Summary of ZTO Express Conference Call Company and Industry Overview - **Company**: ZTO Express (ZTO.N, ZTO UN) - **Industry**: Transportation & Infrastructure in Hong Kong/China - **Conference**: China BEST Conference 3Q 2025 Key Points and Arguments 1. **Market Volume Slowdown**: ZTO has experienced a slowdown in market volume in August due to logistics price hikes, with expectations of more significant impacts from September to October [3] 2. **Parcel Trends**: Management views the reduction of low Average Order Value (AOV) parcels as a healthy trend for the express delivery segment, although market share and pricing restrictions may hinder ZTO's market share gains [3] 3. **Retail Parcel Handling**: ZTO handled 850 million retail parcels per day in Q2 2025, with a target of 1 billion parcels per day during peak season [10] 4. **Pricing Strategy**: ZTO raised end-market prices by approximately RMB 0.3 in Guangdong, expecting to benefit by around RMB 0.1 per parcel. Price hikes of RMB 0.2-0.4 are also being discussed in other regions [9] 5. **Financial Metrics**: - **Market Cap**: RMB 102,632 million - **Revenue Estimates**: Expected to grow from RMB 44,281 million in FY 2024 to RMB 63,499 million in FY 2027 [6] - **Net Income**: Projected to increase from RMB 10,150 million in FY 2024 to RMB 10,898 million in FY 2027 [6] - **P/E Ratio**: Expected to decrease from 11.9 in FY 2024 to 10.0 in FY 2027 [6] 6. **Capital Expenditure**: Management anticipates a gradual decrease in capital expenditure to RMB 3-4 billion per annum over the medium term [9] 7. **Market Share Strategy**: Maintaining market share is a strategic priority, with potential industry consolidation expected through competition or mergers and acquisitions [9] 8. **Social Security Impact**: If social security payments for couriers are enforced, ZTO is expected to benefit due to its higher unit profit and labor efficiency compared to peers [9] Additional Important Insights 1. **Unit Gross Profit**: The estimated unit gross profit for return parcels is around RMB 1, with unit profit ranging from RMB 0.6 to RMB 0.8 [10] 2. **Price Gap**: The price gap between ZTO and lagging competitors has narrowed to less than RMB 0.1 from a previous range of RMB 0.1-0.5 before the price hike [9] 3. **Risks**: - **Upside Risks**: Faster market share gain, better cost control, and weak performance from peers could enhance ZTO's position [14] - **Downside Risks**: Continued market share loss and intensified competition could negatively impact ZTO [14] Valuation and Price Target - **Price Target**: US$ 23.80, representing a 31% upside from the closing price of US$ 18.20 on August 29, 2025 [6] This summary encapsulates the critical insights from the ZTO Express conference call, highlighting the company's current market position, financial outlook, and strategic priorities.

Core Viewpoint - The express delivery industry in China is experiencing significant growth, with a notable increase in parcel volume and a trend towards "anti-involution" in pricing competition, which is expected to stabilize the market in the medium to long term [1][4]. Group 1: Industry Performance - In July 2025, the national express delivery volume reached 16.4 billion parcels, a year-on-year increase of 15.1%, while the volume for January to July 2025 totaled 112.05 billion parcels, up 18.7% year-on-year [1][2]. - The express delivery industry's revenue in July 2025 increased by 8.9% year-on-year, while the average revenue per parcel decreased by 5.3%. For the first seven months of 2025, revenue grew by 9.9%, with a 7.4% decline in average revenue per parcel [4]. Group 2: Company Performance - SF Express reported a remarkable business volume growth of 33.7% year-on-year in July 2025, leading the industry, with a 26.9% increase for the first seven months [2]. - Other major express companies such as YTO, Yunda, and Shentong also showed positive growth in July 2025, with year-on-year increases of 20.8%, 7.6%, and 11.9% respectively [2]. Group 3: Market Concentration - The market concentration in the express delivery sector is increasing, with the CR8 (concentration ratio of the top 8 companies) reaching 86.9% for January to July 2025, reflecting a 1.7% year-on-year increase [3]. - In Q2 2025, the market shares of leading companies such as Zhongtong, YTO, Yunda, Shentong, and Jitu increased compared to Q1, indicating a trend towards greater market concentration [3]. Group 4: Pricing and Competition - The decline in average revenue per parcel is narrowing, indicating a reduction in price competition due to the "anti-involution" measures being implemented. This trend is expected to ease competitive pressures in the short term while promoting healthy competition in the long term [4]. - The National Postal Administration has emphasized the need to combat "involution-style" competition, with recent meetings aimed at ensuring stable operations and pricing in the express delivery sector [4]. Group 5: Investment Recommendations - The "anti-involution" measures are anticipated to alleviate competitive pressures, with expectations for profitability recovery in the e-commerce express sector in the latter half of the year. The sustainability of price increases will be crucial for future profitability [5]. - Companies such as SF Express, YTO Express, Zhongtong Express, Jitu Express, and Yunda are highlighted as key investment opportunities due to their strong performance and potential for profit recovery [5].

