Investment Rating - Maintain "Overweight" rating [2][7][9] Core Views - Balanced growth in revenue and profit driven by rapid growth in scattered and reverse parcels [2][8] - Optimized unit costs through efficient route planning and improved loading rates [3][8] - Market share increased to 20.0% in 2024Q3, up 0.4 percentage points sequentially [3][9] Financial Performance - 2024Q3 revenue reached RMB 10.7 billion, up 17.6% YoY [2][8] - Express service revenue grew 18.1% YoY, accounting for 91.9% of total revenue [2][8] - Freight forwarding and material sales grew 0.8% and 27.6% YoY respectively [2][8] - 2024Q3 net profit reached RMB 2.38 billion, up 1.3% YoY [3][8] - 2024Q3 gross margin improved to 31.2%, up 1.4 percentage points YoY [3][8] - Operating margin slightly decreased to 26.6%, down 0.1 percentage points YoY [3][8] Operational Highlights - Parcel volume in 2024Q3 reached 8.72 billion, up 15.9% YoY [2][8] - Unit transportation cost decreased by 9.7% YoY [3][8] - Unit sorting center operating cost decreased by 6.4% YoY [3][8] - Direct customer business revenue (including delivery fees) surged 122.1% YoY [2][8] - Scattered parcels grew over 40% YoY [2][8] Market Data - Closing price (HKD): 151.9 [4] - Total shares outstanding: 810 million [4] - Market capitalization: HKD 123.1 billion [4] - Net assets attributable to parent company: RMB 60.6 billion [4] - Total assets: RMB 93.3 billion [4] - Net asset per share: RMB 74.8 [4] Financial Projections - 2024E revenue: RMB 43.24 billion, up 12.5% YoY [6] - 2024E net profit attributable to parent: RMB 9.503 billion, up 8.6% YoY [6][7] - 2025E net profit attributable to parent: RMB 11.124 billion, up 17.1% YoY [6][7] - 2026E net profit attributable to parent: RMB 12.519 billion, up 12.5% YoY [6][7] - 2024E-2026E EPS: RMB 11.88/13.91/15.66 [6]

Investment Rating - The report maintains a "Buy" rating for ZTO Express-W (02057) [4][6] Core Views - ZTO Express released its Q3 2024 results with revenue of RMB 10.675 billion, up 17.6% YoY, and adjusted net profit of RMB 2.39 billion, up 2.0% YoY [4] - The company's performance was slightly below expectations due to intense price competition during the off-season and strategic adjustments [4] - ZTO Express is shifting its strategy to prioritize market share, focusing on network policy optimization, enhancing network confidence, and accelerating scale advantages [5] - The company's cost structure improved, with single-ticket sorting costs decreasing by RMB 0.02 to RMB 0.25 and single-ticket transportation costs decreasing by RMB 0.04 to RMB 0.39 [5] - The report revised downward the company's profit forecasts for 2024-2026, with adjusted net profit expected to be RMB 10.104 billion, RMB 11.067 billion, and RMB 12.686 billion, respectively [6] Financial Performance and Forecasts - ZTO Express's business volume in Q3 2024 was 8.723 billion parcels, up 15.9% YoY, but lower than the industry average of 20.1% [5] - The company's single-ticket revenue increased by 2.6% YoY, driven by higher-value parcels and growth in direct customer business [5] - Revenue for 2024E is projected at RMB 42.704 billion, with an 11% YoY growth, while adjusted net profit is expected to grow 12% YoY to RMB 10.104 billion [6][8] - The company's market share is expected to decline slightly from 22.9% in 2023 to 21.3% in 2024E [11] - ZTO Express's PE ratio for 2024E is 11x, compared to the industry average of 15x, indicating potential upside [6] Strategic Adjustments and Market Position - ZTO Express is focusing on expanding its high-quality customer base through its parcel business, leveraging e-commerce platforms and reverse logistics partnerships [5] - The company is optimizing its cost structure through facility upgrades and standardization reforms, which have contributed to a core cost reduction of RMB 0.06 per ticket [5] - ZTO Express's strategy to regain market share includes stabilizing network policies, enhancing network confidence, and ensuring reasonable profitability [5]

Core Insights - ZTO Express has been under scrutiny due to the ongoing price war in China's express delivery industry, which has created challenges for the company and the sector as a whole [1]. Company Overview - ZTO Express is a key player in the Chinese express delivery market, and its performance is closely tied to the competitive dynamics within the industry [1]. Industry Context - The express delivery industry in China is currently experiencing a price war, which is impacting profitability and operational strategies for companies involved [1].

