Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057) [2][6] Core Insights - ZTO Express reported a revenue of 44.28 billion CNY for 2024, reflecting a year-on-year growth of 15.3%, with adjusted net profit reaching 10.15 billion CNY, up 12.7% [6] - The company aims to prioritize market share, indicating an expectation of intensified price competition in the industry [6] - The report has adjusted profit forecasts for 2025 and 2026, now predicting adjusted net profits of 9.904 billion CNY and 10.95 billion CNY respectively, down from previous estimates [6] Financial Data and Earnings Forecast - Revenue projections for ZTO Express are as follows: - 2023: 38.419 billion CNY - 2024: 44.281 billion CNY - 2025E: 49.173 billion CNY - 2026E: 55.692 billion CNY - 2027E: 62.710 billion CNY - Year-on-year growth rates for revenue are projected at 9%, 15%, 11%, 13%, and 13% respectively [5] - Adjusted net profit forecasts are: - 2023: 9.006 billion CNY - 2024: 10.150 billion CNY - 2025E: 9.904 billion CNY - 2026E: 10.950 billion CNY - 2027E: 12.525 billion CNY - Year-on-year growth rates for adjusted net profit are projected at 32%, 13%, -2%, 11%, and 14% respectively [5] Market Position and Performance - In 2024, ZTO Express achieved a business volume of 34 billion packages, a year-on-year increase of 12.6%, with a market share of 19.4% [6] - The average revenue per package for 2024 was 1.30 CNY, with a slight increase in Q4 to 1.32 CNY [6] - The company maintains a strong competitive position, with the highest market share and service efficiency among peers [6]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company, ZTO Express, reported a revenue of 44.28 billion yuan for 2024, representing a year-on-year growth of 15.3%. The net profit attributable to shareholders was 8.82 billion yuan, a slight increase of 0.8%, while the adjusted net profit was 10.15 billion yuan, up by 12.7% [4][13][22] - In Q4 2024, the company achieved a revenue of 12.92 billion yuan, marking a year-on-year increase of 21.7%, with a net profit of 2.38 billion yuan, up 8.7% [4][13] - The express delivery volume for the company reached 34 billion pieces in 2024, a growth of 12.6%, contributing to a total express business revenue of 40.95 billion yuan, which is a 15.4% increase [5][14] Company Overview - The latest closing price of the company's stock is 172.2 HKD, with a total market capitalization of 138.5 billion HKD. The company has a debt-to-asset ratio of 32.13% and a price-to-earnings ratio of 11.63 [3] - The largest shareholder is ZTO Lms Holding Limited [3] Financial Performance - The company is expected to continue focusing on service quality, business scale, and profitability balance. For 2025, capital expenditure is projected to be around 5.2 billion yuan, with business volume anticipated to reach 40.8-42.2 billion pieces, reflecting a growth of 20%-24% [7][23] - Revenue forecasts for 2025-2027 are 54.5 billion yuan, 62 billion yuan, and 67.5 billion yuan, with year-on-year growth rates of 23.1%, 13.8%, and 8.9% respectively. Net profits for the same period are expected to be 10.81 billion yuan, 11.88 billion yuan, and 12.86 billion yuan, with growth rates of 22.6%, 9.9%, and 8.2% [7][23] Cost Management - The company has successfully reduced core costs, with unit transportation costs decreasing by 8.9% to 0.41 yuan due to improved routing and loading rates. Overall, core costs have been further reduced [6][18] - The gross profit for 2024 increased by 17.6% to 13.72 billion yuan, with a gross margin improvement of 0.6 percentage points to 31.0% [19]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company, ZTO Express, reported a revenue of 44.28 billion yuan for 2024, representing a year-on-year growth of 15.3%. The net profit attributable to shareholders was 8.82 billion yuan, a slight increase of 0.8%, while the adjusted net profit was 10.15 billion yuan, up 12.7% year-on-year [4][13][22] - In Q4 2024, the company achieved a revenue of 12.92 billion yuan, a year-on-year increase of 21.7%, with a net profit of 2.38 billion yuan, up 8.7% [4][13] - The express delivery volume for the company reached 34 billion pieces in 2024, a growth of 12.6%, contributing to a total express business revenue of 40.95 billion yuan, which is a 15.4% increase [5][14] - The company has focused on improving efficiency and reducing core costs, with unit transportation costs decreasing by 8.9% to 0.41 yuan [6][18] Financial Performance - The company forecasts a capital expenditure of approximately 5.2 billion yuan for 2025, continuing a downward trend, with