Group 1 - The company ZTO Express (02057) announced a comprehensive buyback of approximately 33.63 million shares, costing about 982 million USD [1] - The buyback is scheduled to take place on September 2, 2025 [1] - This move indicates the company's strategy to enhance shareholder value through share repurchase [1] Group 2 - The total expenditure for the buyback reflects a significant investment in the company's own equity [1] - The decision to repurchase shares may signal confidence in the company's future performance and financial health [1] - The buyback could potentially impact the stock price positively by reducing the number of shares outstanding [1]

Core Viewpoint - ZTO Express (02057) announced a comprehensive buyback of approximately 33.63 million shares, costing around $982 million, scheduled for September 2, 2025 [1] Summary by Categories Company Actions - ZTO Express plans to repurchase approximately 33.63 million shares [1] - The total expenditure for this buyback is estimated at $982 million [1] Financial Implications - The buyback represents a significant investment in the company's own shares, indicating confidence in its future performance [1]

FF305 翌日披露報表 (股份發行人 ── 已發行股份或庫存股份變動、股份購回及/或在場内出售庫存股份) 表格類別： 股票 狀態： 新提交 公司名稱： 中通快遞（開曼）有限公司（於開曼群島註冊成立以不同投票權控制的有限責任公司） 呈交日期： 2025年9月3日 如上市發行人的已發行股份或庫存股份出現變動而須根據《香港聯合交易所有限公司（「香港聯交所」）證券上市規則》(「《主板上市規則》」)第13.25A條 / 《香港聯合交易所有限公司GEM證券 上市規則》(「《GEM上市規則》」)第17.27A條作出披露，必須填妥第一章節 。 | 第一章節 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 1. 股份分類 | 其他分類 (請註明) | 股份類別 | 其他類別 (請註明) | | 於香港聯交所上市 | 否 | | | | 證券代號 (如上市) | | 說明 | | 於2027年到期年利率為1.50%的可換股優先票據（「2027年票據」） | | | | | | A. 已發行股份或庫存股份變動 | | | | ...

Core Insights - Chengdu Qingbaijiang District and ZTO Express Group signed a strategic cooperation agreement focusing on low-altitude logistics, logistics innovation, and smart logistics to create a multi-modal smart logistics ecosystem [2][3] - The project leverages Qingbaijiang's advantages as an international railway hub and ZTO's expertise in smart logistics and unmanned delivery technology, aiming to enhance the digital and intelligent upgrade of the regional supply chain [2][3] Company Developments - ZTO Express is expanding its investment in Chengdu, utilizing Qingbaijiang's logistics infrastructure and ZTO's industry experience to develop a comprehensive logistics hub headquarters, China-Europe Railway Express hub warehouse, and an intelligent delivery network [3] - The project will also explore integrated logistics systems, including "railway + drone" and "low-altitude + cold chain" delivery models, aiming to create a modern logistics industry function system that integrates intercity distribution and smart transportation [3] Industry Context - Qingbaijiang District is recognized as a national economic and technological development zone and a starting point for the China-Europe Railway Express (Chengdu), with a strong foundation in manufacturing and mature logistics and equipment manufacturing clusters [2] - The collaboration is part of Qingbaijiang's efforts to integrate into the Belt and Road Initiative and build an international supply chain ecosystem, while ZTO aims to enhance its national network and service capabilities [3]

公司名稱: 中通快遞（開曼）有限公司（於開曼群島註冊成立以不同投票權控制的有限責任公司） 第 1 頁 共 11 頁 v 1.1.1 | 3. 股份分類 | 不同投票權架構公司普通股 | 股份類別 | 其他類別 (請註明) | 於香港聯交所上市 (註1) | 否 | | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | N/A | 說明 | 未指定 | | | | 2. 股份分類 | 不同投票權架構公司普通股 | 股份類別 | B | 於香港聯交所上市 (註1) | | 否 | | | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | N/A | 說明 | B類普通股 | | | | | | | | 法定/註冊股份數目 | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | | 1,000,000,000 USD | | 0.0001 USD | | 100,000 | | 增加 / 減少 (-) | | | | | USD | | | | 1. 股份分類 | 不同投票權 ...