Investment Rating - The report maintains a "Strong Buy" rating for ZTO Express (02057.HK) [6][10]. Core Insights - ZTO Express reported a business volume of 8.723 billion pieces in Q3 2024, representing a year-on-year growth of 15.9%, although its market share decreased by 0.7 percentage points to 20.0% [1]. - The company adjusted its annual business volume guidance for 2024 to between 33.7 billion and 33.9 billion pieces, with a projected Q4 volume of 9.35 to 9.55 billion pieces, indicating a growth rate of 7.5% to 9.8% [1]. - The increase in low-value e-commerce packages poses challenges to the company's strategy of achieving synchronized growth in service quality, business volume, and profits [1]. Summary by Sections Business Performance - In Q3, ZTO's single-package revenue was CNY 1.19, up 1.9% year-on-year, driven by an increase in direct customer revenue, particularly in the parcel business, which saw over 40% growth [2]. - The company’s single-package core cost decreased by approximately CNY 0.06 year-on-year, with transportation costs down 9.7% and sorting costs down 6.4% [2]. Profitability Metrics - The gross margin improved by 1.4 percentage points year-on-year to 31.2% in Q3, attributed to revenue growth and cost optimization [3]. - However, the net profit margin slightly declined due to increased operating expenses and tax fees [3]. Financial Forecast and Valuation - The report forecasts ZTO's net profit for 2024-2026 to be CNY 93.83 billion, CNY 117.18 billion, and CNY 133.70 billion, respectively, with corresponding P/E ratios of 12.5X, 10.0X, and 8.8X [3][7]. - ZTO's strong brand recognition and customer satisfaction allow it to maintain a premium on revenue, avoiding the pitfalls of industry cost competition [3].

Investment Rating - The investment rating for ZTO Express is "Buy" [1] Core Views - ZTO Express reported a package volume of 8.723 billion in Q3 2024, representing a year-on-year growth of 15.9% [1] - The adjusted net profit for Q3 2024 was 2.387 billion, showing a year-on-year increase of 2.0% [1] - The company aims to maintain high-quality service and customer satisfaction while regaining market share and expanding its leading position in package volume [1] Summary by Relevant Sections Package Volume - In Q3 2024, ZTO Express achieved a package volume of 8.723 billion, with a year-on-year growth of 15.9% [1] - The company expects to guide its total package volume to 33.7 billion for the year, reflecting a year-on-year increase of 11.6% [1] Pricing and Revenue - The core revenue per package (excluding freight forwarding) was 1.20 yuan, with a year-on-year increase of 1.83% [1] - The single-package core cost decreased by 0.06 yuan year-on-year, benefiting from economies of scale and operational efficiencies [1] Profitability - The adjusted net profit per package was 0.28 yuan, showing a year-on-year decline, primarily due to a tax refund received in Q3 2023 [1] - The company maintained a healthy operating cash flow per package at 0.36 yuan, despite a year-on-year decrease of 8.7% [1] Financial Forecasts - The projected net profit for the years 2024 to 2026 is expected to be 10.204 billion, 10.971 billion, and 12.521 billion respectively, with year-on-year growth rates of 16.63%, 7.52%, and 14.13% [2] - The expected revenue for 2024 is 43.179 billion, with a year-on-year growth rate of 12.39% [2] Market Outlook - The express delivery industry continues to have growth potential, with ZTO Express expected to steadily increase its market share [1] - The expansion of e-commerce and the rise of live-streaming commerce are anticipated to drive further growth in package volumes [1]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 183.64 HKD for the Hong Kong stock and 23.59 USD for the US stock, based on a 15x PE valuation for 2024 [6][4]. Core Insights - The company reported a revenue of 31.36 billion RMB for the first three quarters of 2024, representing a year-over-year