Summary of ZTO Express Conference Call Company Overview - **Company**: ZTO Express (ZTO.N) - **Industry**: Transportation & Infrastructure in Hong Kong/China Key Points and Arguments Market Share and Competition - ZTO has gained market share in Q4 2025, achieving low-teens year-over-year volume growth quarter-to-date, outperforming the industry due to a decrease in low-value parcels in the market [4][12] - Management believes that market competition has improved, with leading players resuming share gains, which was a positive surprise compared to expectations of stable market shares due to customer lock-up [2][4] - ZTO is not participating in aggressive pricing competition, which is deemed irrational for smaller players with thin margins and weak balance sheets [5][12] Financial Performance - 3Q25 net profit exceeded expectations due to tax credits, while gross profit and operating profit missed estimates [3] - Adjusted EBITDA was in line with expectations, and excluding tax benefits, unit profit increased quarter-over-quarter [3] - The 2025 volume outlook was slightly lowered due to a slowdown in market volume growth [3] Earnings Forecasts and Price Target - EPS forecasts for 2025-2027 have been raised by 3%, 6%, and 4% respectively, reflecting the 3Q25 results and healthier average selling price dynamics [6][15] - The weighted average cost of capital (WACC) assumption was slightly lowered to 13.2% from 13.3% due to a decrease in the cost of debt [6][16] - The price target has been increased by 5% to US$25.00, implying a 13x 2026 estimated P/E, which is below the domestic peer average of 16x [6][16] Shareholder Returns and Capital Expenditure - ZTO expects higher absolute shareholder returns year-over-year, assuming no irrational competition [14] - Capital expenditure guidance for 2025 is approximately Rmb5.5-6 billion, expected to decline to Rmb5 billion in 2026 [14] Risks and Opportunities - Risks still exist, but the company is optimistic about achieving both market share gain and profit growth in 2026 [5][29] - The retail business handles over 9 million daily parcels, representing 8-9% of total volume, with management targeting a higher retail parcel mix in 2026 [13] - Potential mergers and acquisitions are being considered as a growth option [14] Valuation and Investment Thesis - ZTO is viewed as a long-term winner in the industry, with attractive risk-reward dynamics, trading at 11x 2026 estimated P/E and a forward free cash flow yield of 7-8% compared to a peer average of 1% [7][29] - The company’s market leadership in volume and unit profitability supports a positive outlook, with a moderate probability of achieving both market share gain and profit growth [24][29] Additional Important Information - The effective tax rate is expected to be 18%, with a significant reduction in tax expenses noted [17] - The company’s market cap is currently Rmb107,605 million, with an average daily trading value of US$10 million [9] - The stock price closed at US$18.97 on November 19, 2025, indicating a 32% upside to the new price target [9] This summary encapsulates the key insights from the ZTO Express conference call, highlighting the company's performance, market dynamics, and future outlook.

E-commerce and Retail - ByteDance integrates its Chinese e-commerce, lifestyle services, and advertising engineering teams into a new "China Transaction and Advertising" department to enhance R&D efficiency and competitiveness in the e-commerce sector [1] - Pinduoduo reports Q3 revenue of 108.28 billion yuan, a 9% year-on-year increase, with net profit rising 17% to 29.33 billion yuan, indicating a slowdown in revenue growth and a strategic shift towards long-term value over short-term profits [2] - Vipshop achieves Q3 net revenue of 21.4 billion yuan, a 3.4% year-on-year increase, with adjusted net profit rising 14.6%, reflecting improved platform activity despite the need for ongoing reforms in core business areas [3] - JD.com announces the launch of an independent app for its food delivery service, aiming to capture a larger share of the instant delivery market and enhance user engagement through new features [3] - Hema's founder, Hou Yi, announces the closure of several physical stores for the pet food brand "Paiteshengsheng," citing a mismatch between operational performance and initial goals, while shifting focus to online business [4] - Xibei raises salaries for frontline employees by an average of 500 yuan per person per month to boost morale and service quality amid recent controversies [5][6] Logistics and Supply Chain - The State Post Bureau reports that in October, express delivery revenue reached 131.67 billion yuan, a 4.7% year-on-year increase, with business volume growing by 6.5%, highlighting the increasing reliance on online shopping [6] - Flash Delivery reports Q3 revenue of 1.005 billion yuan, a slight decline year-on-year, but net profit increases by 83.6% to 43.7 million yuan, indicating effective cost control [7] - ZTO Express announces Q3 revenue of 11.86 billion yuan, an 11.1% year-on-year increase, with adjusted net profit growing by 5% to 2.51 billion yuan, reflecting strong market competitiveness [8] Innovation and Investment - Keling AI reports Q3 revenue exceeding 300 million yuan, with Kuaishou's total revenue growing by 14.2% to 35.6 billion yuan, indicating progress in AI commercialization and strengthening competitiveness in live commerce [8]