expected business volume growth of 20%-24% [7][23] - Projected revenues for 2025-2027 are 54.50 billion yuan, 62.00 billion yuan, and 67.51 billion yuan, with year-on-year growth rates of 23.1%, 13.8%, and 8.9% respectively. The net profit for the same period is expected to be 10.81 billion yuan, 11.88 billion yuan, and 12.86 billion yuan, with growth rates of 22.6%, 9.9%, and 8.2% [7][10][23] - The company's price-to-earnings (P/E) ratios for 2025-2027 are projected to be 11.6X, 10.6X, and 9.8X, indicating a relatively low valuation [7][23] Operational Efficiency - The company has seen an increase in high-value packages and a reduction in core costs, with the overall gross profit rising by 17.6% to 13.72 billion yuan, and the gross margin improving by 0.6 percentage points to 31.0% [19][22]

ZTO Express (Cayman) (ZTO) Q4 2024 Earnings Call March 18, 2025 08:30 PM ET Company Participants Sophie Li - Director - Capital MarketsHuiping Yan - Chief Financial OfficerAaron Wu - Director Conference Call Participants Ronald Keung - AnalystQianlei Fan - Analyst Operator Please also note today's event is being recorded. I would now like to turn the conference over to Sophie Li, Head of Capital Markets. Please go ahead. Sophie Li Thank you, Rako. Hello, everyone, and thank you for joining us today. The Com ...

Financial Data and Key Metrics Changes - In Q4 2024, the company achieved a total parcel volume of RMB 9.67 billion, up 11% year over year, and an adjusted net income of RMB 2.73 billion, which grew 23.4% year over year [6][16] - Total revenue increased by 21.7% to RMB 12.9 billion for Q4 and by 15.3% to RMB 44 billion for the year [17] - Adjusted annual net income reached RMB 10.15 billion, increasing by 12.7% year over year [10] Business Line Data and Key Metrics Changes - The core express delivery business saw an increase in average selling price (ASP) by 10.3% or RMB 0.13 for Q4 and 2.7% or RMB 0.04 for the year [17] - The number of retail parcels in Q4 grew nearly 50%, significantly outpacing overall e-commerce parcel growth [9] Market Data and Key Metrics Changes - The express delivery industry maintained strong growth momentum, with an estimated industry growth of around 15% for 2025 [21] - The company anticipates its parcel volume for 2025 to be in the range of 40.8 billion to 42.2 billion, representing a 20% to 24% increase year over year [21] Company Strategy and Development Direction - The company is committed to a high-quality growth strategy, focusing on differentiated products and services while enhancing brand recognition and customer satisfaction [7][10] - Key initiatives include improving operational efficiency, empowering network partners, and enhancing last-mile delivery capabilities [11][12] Management Comments on Operating Environment and Future Outlook - Management noted that while the express delivery industry has strong growth prospects, challenges such as consumption downgrade and intense price competition remain [10][14] - The company believes that the overall potential for growth is intact, supported by favorable government policies and evolving logistics demands [27] Other Important Information - The company achieved a gross profit margin of 29.1% for Q4 and 31% for the year, reflecting strong corporate cost efficiency [19] - Capital expenditure for Q4 totaled RMB 1.2 billion, with annual CapEx at RMB 5.9 billion, indicating another year of free cash flow [21] Q&A Session Summary Question: Market share and pricing impact - Management anticipates industry growth around 16% and aims for 20% to 24% growth, indicating a plan to protect and enlarge market share [26] Question: Technology advancements and cost savings - The company is integrating AI technology to improve efficiency and reduce costs, with a focus on autonomous vehicles expected to lower operational costs significantly [34][37] Question: Retail parcel growth and competition - The average retail parcel volume exceeded 7 million in Q4, with a goal of 8.4 million daily volume for 2025, indicating strong growth momentum [46] Question: Cost reduction potential - The company aims for a reduction of at least RMB 0.03 in combined unit costs for sorting and transportation by 2025 [48]