increase of 12.8%. The net profit attributable to shareholders was 6.43 billion RMB, down 1.9% year-over-year, while the adjusted net profit increased by 9.2% to 7.42 billion RMB [2][3]. - In Q3 2024, the company achieved a revenue of 10.68 billion RMB, up 17.6% year-over-year, with a net profit of 2.40 billion RMB, reflecting a 2.2% increase year-over-year [2][3]. - The total business volume for the first three quarters reached 24.346 billion packages, a 13.3% increase year-over-year, with Q3 alone accounting for 8.723 billion packages, up 16.0% year-over-year [2][3]. Financial Performance Summary - The company's gross profit maintained a robust growth of 23.2% year-over-year in Q3, driven by improved service quality and customer satisfaction. The core revenue per package increased by 1.8%, despite a decline of 11.8% in industry average package prices [3]. - The company has optimized its business structure, leading to improved revenue and operating profit margins. However, the ongoing trend of smaller package sizes poses challenges to balancing service quality, volume, and overall profitability [3]. - The company plans to rebalance resource allocation and pricing strategies to regain business volume growth and enhance market share [3]. Earnings Forecast - The expected EPS for 2024, 2025, and 2026 are 11.31 RMB, 13.06 RMB, and 14.66 RMB respectively, with projected revenue growth rates of 12%, 14%, and 10% for the same years [4][5].

Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057.HK) [1] Core Views - ZTO Express reported a revenue of 31.36 billion yuan for the first three quarters of 2024, representing a year-on-year increase of 12.8%. The net profit for the same period was 6.44 billion yuan, a slight decline of 1.6% year-on-year. In Q3 2024, the company achieved a revenue of 10.68 billion yuan, with a year-on-year growth of 17.6%, and a net profit of 2.38 billion yuan, up 1.3% year-on-year [1] - The customer structure continues to optimize, leading to an increase in revenue per package. In Q3 2024, the revenue per package was 1.20 yuan, a year-on-year increase of 1.8%, driven by an increase in direct customer revenue [1] - The company has adjusted its full-year package volume growth forecast to between 11.6% and 12.3%, corresponding to 33.7 billion to 33.9 billion packages, due to current market conditions [1] Summary by Sections Performance Overview - For Q1-Q3 2024, ZTO Express achieved a revenue of 31.36 billion yuan, a 12.8% increase year-on-year, and a net profit of 6.44 billion yuan, down 1.6% year-on-year. Q3 2024 revenue was 10.68 billion yuan, up 17.6% year-on-year, with a net profit of 2.38 billion yuan, up 1.3% year-on-year [1] Operational Analysis - The company saw a 15.9% year-on-year increase in business volume in Q3 2024, reaching 8.72 billion packages. The market share decreased by 0.7 percentage points to 20% year-on-year but increased by 0.4 percentage points quarter-on-quarter [1] - The cost per package remained stable at 0.82 yuan, with transportation costs decreasing to 0.39 yuan and transfer costs to 0.25 yuan, contributing to a gross margin increase of 1.4 percentage points to 31.2% [1] Profit Forecast and Valuation - The net profit forecasts for 2024-2026 have been revised down to 9.5 billion yuan, 11.5 billion yuan, and 13.1 billion yuan, respectively, from previous estimates of 10.5 billion yuan, 12.1 billion yuan, and 13.6 billion yuan. The "Buy" rating is maintained despite these adjustments [1]

Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057.HK) [1] Core Views - ZTO Express reported a revenue of 31.36 billion yuan for the first three quarters of 2024, representing a year-on-year growth of 12.8%, while net profit decreased by 1.6% to 6.44 billion yuan. In Q3 2024, revenue reached 10.68 billion yuan, up 17.6% year-on-year, with net profit of 2.38 billion yuan, a 1.3% increase [1] - The company continues to optimize its customer structure, leading to an increase in average revenue per package. In Q3 2024, the average revenue per package was 1.20 yuan, up 1.8% year-on-year, driven by a higher proportion of direct customer revenue [1] - The company has adjusted its full-year package volume growth forecast to between 11.6% and 12.3%, corresponding to 33.7 billion to 33.9 billion packages, due to current market conditions [1] Summary by Sections Performance Overview - For Q1-Q3 2024, ZTO Express achieved a revenue of 31.36 billion yuan, a 12.8% increase year-on-year, and a net profit of 6.44 billion yuan, down 1.6%. Q3 alone saw revenue of 10.68 billion yuan, up 17.6%, and net profit of 2.38 billion yuan, up 1.3% [1] Operational Analysis - The company’s package volume reached 8.72 billion in Q3 2024, a 15.9% year-on-year increase, although market share slightly declined by 0.7 percentage points to 20% [1] - The cost per package remained stable at 0.82 yuan, with transportation costs decreasing to 0.39 yuan and transfer costs to 0.25 yuan, contributing to a gross margin increase of 1.4 percentage points to 31.2% [1] Profit Forecast and Valuation - The net profit forecasts for 2024-2026 have been revised down to 9.5 billion yuan, 11.5 billion yuan, and 13.1 billion yuan respectively, from previous estimates of 10.5 billion yuan, 12.1 billion yuan, and 13.6 billion yuan [1]

Company Performance - ZTO Express reported third-quarter 2024 earnings of 41 cents per share, showing improvement year over year [1] - Total revenues reached $1.52 billion, reflecting a year-over-year increase [3] - Gross profit improved by 23.2% compared to the same quarter last year, with gross margin rising to 31.2% from 29.8% [5] Operational Statistics - Revenues from the core express delivery business increased by 18.1% year over year, driven by a 15.9% growth in parcel volume and a 1.8% rise in unit price [4] - KA revenues surged by 122.1%, attributed to a higher proportion of valuable parcels, including returns from e-commerce platforms [4] - Revenues from freight forwarding services grew by 0.8%, while accessory sales, primarily thermal paper for digital waybills, climbed by 27.6% year over year [5] Expenses and Cash Position - Total operating expenses amounted to RMB493.0 million (approximately $70.3 million), up from RMB282.8 million in the previous year [6] - ZTO Express ended the third quarter of 2024 with cash and cash equivalents of RMB11.70 billion, an increase from RMB10.54 billion at the end of the prior quarter [6] Guidance - ZTO Express updated its 2024 parcel volume guidance to a range of 33.7 billion to 33.9 billion, representing an increase of 11.6% to 12.3% year over year [7] - The previous guidance anticipated parcel volumes between 34.73 billion and 35.64 billion, indicating a projected increase of 15% to 18% year over year [7] Market Position - ZTO Express currently holds a Zacks Rank of 4 (Sell) [8]

Financial Performance - Total revenues for Q3 2024 were RMB10,675.0 million (US$1,521.2 million), an increase of 17.6% from RMB9,075.9 million in Q3 2023[3] - Adjusted net income grew 2.0% to RMB2,387.3 million (US$340.2 million) compared to RMB2,340.7 million in the same period last year[3] - Gross profit rose 23.2% to RMB3,334.8 million (US$475.2 million), with a gross margin improvement to 31.2% from 29.8%[12] - Net income for the period was RMB2,379.0 million (US$339.0 million), reflecting a year-over-year increase of 1.3% from RMB2,349.6 million[18] - Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB2.98 (US$0.42) and RMB2.90 (US$0.41), compared to RMB2.91 and RMB2.84 in the same period last year, representing increases of 2.4% and 2.1% respectively[19] - EBITDA increased to RMB3,731.3 million (US$531.7 million), compared to RMB3,449.5 million in the same period last year, marking an increase of approximately 8.2%[21] - Adjusted net income rose to RMB2,387.3 million (US$340.2 million), up from RMB2,340.7 million during the same period