Investment Rating - The investment rating for ZTO Express (2057.HK) is "Buy" [1] Core Views - The report highlights that ZTO Express achieved a year-on-year growth of 9.8% in parcel volume for Q3 2025, driven by a strong performance in the bulk parcel segment, which saw nearly 50% growth year-on-year [3][6] - The company adjusted its full-year parcel volume growth target down to 12.3% to 13.8%, reflecting a more cautious outlook while emphasizing quality and market share expansion [5] - The report suggests that the express delivery industry still has significant growth potential, particularly in the context of e-commerce and the ongoing "anti-involution" trend, which shifts focus from quantity to quality [6] Summary by Sections Financial Performance - For the first three quarters of 2025, ZTO Express reported total revenue of 34.588 billion yuan, a year-on-year increase of 10.3%, with adjusted net profit of 6.818 billion yuan, down 8.1% year-on-year [2] - In Q3 2025, the company achieved revenue of 11.865 billion yuan, up 11.1% year-on-year, and adjusted net profit of 2.506 billion yuan, up 5.0% year-on-year [2] Operational Metrics - In Q3 2025, ZTO Express handled 9.573 billion parcels, marking a 9.8% increase year-on-year, with a market share of approximately 19.4%, maintaining the leading position in the industry [3] - The average revenue per parcel in Q3 was 1.15 yuan, reflecting a 2.3% increase year-on-year, attributed to improved pricing dynamics due to the "anti-involution" trend [3] Cost and Profitability - The cost per parcel in Q3 was approximately 0.59 yuan, down 8.5% year-on-year, with significant reductions in line-haul and sorting costs [4] - The adjusted net profit per parcel was 0.262 yuan, down 4.3% year-on-year, but up 25.6% quarter-on-quarter, indicating improved profitability trends [4] Future Outlook - The report projects adjusted net profits for ZTO Express to be 9.870 billion yuan in 2025, with growth rates of -2.08%, 14.21%, and 11.11% for the following years [7] - The company is expected to leverage its scale and operational efficiencies to achieve stable growth in both parcel volume and profitability [7]

Core Viewpoint - Zhongtong Express reported a third-quarter revenue of 11.86 billion yuan, with a year-on-year increase of 11.1% and a quarter-on-quarter increase of 0.3% [1] - The significant growth in profitability is attributed to the "anti-involution" policy leading to an increase in express delivery prices [1] Financial Performance - The net profit attributable to shareholders for the third quarter was 2.52 billion yuan, reflecting a year-on-year increase of 5.3% and a quarter-on-quarter increase of 30.2% [1] - Adjusted net profit for the third quarter was 2.49 billion yuan, with a year-on-year increase of 3.6% and a quarter-on-quarter increase of 22.9% [1] - For the first three quarters, the company's net profit attributable to shareholders was 6.46 billion yuan, showing a year-on-year increase of 0.3%, while the adjusted net profit was 6.73 billion yuan, down 9.2% year-on-year [1] Volume and Pricing Trends - In the third quarter, the company completed a delivery volume of 9.57 billion parcels, with a year-on-year increase of 9.7% but a quarter-on-quarter decrease of 2.8% [1] - The average revenue per parcel in the third quarter was 1.22 yuan, with a quarter-on-quarter increase of 0.02 yuan [1] - The company expects a 10.1% quarter-on-quarter increase in delivery volume for the fourth quarter, driven by the traditional e-commerce peak season [1] Cost and Profitability - The average cost per parcel in the third quarter was 0.91 yuan, with a quarter-on-quarter increase of 0.09 yuan [2] - The adjusted operating profit per parcel was 0.25 yuan, down 0.08 yuan year-on-year but stable quarter-on-quarter [2] - The company anticipates further cost reduction potential in the long term due to economies of scale and automation [2] Industry Outlook - The "anti-involution" policy is expected to shift the express delivery industry from a focus on volume growth to high-quality development [2] - The overall growth rate of delivery volume in the industry is slowing, with a reported year-on-year increase of 7.9% in October [2] - Zhongtong Express, as a market leader with a 19.4% market share, is expected to be less affected by the reduction in low-value parcel demand [2] Valuation Adjustments - The profit forecasts for 2025, 2026, and 2027 have been raised by 10%, 5%, and 2% respectively, with adjusted net profit forecasts also increased [3] - The valuation multiple has been lowered to 15.2x for 2025E PE, and the target price has been reduced by 10% to 185.9 HKD / 23.9 USD [3]

