Investment Rating - The investment rating for the company is "Buy" (maintained) [2][3]. Core Views - In Q1 2024, the company adjusted its strategy to focus more on profitability and service quality, resulting in a slight decline in market share but a profit growth that slightly exceeded expectations [3][5]. - The company completed a business volume of 7.27 billion pieces in Q1, representing a year-on-year growth of 13.9%, with a market share of 19.3%, down by 1.9 percentage points [5]. - The adjusted net profit for Q1 was 22.2 billion yuan, a year-on-year increase of 15.8%, despite a reported net profit of 14.5 billion yuan, which was a 13% decline due to a 4.8 billion yuan impairment from Alibaba's acquisition of Cainiao shares [5]. Financial Performance Summary - Revenue projections for the company are as follows: - 2024E: 49.252 billion yuan - 2025E: 53.942 billion yuan - Revenue growth rates are expected to be 11% in 2024 and 15% in 2025 [3]. - The net profit forecast is: - 2024E: 12.228 billion yuan - 2025E: 13.384 billion yuan - Net profit growth rates are projected at 10.5% for 2024 and 26.5% for 2025 [3]. - The diluted earnings per share (EPS) are expected to be: - 2024E: 14.79 yuan - 2025E: 16.18 yuan [3]. - The price-to-earnings (P/E) ratio is projected to decrease from 20.9 in 2022 to 10.6 in 2026, indicating an attractive valuation [3]. Strategic Initiatives - The company is focusing on enhancing its profitability and service quality while strategically relinquishing some loss-making business segments [5]. - The average daily volume of the company's parcel business reached 5 million pieces, with expectations for rapid growth in this segment due to improved service quality [5]. - The company is also increasing its dividend payout and share buyback amounts, which is expected to enhance shareholder returns [5].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 201.76 CNY (217.80 HKD) based on a 16x PE for 2024 [5][8]. Core Insights - In Q1 2024, the company achieved an operating revenue of 9.96 billion CNY, a year-on-year increase of 10.9%, while the net profit was 1.45 billion CNY, a decrease of 13.0%. However, the adjusted net profit rose to 2.22 billion CNY, reflecting a 15.8% year-on-year growth, indicating high-quality earnings growth [1]. - The company's express delivery volume reached 7.17 billion pieces in Q1 2024, marking a 13.9% year-on-year increase, with a market share of 19.3%, down 4.1 percentage points year-on-year due to a strategic adjustment in the volume structure to reduce low-priced loss-making items [2]. - The company implemented strict cost control, resulting in a decrease in per-piece sorting and transportation costs by 0.06 CNY to 0.94 CNY, a decline of 5.3%. The per-piece gross profit increased by 0.02 CNY to 0.42 CNY, with a gross margin of 31.0%, up 2.0 percentage points year-on-year [3]. - The adjusted net profit per piece was 0.31 CNY, a 1.7% year-on-year increase, indicating a steady improvement in profitability. The company expects the industry growth rate for 2024 to be between 15% and 20%, with its package volume projected to be between 34.73 billion and 35.64 billion pieces, reflecting a growth rate of 15% to 18% [4]. Financial Forecasts - The company is projected to achieve operating revenues of 43.96 billion CNY, 49.37 billion CNY, and 54.54 billion CNY for 2024, 2025, and 2026, respectively, with growth rates of 14.43%, 12.29%, and 10.48%. The net profit attributable to shareholders is expected to be 10.25 billion CNY, 11.83 billion CNY, and 13.54 billion CNY for the same years, with year-on-year growth rates of 17.12%, 15.42%, and 14.50% [5][6].

Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057) [1] Core Views - ZTO Express has achieved healthy operations with a further increase in profit market share year-on-year [1] - The company focuses on maintaining a cost reduction strategy within price competition, achieving stable growth in both volume and profit [5][9] - The company has opted not to engage in loss-making businesses, which has led to an increase in profit market share despite a slight decline in volume share [6][9] Financial Performance Summary - In Q1 2024, ZTO Express reported revenue of 9.96 billion yuan, a year-on-year increase of 10.87%, with core express service revenue reaching 9.24 billion yuan, up 10.15% [4] - The gross profit for Q1 2024 was 3.00 billion yuan, reflecting a year-on-year growth of 19%, while the adjusted net profit was 2.22 billion yuan, up 15.85% [4] - The company completed a business volume of 7.171 billion parcels in Q1 2024, marking a year-on-year increase of 13.88%, with a market share of 19.32%, down 4.10 percentage points year-on-year [4] Cost and Profitability Analysis - The adjusted net profit per parcel in Q1 2024 was 0.31 yuan, a year-on-year increase of 1.73% [5] - The average revenue per parcel (excluding freight forwarding) was 1.36 yuan, down 2.53% year-on-year, while the average cost per parcel was 0.94 yuan, down 5.30% year-on-year [5] - The gross margin (excluding freight forwarding) improved by 2.03 percentage points to 30.62% [5] Strategic Initiatives - ZTO Express is enhancing service quality and product differentiation to break through homogeneous low-price competition [8] - The company has established over 110,000 end-point stores nationwide, which helps reduce delivery costs and improve operational flexibility [9] - The ongoing focus on balancing volume, quality, and profit is expected to support sustainable growth and enhance competitive advantages [9] Earnings Forecast - The projected revenues for ZTO Express from 2024 to 2026 are 42.976 billion yuan, 48.431 billion yuan, and 54.556 billion yuan, respectively [10] - The expected net profits for the same period are 10.077 billion yuan, 11.805 billion yuan, and 14.485 billion yuan, respectively [10] - The corresponding P/E ratios for 2024 to 2026 are estimated at 13.73, 11.72, and 9.55 [10]

Investment Rating - The report maintains a "Strong Buy" rating for ZTO Express (02057.HK) [5][6] Core Views - ZTO Express achieved a business volume of 7.17 billion parcels in Q1 2024, a year-on-year increase of 13.9%, while its market share decreased from 21.2% to 19.3% [5][6] - The company continues to avoid loss-making parcels, resulting in a stable single-ticket revenue despite a decline in market share [5][6] - The company’s adjusted net profit for Q1 2024 was 2.224 billion yuan, reflecting a year-on-year growth of 15.8% [5][6] - The report anticipates a gradual recovery in market share in the second half of the year as price competition is expected to ease [6] Summary by Sections Company Overview - ZTO Express is a large group company integrating express delivery, logistics, e-commerce, and printing services, providing nationwide delivery and value-added services [2] Financial Performance - In Q1 2024, ZTO Express's single-ticket cost decreased to 0.94 yuan, down 0.06 yuan year-on-year, while single-ticket profit increased from 0.30 yuan to 0.31 yuan [5][6] - The company’s revenue for 2024 is projected to be 43.31 billion yuan, with a growth rate of 12.74% [7] - The net profit for 2024 is expected to reach 10.20 billion yuan, with a growth rate of 16.60% [7] Market Position - The report notes that ZTO Express's decision to refrain from participating in the price war for low-cost parcels has led to a lower growth rate compared to the industry average, but it has also helped maintain higher profitability [5][6] - The competitive landscape is characterized by aggressive pricing in the low-cost segment, which has pressured the income of franchisees and couriers [6] Future Outlook - The report suggests that if the price war subsides, ZTO Express's profitability and stock price could see significant upward potential [6] - The company is expected to maintain a balanced strategy focusing on service quality, business scale, and profitability [6]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 210.31 HKD per share and 26.54 USD per share [2][4]. Core Insights - The company reported a revenue of 9.96 billion RMB for Q1 2024, representing a year-on-year increase of 10.9%. The net profit attributable to shareholders was 1.448 billion RMB, down 13.0% year-on-year, while the adjusted net profit was 2.224 billion RMB, up 15.8% year-on-year. The total business volume reached 7.171 billion pieces, an increase of 13.9% year-on-year [1][4]. - The strategic focus has shifted towards enhancing service quality while maintaining reasonable business scale and profitability. In Q1 2024, the company achieved a better single-package profit level, with an adjusted profit per package of 0.31 RMB, an increase of 0.01 RMB year-on-year and 0.06 RMB quarter-on-quarter [1][4]. - The supply-demand environment is improving, with a forecasted business volume growth of 15%-18% for the year. The company’s capital expenditure decreased by 26.5% year-on-year in Q1 2024, indicating a continued reduction in scale [1][4]. Financial Summary - Revenue projections for 2024-2026 are 44.004 billion RMB, 49.424 billion RMB, and 54.317 billion RMB, respectively, with growth rates of 15%, 12%, and 10% [4]. - The expected EPS for 2024-2026 is 12.73 RMB, 14.89 RMB, and 17.42 RMB, respectively, with corresponding PE ratios of 13.46, 11.51, and 9.83 [4]. - The return on equity (ROE) is projected to increase from 15.86% in 2024 to 17.98% in 2026 [4].