Financial Performance - Total revenue for the year ended December 31, 2024, reached RMB 44,280,720, representing a 15.3% increase compared to RMB 38,418,915 in 2023[6] - Gross profit increased by 17.6% to RMB 13,717,092 in 2024, up from RMB 11,662,526 in 2023[6] - Net profit for the year was RMB 8,887,595, a slight increase of 1.5% from RMB 8,754,457 in 2023[6] - Adjusted net profit rose by 12.7% to RMB 10,150,359 in 2024, compared to RMB 9,005,920 in 2023[6] - Adjusted EBITDA increased by 15.9% to RMB 16,354,858 in 2024, up from RMB 14,107,290 in 2023[6] - Basic earnings per American depositary share increased by 12.4% to RMB 12.52 in 2024, compared to RMB 11.14 in 2023[6] - Diluted earnings per American depositary share rose by 11.9% to RMB 12.20 in 2024, compared to RMB 10.90 in 2023[6] - The net profit attributable to ordinary shareholders for 2023 was RMB 8,749,004, increasing to RMB 8,816,835 in 2024, representing a growth of 0.77%[14] - Adjusted net profit attributable to ordinary shareholders rose from RMB 9,000,467 in 2023 to RMB 10,079,599 in 2024, marking an increase of 11.99%[14] Revenue and Growth - Revenue increased from RMB 38,418.9 million in 2023 to RMB 44,280.7 million in 2024, reflecting a growth of 15.3% driven by deeper online consumption penetration[15] - The company’s revenue from express services increased by 15.7% from RMB 37,512.1 million in 2023 to RMB 43,395.3 million in 2024, driven by a 12.6% increase in package volume and a 2.7% rise in package price[31] - Total revenue for the year ended December 31, 2024, was RMB 44,280.7 million, up from RMB 38,418.9 million in 2023, representing a growth of 15.2%[29] Operating Costs and Expenses - Operating costs increased by 14.2% to RMB 30,563,628 in 2024, compared to RMB 26,756,389 in 2023[6] - Total operating expenses increased by 17.3% from RMB 1,654.6 million for the year ended December 31, 2023, to RMB 1,940.2 million for the year ended December 31, 2024[38] - The cost of materials sold increased by 26.9% from RMB 513.4 million for the year ended December 31, 2023, to RMB 651.7 million for the year ended December 31, 2024, in line with package volume growth[38] Cash Flow and Investments - Cash and cash equivalents, restricted cash, and short-term investments totaled RMB 13,465.4 million, RMB 37.5 million, and RMB 8,848.4 million, respectively, as of December 31, 2024[47] - The principal amount of outstanding bank loans was RMB 9,514.0 million as of December 31, 2024, up from RMB 7,766.0 million as of December 31, 2023[48] - The company incurred total capital expenditures of approximately RMB 5.9 billion for the year ended December 31, 2024, compared to RMB 6.7 billion for the year ended December 31, 2023[57] Corporate Governance - The board appointed Ms. Xie Fang as a member of the Nomination and Corporate Governance Committee, effective March 19, 2025, enhancing corporate governance[25] - The company has established four board committees to oversee specific aspects of its affairs, including an audit committee and a compensation committee[65] - The company has complied with all corporate governance codes, except for the separation of the roles of Chairman and CEO, which are held by the same individual[62] Shareholder Returns - The company declared a cash dividend of USD 0.35 per American Depositary Share and ordinary share for the six months ending December 31, 2024, with a payout ratio of 40%[26] - The company declared a cash dividend of $0.62 per share for the year ended December 31, 2023, totaling $500,134 (RMB 3,600,516) and a mid-term dividend of $0.35 per share for the six months ended June 30, 2024, totaling $282,239 (RMB 2,012,929)[112] Employee and Compensation - The total number of employees as of December 31, 2024, is 24,477, with the largest functional area being sorting, which accounts for 30.8% of the total[59] - Employee compensation costs for the year ended December 31, 2024, totaled RMB 3,392.6 million, an increase from RMB 3,226.5 million for the year ended December 31, 2023[59] - The company granted 916,200 stock options under the 2024 equity incentive plan with an exercise price of $21.88, which will vest over three years[107] Risk Management - The company does not foresee significant risks from interest rate fluctuations and has not used derivative financial instruments to manage interest rate risks[55] - The company has no significant contingent liabilities as of December 31, 2024[56] Future Outlook - The company plans to continue focusing on operational efficiency and market expansion strategies in the upcoming fiscal year[3] - The company expects total package volume for 2025 to be between 40.8 billion and 42.2 billion, reflecting a year-on-year growth of 20% to 24%[27] - The company aims to expand its service offerings to include a comprehensive ecosystem of logistics solutions, including express delivery, less-than-truckload (LTL) services, and cross-border logistics[18]