Core Insights - The report highlights a significant increase in VLCC (Very Large Crude Carrier) freight rates, reaching a new high, driven by a notable decline in Russian oil exports, which has created additional demand for oil transportation from the Middle East to India and China [3][4] - The report suggests a positive outlook for the transportation sector, particularly in shipping and aviation, with recommendations for specific companies such as China Merchants Energy and COSCO Shipping Energy [3][4] - The report emphasizes the importance of monitoring seasonal trends in freight rates, particularly the potential for a "not-so-dull" off-season from December to February [3] Industry Overview - The transportation index has decreased by 5.00%, underperforming the CSI 300 index by 1.23 percentage points, with the express delivery sector showing the smallest decline at -2.75% and the public transport sector experiencing the largest drop at -9.35% [4][11] - The shipping sector has shown mixed performance, with the Baltic Dry Index increasing by 5.67% while the coastal dry bulk freight index fell by 3.47% [4][11] - The report notes that the average freight rate for VLCCs has risen by 5% week-on-week, reaching $126,371 per day, with the Middle East to Far East route hitting a new high of $138,144 per day [3][4] Shipping Sector Insights - The report indicates that the average freight rate for the fourth quarter is approaching $99,000 per day, marking it as one of the highest quarterly averages in history [3] - The decline in Russian oil exports has been significant, dropping from nearly 4 million barrels per day to around 3 million barrels per day, which has increased demand for oil from the Middle East [3][4] - The report also highlights the recovery of chartering activities following the Bahri conference, with shipowners beginning to control capacity due to tightening supply [3] Aviation Sector Insights - The report discusses the unprecedented challenges in the aircraft manufacturing supply chain, with an aging fleet expected to persist over the next 5-10 years, leading to constrained supply [3] - It anticipates a significant improvement in airline profitability as capacity is allocated to international routes, suggesting a potential golden era for airlines [3] - Recommendations include major airlines such as China Eastern Airlines and Spring Airlines, which are expected to benefit from these trends [3] Express Delivery Sector Insights - The express delivery industry is entering a new phase of competition, with three potential scenarios outlined: price recovery leading to utility-like profitability, continued competitive pressure, or higher-level consolidation [3] - Companies such as Shentong Express and YTO Express are highlighted as having strong potential due to their competitive advantages and market positioning [3] High Dividend Stocks in Transportation - The report lists high dividend yield stocks in the transportation sector, including Bohai Ferry with a yield of 8.08% and China Railway with a yield of 3.95% [21] - The focus on high dividend stocks is seen as a stable investment strategy amidst market fluctuations [21]

Core Insights - ZTO Express reported third-quarter 2025 earnings of 43 cents per share, an improvement from the previous year, with total revenues reaching $1.66 billion, also showing year-over-year growth [1][6] Revenue Performance - Revenue from the core express delivery business increased by 11.6% year over year, driven by a 9.8% growth in parcel volume and a 1.7% increase in parcel unit price [2] - Key account revenues surged by 141.2% year over year, attributed to a rise in e-commerce return parcels [2] - Revenue from freight forwarding services declined by 7.4% year over year [2] Gross Profit and Margins - Gross profit decreased by 11.4% compared to the year-ago quarter, with the gross margin rate falling to 24.9% from 31.2% [3][6] Operating Expenses - Total operating expenses amounted to RMB550.9 million (approximately $77.4 million), an increase from RMB493.0 million in the previous year [3] Share Repurchase Program - ZTO's board approved a share repurchase program with an increased aggregate value of $2.0 billion, extended through June 30, 2026; as of September 30, 2025, ZTO had repurchased 52,919,506 ADSs for $1.3 billion, leaving $0.7 billion available under the program [4] Cash Position - ZTO Express ended the third quarter of 2025 with cash and cash equivalents of $1.31 billion, down from $1.85 billion at the end of the previous quarter [7]