Investment Rating - The investment rating for ZTO Express (2057.HK) is "Buy" with a maintained rating [4][12]. Core Insights - The company reported an adjusted net profit of 0.30 CNY per ticket, indicating an improvement in profitability [7]. - ZTO Express achieved a revenue of 99.6 billion CNY in Q1 2024, representing a year-on-year growth of 10.9%, while the net profit was 14.5 billion CNY, a decrease of 13.0% year-on-year, primarily due to a one-time impact from the sale of Cainiao shares [7][8]. - The company’s package volume reached 7.17 billion pieces in Q1 2024, reflecting a year-on-year increase of 13.9% [7]. Financial Data and Valuation - Revenue projections for ZTO Express are as follows: - 2023A: 38,419 million CNY - 2024E: 44,526 million CNY - 2025E: 50,234 million CNY - 2026E: 56,105 million CNY - The net profit forecasts are: - 2023A: 8,749 million CNY - 2024E: 10,542 million CNY - 2025E: 12,109 million CNY - 2026E: 13,963 million CNY - The company’s earnings per share (EPS) are projected to grow from 10.76 CNY in 2024 to 17.18 CNY in 2026 [6][8]. Cost and Profitability Analysis - The average revenue per ticket for the express business in Q1 2024 was 1.29 CNY, down 3.3% year-on-year, while the adjusted net profit per ticket was 0.31 CNY, up 1.7% year-on-year [7]. - The company maintained a healthy profit growth despite a slight decline in market share, focusing on quality and effective competition [7]. - The operating cash flow for Q1 2024 was 20 billion CNY, with capital expenditures of 17 billion CNY [7].

Investment Rating - The investment rating for the company is "Buy" [5][2] Core Views - The company achieved a revenue of 9.96 billion yuan in Q1 2024, representing a year-on-year growth of 10.9%. However, net profit decreased by 14.6% to 1.43 billion yuan, while adjusted net profit increased by 15.8% to 2.22 billion yuan [1][7] - The company maintained a price strategy focused on profitability, leading to a business volume of 7.171 billion pieces, which grew by 13.9% year-on-year but lagged behind industry peers [1][7] - The average price per delivery decreased by 2.5% year-on-year, a significant improvement from a decline of 18.2% in the previous quarter [1][7] - The company optimized its operating costs, with transportation and transfer costs per piece decreasing by 7.0% and 5.4% respectively, contributing to a stable profit margin [1][9] Summary by Sections Financial Performance - Q1 2024 revenue was 9.96 billion yuan, up 10.9% year-on-year - Q1 2024 net profit was 1.43 billion yuan, down 14.6% year-on-year - Adjusted net profit for Q1 2024 was 2.22 billion yuan, up 15.8% year-on-year [1][7] Business Volume and Pricing - Business volume reached 7.171 billion pieces, growing 13.9% year-on-year but underperforming compared to industry growth rates - The company’s market share decreased compared to the previous year but remains higher than competitors [1][7] Cost Management - The average transportation cost per piece was 0.47 yuan, down 7.0% year-on-year, while transfer costs were 0.30 yuan, down 5.4% year-on-year - The gross profit per piece for core express services was 0.42 yuan, showing an increase from previous periods [1][9] Capital Expenditure - Capital expenditure for Q1 2024 was 1.69 billion yuan, significantly lower than 2.3 billion yuan in the same period last year, indicating a peak in capital spending has passed [1][9]

