Drone Delivery And Premium Last Mile Services Will Drive Long Term Earnings Potential

Catalysts

About BingEx

BingEx, operating under the FlashEx brand, provides on-demand dedicated courier and premium last mile delivery services across China.

What are the underlying business or industry changes driving this perspective?

• Shift in food delivery and local services competition away from heavy subsidies toward service quality is favoring FlashEx differentiated, time critical courier model, supporting higher average selling prices and more resilient revenue.
• Deepening penetration in high value, time sensitive verticals such as fresh flowers, cakes and premium gifting, including in store service pilots and collaborative operations, should increase order density per merchant and enhance gross margin.
• Expansion of individual user life cycle scenarios, from parcel and meal pickup to shopping assistance and EV charging support, is turning FlashEx into a daily utility for consumers, raising repeat usage and lifetime value and supporting top line growth.
• Targeted growth in enterprise and core high frequency merchant clients with VIP service, membership benefits and collaborative management is improving customer mix quality, which should stabilize volumes and drive operating leverage and net margin expansion.
• Early leadership in low altitude logistics through commercial drone delivery pilots in partnership with local governments, combined with algorithmic dispatch and a large rider base, positions BingEx to capture future long distance and congestion sensitive demand and to structurally improve delivery efficiency, supporting earnings growth.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming BingEx's revenue will grow by 6.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -5.2% today to 8.0% in 3 years time.
• Analysts expect earnings to reach CN¥390.5 million (and earnings per share of CN¥5.63) by about December 2028, up from CN¥-209.9 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 7.6x on those 2028 earnings, up from -7.3x today. This future PE is lower than the current PE for the US Logistics industry at 16.1x.
• Analysts expect the number of shares outstanding to grow by 0.69% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.23%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Revenue declined from RMB 1,154.8 million to RMB 1,005.4 million year over year in the third quarter of 2025 despite management emphasizing long term growth. This suggests that secular competitive pressures and weaker demand could persist and constrain future revenue growth and scale benefits, limiting earnings expansion.
• Gross profit fell from RMB 130.3 million to RMB 111.8 million even as gross margin stayed around 11 percent. This indicates limited pricing power in a competitive last mile market and raises the risk that any further cost inflation or discounting erodes gross margin and compresses net margins.
• Non GAAP income from operations dropped from RMB 46.2 million to RMB 23.7 million while non GAAP net income still grew. This implies that current profitability is partly supported by non operating items such as lower costs and past grants and that a normalization of subsidies or grants could reduce earnings resilience.
• Heavy strategic focus on new scenarios such as EV charging support, shopping assistance and drone based low altitude logistics requires sustained technology and rider investment. If these emerging services scale more slowly than expected they could keep operating expenses elevated and delay operating leverage, weighing on net margins.
• Management expects expense ratios to keep declining over the medium to long term. However, ongoing market competition and the need to acquire and retain high value merchants, enterprise clients and individual users could force higher selling and marketing or rider incentives, limiting further efficiency gains and capping earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $4.7 for BingEx based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be CN¥4.9 billion, earnings will come to CN¥390.5 million, and it would be trading on a PE ratio of 7.6x, assuming you use a discount rate of 8.2%.
  
• Given the current share price of $3.19, the analyst price target of $4.7 is 32.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.