last year[20] - Adjusted EBITDA was RMB3,729.5 million (US$532.8 million), compared to RMB3,438.6 million in the same period last year, reflecting an increase of approximately 8.5%[22] Operational Metrics - Parcel volume increased by 15.9% year over year to 8.72 billion parcels[4] - The number of pickup/delivery outlets exceeded 31,000 as of September 30, 2024[4] - The express delivery industry experienced high growth despite soft macroeconomic conditions, prompting the company to adjust annual volume targets[6] - The core express average selling price (ASP) increased by 1.8% due to improved key account mix[6] Cash Flow and Liquidity - Cash generated from operating activities was RMB3,112.0 million (US$443.5 million), up from RMB2,938.1 million in Q3 2023[3] - Net cash provided by operating activities was RMB3,112.0 million (US$443.5 million), an increase from RMB2,938.1 million in the same period last year[22] - Cash and cash equivalents decreased to RMB11,703,151 as of September 30, 2024, from RMB12,333,884 as of December 31, 2023, a decline of 5.1%[37] - The total cash, cash equivalents, and restricted cash as of September 30, 2024, amounted to RMB11,747,744, compared to RMB10,108,507 in the previous year, indicating a strong liquidity position[39] - The company’s net cash provided by financing activities significantly decreased from RMB2,529,988 in the three months ended September 30, 2023, to RMB10,183 in 2024, a decline of 99.6%[38] Assets and Liabilities - Total current assets increased to RMB30,156,630 as of September 30, 2024, compared to RMB26,953,548 as of December 31, 2023, reflecting a growth of 8.1%[37] - Total assets reached RMB93,320,033 as of September 30, 2024, up from RMB88,465,221 as of December 31, 2023, indicating a growth of 5.5%[37] - Total liabilities increased to RMB32,197,962 as of September 30, 2024, compared to RMB28,184,813 as of December 31, 2023, representing a rise of 14.3%[37] - The company’s total equity increased to RMB61,122,071 as of September 30, 2024, from RMB60,280,408 as of December 31, 2023, indicating a growth of 1.4%[37] Tax and Other Income - The company received an income tax refund of RMB207.1 million for being a "Key Software Enterprise" for the tax year 2022[18] Year-over-Year Comparisons - Revenues for the three months ended September 30, 2023, were RMB9,075,918, representing a year-over-year increase of 17.6% compared to RMB10,675,048 for the same period in 2024[36] - Gross profit for the nine months ended September 30, 2023, was RMB8,534,277, up 16.7% from RMB9,957,373 in 2024[36] - Net income attributable to ZTO Express (Cayman) Inc. for the three months ended September 30, 2023, was RMB2,345,158, a slight increase from RMB2,396,297 in 2024[36] - Net cash used in investing activities decreased significantly from RMB4,025,760 in the three months ended September 30, 2023, to RMB1,910,131 in 2024, indicating a reduction of 52.6%[38] - Net income for the three months ended September 30, 2023, was RMB2,349,610, slightly increasing to RMB2,379,042 in 2024, representing a growth of 1.3%[40] - Adjusted net income attributable to ordinary shareholders for the three months ended September 30, 2023, was RMB2,336,292, rising to RMB2,404,506 in 2024, an increase of 2.9%[41] - EBITDA for the three months ended September 30, 2023, was RMB3,449,483, increasing to RMB3,731,315 in 2024, which is a growth of 8.2%[40] - The company reported a diluted net earnings per share of RMB2.84 for the three months ended September 30, 2024, compared to RMB2.90 in the previous year, reflecting a decrease of 2.1%[43] - Net earnings per share (diluted) for the nine months ended September 30, 2023, was RMB7.94, compared to RMB7.80 in 2024, showing a slight increase[36] - Weighted average shares used in calculating net earnings per share for the three months ended September 30, 2024, were 838,131,679, compared to 838,290,093 in the previous year, showing a slight decrease[41]