Financial Performance - Adjusted net profit for the fiscal year reached RMB 10.2 billion, an increase of 12.7%[9] - Revenue for Q4 was RMB 12.9 billion (USD 1.77 billion), up 21.7% from RMB 10.6 billion in the same period last year[13] - Net profit for Q4 was RMB 2.45 billion (USD 335.2 million), reflecting a 10.7% increase from RMB 2.21 billion in Q4 2023[13] - Total revenue for the fiscal year was RMB 44.28 billion (USD 6.07 billion), a 15.3% increase from RMB 38.42 billion in 2023[13] - Operating profit increased by 25.3% to RMB 3,453.2 million (USD 473.1 million), with an operating margin rising from 25.9% to 26.7%[25] - Net profit grew by 10.7% to RMB 2,446.8 million (USD 335.2 million), compared to RMB 2,209.8 million in the same period last year[28] - Adjusted net profit reached RMB 2,733.3 million (USD 374.5 million), up from RMB 2,214.4 million year-over-year[29] - Gross profit increased by 17.6% to RMB 13,717.1 million (USD 1,879.2 million), with a gross margin improvement from 30.4% to 31.0%[40] - Operating profit for Q4 2024 was RMB 3,453,171, a 25.3% increase compared to RMB 2,755,095 in Q4 2023[69] - Net profit for the year 2024 was RMB 8,887,595, reflecting a 1.5% increase from RMB 8,754,457 in 2023[69] Revenue Growth - Total package volume increased to 34 billion, representing a year-on-year growth of 12.6%[10] - Total revenue for Q4 2024 was RMB 12.92 billion (USD 1.77 billion), a 21.7% increase from RMB 10.62 billion in Q4 2023, driven by a 22.4% growth in core express service revenue[19] - The core express service revenue growth was supported by a 10.3% increase in average ticket price and an 11.0% increase in package volume[19] - The direct customer business revenue grew by 275.9%, driven by an increase in high-value packages from e-commerce platforms[19] - The company expects core express service revenue to grow by 15.7%, driven by a 12.6% increase in package volume and a 2.7% rise in unit price[35] - The company expects package volume for 2025 to be between 40.8 billion and 42.2 billion, representing a year-over-year growth of 20% to 24%[55] Operating Costs and Cash Flow - Operating cash flow for the fiscal year was RMB 11.43 billion (USD 1.57 billion), down from RMB 13.36 billion in 2023[13] - Operating costs for Q4 2024 totaled RMB 9.16 billion (USD 1.25 billion), a 22.3% increase from RMB 7.49 billion in the same period last year[20] - Total operating costs increased by 14.2% to RMB 30,563.6 million (USD 4,187.2 million) from RMB 26,756.4 million[36] - The net cash flow from operating activities was RMB 11,429.4 million (USD 1,565.8 million), down from RMB 13,361.0 million last year[50] - Cash flow from operating activities was RMB 2,806.3 million (USD 384.5 million), down from RMB 3,923.3 million in the previous year[32] Dividends and Share Repurchase - The company announced a semi-annual dividend of USD 0.35 per share[9] - The company declared a cash dividend of USD 0.35 per American Depositary Share for the six months ending December 31, 2024, with a payout ratio of 40%[53] - The company has repurchased shares totaling USD 1,222.0 million, with remaining funds available for repurchase amounting to USD 778.0 million[54] Company Operations and Strategy - ZTO Express is a leading and rapidly growing express delivery company in China, operating a highly scalable network partner model to support the fast growth of e-commerce in the country[64] - The company operates a network partner model that provides collection and last-mile delivery services while offering critical trunk transportation and sorting network services[64] - The company plans to achieve a business volume growth rate exceeding the industry average by 2025, targeting an industry growth rate of around 15%[17] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[69] Risks and Forward-Looking Statements - The company relies significantly on third-party e-commerce platforms, which poses inherent risks and uncertainties[67] - The earnings call will include forward-looking statements that may involve risks, including intense competition and potential service disruptions[67] - The company is subject to various risks that could materially affect its operating performance and market share[67] Financial Metrics and Comparability - The company emphasizes the importance of comparing non-GAAP financial metrics with the most directly comparable GAAP metrics, highlighting that adjusted EBITDA and net income should not be considered in isolation[59] - ZTO Express's financial metrics may not be directly comparable to those of other companies due to different calculation methods[59] - ZTO Express encourages investors to review the company's financial information comprehensively rather than relying on a single financial metric[59] Assets and Liabilities - Total assets increased to RMB 92,340,330 in 2024, up from RMB 88,465,221 in 2023, marking a growth of 4.3%[71] - Total liabilities increased to RMB 29,665,497 in 2024, up from RMB 28,184,813 in 2023, indicating a growth of 5.3%[71] - The company’s total equity reached RMB 62,674,833 in 2024, up from RMB 60,280,408 in 2023, reflecting a growth of 4.0%[71]