Core Viewpoint - The express delivery industry is accelerating its "anti-involution" efforts, with multiple companies raising prices for e-commerce clients in key regions like Guangdong and Zhejiang, aiming to improve profitability and shift from price competition to value competition [1][7][8]. Price Adjustments - The National Postal Administration has implemented measures to combat "below-cost" pricing, leading to price increases across various regions, particularly in Guangdong, where prices have risen by 0.3 to 0.7 yuan per ticket, establishing a minimum price of 1.4 yuan [2][4]. - In Zhejiang, the base price for express delivery increased from 1.1 yuan to 1.2 yuan per ticket [2]. Impact on Profitability - The price adjustments are expected to alleviate cost pressures for logistics service providers, with some outlets potentially achieving profitability under the new pricing mechanism [4]. - Prior to the price hikes, express delivery companies were operating at a loss, with net losses of 0.2 to 0.5 yuan per ticket after accounting for various fees [5]. Market Dynamics - The express delivery market has seen intensified competition since Q2 2023, with a rapid decline in e-commerce delivery prices affecting the industry's healthy development [5][7]. - Despite a 21.6% increase in package volume, the overall revenue per ticket has decreased, leading to a "volume increase, profit decrease" scenario [7]. Regulatory Environment - The recent regulatory measures, including the draft of the revised Price Law, aim to curb irrational price competition in the express delivery sector [8][11]. - The National Postal Administration has emphasized the need for stable operations and profitability in the industry, marking a significant shift in regulatory focus [8][9]. Future Outlook - Analysts predict that the express delivery industry will gradually move away from price wars over the next 2-3 years, supported by ongoing regulatory efforts and industry transformations [11]. - The upcoming peak season and price increases in key production areas are expected to bolster express delivery prices, leading to a potential recovery in company performance in the latter half of 2025 [8].

Core Viewpoint - The express delivery industry is accelerating its "anti-involution" efforts, with multiple companies raising prices for e-commerce clients to ensure profitability and improve service quality [1][3][6]. Price Adjustments - Several express companies in key regions like Guangdong and Zhejiang have increased their prices, with Guangdong raising fees by 0.3 to 0.7 yuan per ticket, establishing a minimum price of 1.4 yuan [3][6]. - Prior to Guangdong's adjustments, Zhejiang's Yiwu raised its base price from 1.1 yuan to 1.2 yuan per ticket [3][6]. - The price hikes are expected to alleviate cost pressures on logistics providers, with some benefiting from the new pricing mechanisms [3][6]. Impact on E-commerce - The price increases are particularly impactful on low-cost and special-priced packages, while high-value items are less affected [4][6]. - E-commerce sellers with high-value products can absorb or pass on the increased logistics costs, whereas those with lower-priced items may face squeezed profit margins [4][6]. Industry Context - The current round of "anti-involution" in the express delivery sector is a response to previous irrational price wars that destabilized the market and harmed workers' rights [6][7]. - The industry has been experiencing a decline in single-ticket revenue, with a 17.84% year-on-year drop in Q1 2025, despite a 21.6% increase in overall package volume [6][7]. Regulatory Environment - The National Development and Reform Commission and the State Administration for Market Regulation have introduced new regulations to combat "involution" and ensure fair pricing practices [7][10]. - The establishment of a national price monitoring platform and strict penalties for below-cost pricing are part of the government's efforts to stabilize the market [7][10]. Future Outlook - Analysts predict that the express delivery industry may gradually escape the price war cycle over the next 2-3 years, moving towards healthier competition and development [10]. - The upcoming peak season and the recent price adjustments are expected to support express companies' performance in the latter half of 2025 [7][10].

Core Viewpoint - The express delivery industry is experiencing a shift towards rational pricing and healthy development, influenced by the "anti-involution" policies, which aim to stabilize prices and improve service quality [2][5][6]. Financial Performance - In the first half of the year, the company reported revenue of 22.723 billion yuan, a year-on-year increase of 9.85%, while net profit was 4.004 billion yuan, slightly down from 4.062 billion yuan in the same period last year [2]. - The company adjusted its full-year business volume guidance to a range of 38.8 billion to 40.1 billion pieces, reflecting a growth rate of 14% to 18%, down from the previous estimate of 40.8 billion to 42.2 billion pieces, which indicated a reduction of 6 percentage points in expected growth [2][3]. Cost and Profitability - The company's total operating costs increased by 21.5% year-on-year, surpassing revenue growth, with significant cost increases attributed to servicing high-value customers and automation upgrades [3]. - Gross profit decreased by 14.9%, with the gross margin dropping from 32% to 24.8% [3][4]. Market Trends - The express delivery market is seeing a notable trend towards lighter and smaller packages, with more merchants opting for economical delivery services [4]. - The "anti-involution" policies are expected to lead to a recovery in profits for the industry, with price adjustments in key regions like Guangdong and Zhejiang [5][6]. Technological Advancements - The company has deployed over 2,000 unmanned vehicles across more than 700 outlets in over 200 cities, significantly reducing transportation costs [7]. - The shift in industry competition is moving from quantity to a balance of quality and quantity, emphasizing digitalization and intelligent logistics solutions [7].