.

NEV business to regain growth thanks to new customer acquisition and to benefit from growth of domestic NEV market in the long term.

In 2024, the firm’s revenue from the new energy vehicle (AFV) business fell 81.3% YoY to about Rmb90mn, mainly because revenue from NEV customer L fell about Rmb430mn YoY. The firm has actively expanded to other NEV customers to offset the negative impact. Data from the China Association of Automobile Manufacturers shows that NEV sales volume rose 35.5% YoY to 12.866mn units in 2024. In the long term, we believe the firm will continue to enhance its strength in NEV production logistics.

Automation integration business began to contribute incremental

profit. In 2024, the firm’s new automation and equipment manufacturing business generated revenue of Rmb141mn, accounting for 8.5% of its full- year revenue. Semiconductor automated material handling system (AMHS) equipment and display panel AMHS equipment contributed revenue of Rmb80.75mn and Rmb40.86mn. In 2024, the firm completed the renovation and upgrading of its Kunshan factory. Its subsidiary Haimeng Technology generated revenue of Rmb207mn and fully converted the semiconductor intelligent automation project into fixed assets. We believe the AMHS industry has high technological barriers to　　entry and large market potential. We expect the firm’s automation integration business to become an important profit growth driver as its production capacity ramps up.

Financials and valuation

We largely keep our 2025 earnings forecast unchanged and introduce our 2026 earnings forecast at Rmb357mn. We expect the firm’s earnings to grow 9.8% and 10.8% YoY in 2025 and 2026. The stock is trading at 13.9x 2025e and 12.6x 2026e P/E. Given the firm’s long-term growth potential, we maintain an OUTPERFORM rating and our target price of Rmb21.2, implying 15.2x 2025e and 13.7x 2026e P/E and offering 8.9% upside.

Risks

Disappointing expansion of NEV business and/or orders for automation integration business.