Core Viewpoint - ZTO Express (Cayman) Inc. is set to release its unaudited financial results for Q4 and the fiscal year 2024 on March 18, 2025, after U.S. market close [1] Group 1: Financial Results Announcement - The unaudited financial results for the fourth quarter ended December 31, 2024, and the annual results for the fiscal year ended December 31, 2024, will be announced after the U.S. market closes on March 18, 2025 [1] - An earnings conference call will be held at 8:30 P.M. U.S. Eastern Time on March 18, 2025, which corresponds to 8:30 A.M. Beijing Time on March 19, 2025 [2] Group 2: Company Overview - ZTO Express is a leading and fast-growing express delivery company in China, providing express delivery and value-added logistics services through a reliable nationwide network [3] - The company operates a scalable network partner model to support the growth of e-commerce in China, leveraging partners for pickup and last-mile delivery while controlling the line-haul transportation and sorting network [4]

Core Insights - ZTO Express held its National Network Conference on January 9, 2025, to discuss the spirit of the 2025 National Postal Management Work Conference and outline key tasks for 2025 [1][3] - In 2024, ZTO achieved a parcel volume of 34 billion, marking a year-on-year growth of 12.6%, and maintained its position as the industry leader for the ninth consecutive year [2] - The company emphasized the integration of "quality" and "development" as central themes for 2025, focusing on safety, service enhancement, fairness, unity, execution, potential exploration, capability enhancement, and efficiency improvement [3] Company Performance - ZTO's balanced development strategy has led to significant growth in parcel volume, reinforcing its market leadership [2] - The company is committed to high-quality development and operational efficiency, enhancing brand awareness and recognition [2] Industry Outlook - The Chinese express delivery industry is characterized by vast market potential and increasing concentration, with a clear trend towards high-quality development [4] - ZTO aims to leverage its network partners to support the growth of e-commerce in China while maintaining control over critical logistics operations [6]

Core Insights - ZTO Express has experienced a significant decline in share price, falling in double digits over the past six months, underperforming its industry and competitors like C.H. Robinson Worldwide and Expeditors International [1][4] Financial Performance - ZTO updated its 2024 parcel volume guidance to a range of 33.7 billion to 33.9 billion, reflecting a year-over-year increase of 11.6% to 12.3%, down from a previous expectation of 34.73 billion to 35.64 billion, which represented a 15% to 18% increase [5] - The company's SG&A expenses rose by 25.6% year over year in 2023 and increased by 17.5% year over year in the third quarter of 2024, contributing to higher operating expenses [6] - ZTO's revenues from the core express delivery business grew by 18.1% year over year in the third quarter of 2024, driven by a 15.9% increase in parcel volume and a 1.8% rise in unit price [8] - Revenues from freight forwarding services increased by 0.8% year over year, while sales of accessories rose by 27.6% year over year [9] - ZTO's gross profit improved by 23.2% year over year, with the gross margin rate increasing to 31.2% from 29.8% in the previous year [9] Valuation - ZTO is currently trading at a discount compared to the industry based on its forward 12-month price-to-sales ratio, which is also below its median over the last five years, indicating an attractive valuation [10] Investment Outlook - Despite the attractive valuation and growth in parcel volume, the company faces headwinds that suggest it may not be the right time to buy ZTO stock, which currently holds a Zacks Rank of 3 (Hold) [12][13] - Investors are advised to monitor the company's developments for a more suitable entry point while those already invested should consider staying in the stock [13]