Core Viewpoint - Cathay Securities has given ZTO Express (02057) an "Accumulate" rating with a target price of HKD 195.99, highlighting the company's "co-building and sharing" concept as a solid foundation for a stable franchise network, which will help maintain its leading position in the industry [1]. Group 1: Business Model and Network Stability - The "co-building and sharing" concept was introduced by ZTO Express in 2010, and by 2015, the company had transitioned some major franchisees into shareholders, making it the first and only company in the express delivery sector to do so. This alignment of interests has fostered trust and stability within the network, contributing to ZTO's leadership in the industry [2]. Group 2: Investment in Core Assets - Since 2013, ZTO Express has benefited from significant early investments in sorting and other equipment, along with effective network management, leading to a steady increase in market share. By 2016, the company achieved a market share of 14.4%, and it has continued to invest in core assets (land, facilities, vehicles, sorting equipment) while maintaining efficient network management, securing its position as the industry leader [3]. Group 3: Balanced Development - The company focuses on achieving a balance between business volume, market share growth, and profitability, while effectively managing costs. Following improvements in the industry landscape, ZTO has successfully increased both business volume and profit per shipment [4]. Group 4: Financial Forecast and Investment Recommendations - Cathay Securities projects ZTO Express's revenue for 2025-2027 to be HKD 471.07 billion, HKD 516.85 billion, and HKD 577.06 billion, representing year-on-year growth of 6%, 10%, and 12%, respectively. The net profit attributable to shareholders is expected to be HKD 95.65 billion, HKD 106.33 billion, and HKD 119.29 billion, with year-on-year growth of 8%, 11%, and 12%. The estimated EPS for these years is HKD 11.89, HKD 13.22, and HKD 14.83. The target price of HKD 195.99 corresponds to a 15x P/E ratio for 2025, supporting the "Accumulate" rating [5].

Core Viewpoint - Cathay Securities gives ZTO Express (02057) a "Buy" rating with a target price of HKD 195.99, highlighting the company's "co-building and sharing" concept as a solid foundation for a stable franchise network, which will help maintain its leading position in the industry [1]. Group 1: "Co-Building and Sharing" Concept - ZTO Express introduced the "co-building and sharing" concept in 2010 and transitioned major franchisees to shareholders by 2015, becoming the first and only express delivery company to do so, aligning interests and establishing trust, which enhances network stability and supports its industry leadership [2]. Group 2: Early Capital Investment - Since 2013, ZTO Express has benefited from significant early investments in sorting and other equipment, coupled with effective network management, leading to a steady increase in market share, which reached 14.4% in 2016, and has maintained the top position in the industry through continued investment in core assets [3]. Group 3: Balanced Development of Volume, Profit, and Cost - The company focuses on growing business volume and market share while maintaining profitability and managing costs effectively, resulting in simultaneous increases in business volume and profit per shipment following improvements in the industry landscape [4]. Group 4: Profit Forecast and Investment Recommendations - The firm forecasts ZTO Express's revenue for 2025-2027 to be HKD 471.07 billion, HKD 516.85 billion, and HKD 577.06 billion, with year-on-year growth rates of 6%, 10%, and 12% respectively. Net profit is projected to be HKD 95.65 billion, HKD 106.33 billion, and HKD 119.29 billion, with corresponding EPS of HKD 11.89, HKD 13.22, and HKD 14.83. The target price of HKD 195.99 corresponds to a 15x P/E ratio for 2025, supporting a "Buy" rating [5].

Core Viewpoint - The report from Credit Lyonnais indicates that ZTO Express (02057, ZTO.US) experienced a year-on-year revenue growth of 11% and an adjusted net profit growth of 7% in the third quarter, with an adjusted net profit per order of approximately 0.27 RMB, improving from 0.21 RMB in the second quarter [1] Group 1: Financial Performance - ZTO Express's revenue and adjusted net profit for Q3 increased by 11% and 7% year-on-year, respectively [1] - The adjusted net profit per order improved to about 0.27 RMB from 0.21 RMB in the previous quarter [1] - The core per order cost increased by only 0.02 RMB due to the launch of a new transit center [1] Group 2: Market Outlook - Credit Lyonnais maintains a "Outperform" rating for ZTO Express, with a target price of 152 HKD for the Hong Kong stock and 20 USD for the US stock [1] - The expectation of continued implementation of anti-competitive policies in the industry suggests that regulatory bodies will enforce price floors to curb vicious price competition [1] - Given ZTO's favorable customer structure compared to peers, the company is expected to regain market share next year, leading to a slight upward revision of net profit forecasts for 2025 and 2026 by 2% [1]

Group 1 - The core viewpoint of the article is that ZTO Express (02057, ZTO. US) reported a year-on-year revenue growth of 11% and an adjusted net profit growth of 7% for the third quarter, with an adjusted net profit per order of approximately 0.27 RMB, improving from 0.21 RMB in the second quarter [1] - The report maintains an "Outperform" rating for ZTO Express, with a target price of 152 HKD for the Hong Kong stock and 20 USD for the US stock [1] - The expectation of continued implementation of anti-competition policies in the industry is highlighted, with regulatory bodies likely to enforce price floors to curb vicious price competition [1] Group 2 - ZTO Express is expected to regain market share next year due to its better customer structure compared to peers, leading to a slight upward revision of net profit forecasts for 2025 and 2026 by 2% [1]