JIAYOU INTERNATIONAL LOGISTICS(603871)：FIRM TO BUILD INLAND PORT AND INFRASTRUCTURE PROJECT IN ZAMBIA-格隆汇

机构：中金公司
研究员：Wenjie ZHANG/Qibin FENG/Xin YANG

　　What's new
　　Jiayou International Logistics （Jiayou） announced it would invest, construct and operate the Zambian side of Sakania dry port and Ndola- Mufulira road upgrade project. The company expects the total investment to be approximately US$76.13mn, of which 80% will be contributed by Jiayou and 20% by Turbo Infrastructure Development BV. This project has a 22-year concession period, including three years of construction.
　　The investment is subject to filing for record keeping or approval by authorities such as the National Development and Reform Commission, the Ministry of Commerce, and the State Administration of Foreign Exchange.
　　Comments Latest project supports Jiayou’s development model. According to the
　　firm's announcement, the port and road project would be Jiayou’s third cross-border port project in Africa1. We believe Jiayou has confirmed replicability of its business model.
　　Project likely to create synergies with the modernization and renovation project of the Kasumbalesa-Sakania road and port.
　　According to the company’s announcement, the project includes the construction and operation of the Sakania port facilities in Zambia, the Ndola-Sakania road, and the road to Sakania port. If the Sakania Port and road to Ndola are developed, we believe logistics efficiency will improve, thus forming a comprehensive multimodal transport network.
　　Jiayou preannounced that 1-3Q23 net profit may grow 40-60% YoY to Rmb654-747mn, maintaining rapid growth.
　　We believe the high earnings growth is driven by two factors. First, China- Mongolia cross-border business has returned to a high level. According to Ganqimaodu Port Management Committee, coal imports at Ganqimaodu Port rose 139.4% YoY to 26.5mn tonnes over January-September 2023.
　　Second, Jiayou’s African business is progressing rapidly. According to the announcement, its Kasa project in the Democratic Republic of the Congo （DRC） has started operation. Jiayou’s recent successful bid for a cross-　　border logistics project for copper products from the Komoa mine in the DRC marks a new milestone in its African cross-border multimodal transport business, in our view.
　　Financials and valuation
　　Our 2023 and 2024 earnings forecasts are unchanged. The stock is trading at 11.6x 2023e and 9.1x 2024e P/E. We maintain OUTPERFORM and our target price of Rmb23.18, implying 16.8x 2023e and 13.1x 2024e P/E, offering 44.3% upside.
　　Risks
　　Uncertainty of project approval.