Investment Rating - The report maintains a "BUY" rating for ZTO Express with a target price of US$38.50, indicating an upside potential of 80% from the current price of US$21.39 [2][5]. Core Insights - ZTO Express has shifted its strategic focus to a profitable growth strategy in 1Q24, achieving a core net profit of RMB1.9 billion, which is a 23% year-over-year increase and represents 19% of the full-year forecast [2][3]. - The company aims for a parcel volume growth target of 15-18% for 2024, consistent with previous guidance, despite a higher industry growth forecast of 15-20% [2][3]. - ZTO's earnings growth is supported by a 10% year-over-year revenue increase, a 2.1 percentage point expansion in gross margin to 30.1%, and a significant increase in net finance income [3][5]. Financial Performance Summary - **1Q24 Results**: Core net profit increased by 23% YoY to RMB1.9 billion, while reported net income decreased by 15% YoY to RMB1.4 billion due to an impairment of RMB478 million [3][8]. - **Revenue Growth**: Total revenue for 1Q24 was RMB9.96 billion, reflecting a 10.9% increase YoY [8]. - **Parcel Volume**: Parcel volume grew by 14% YoY to 7.2 billion units, which is below the industry average growth of 25% [3][8]. - **Cost Management**: Unit cost decreased by 5% YoY to RMB0.94 per parcel, with transportation costs down by 7% YoY [3][8]. - **Earnings Forecast**: The earnings forecast remains unchanged, with adjusted net profit expected to reach RMB9.74 billion for FY24, reflecting an 11.4% growth YoY [5][17]. Key Financial Metrics - **Revenue Projections**: Revenue is projected to grow from RMB38.42 billion in FY23 to RMB43.87 billion in FY24, representing a 14.2% growth [5][17]. - **Earnings Per Share (EPS)**: Reported EPS is expected to be RMB11.67 for FY24, with a YoY growth of 11.4% [5][17]. - **Price-to-Earnings Ratio (P/E)**: The P/E ratio is projected to be 13.2x for FY24, which is in line with historical averages [5][17]. - **Dividend Yield**: The expected dividend yield for FY24 is 3.0% [5][17].

M N 16 May 2024 CMB International Global Markets | Equity Research | Company Update ZTO Express (2057 HK) 1Q24 core earnings beat estimates; Shifted to profitable growth strategy Target Price HK$303.00 ZTO Express (ZTO) shifted the strategic focus to profitable growth in 1Q24, Up/Downside 74.5% enabling it to deliver core net profit of RMB1.9bn (+23% YoY), representing 19% Current Price HK$173.60 of our full-year forecast (run rate in 1Q23: 17.6%), which is better than our expectation. Looking forward, ZTO ...

Investment Rating - The report assigns a "Buy" rating to ZTO Express [2] Core Views - ZTO Express is the leading player in China's e-commerce express delivery sector, achieving a revenue of HKD 38.419 billion in 2023, with express services accounting for HKD 35.488 billion (92.4% of total revenue) [5][11] - The company completed a total of 30.202 billion express deliveries in 2023, representing a year-on-year growth of 23.8% and a market share of 22.9% [5][11] - The report anticipates a compound annual growth rate (CAGR) of 17.1% for express delivery volumes from 2024 to 2026, driven by the continued optimization of online channel costs and the growth of e-commerce penetration [5][51] Company Overview - ZTO Express has maintained its position as the top express delivery service provider in China since 2016, with a consistent market share in delivery volumes [5][11] - The company's revenue has shown a compound annual growth rate (CAGR) of 18.5% from 2017 to 2023, with express delivery volumes growing at a CAGR of 30.1% during the same period [15] Industry Dynamics - The report highlights that the core driver of the industry is online consumption, which continues to grow as online channels optimize their costs [5][33] - The efficiency of online channels is expected to replace less efficient offline distribution channels, leading to an increase in e-commerce penetration [51] Financial Forecasts and Investment Recommendations - Revenue projections for ZTO Express from 2024 to 2026 are estimated at HKD 43.084 billion, HKD 47.989 billion, and HKD 53.065 billion, respectively [5][106] - The net profit attributable to shareholders is forecasted to be HKD 10.256 billion, HKD 11.481 billion, and HKD 12.866 billion for the same period, with corresponding earnings per share (EPS) of HKD 12.62, HKD 14.12, and HKD 15.83 [5][106] - The report emphasizes that ZTO Express is transitioning from operational leadership to shareholder return leadership, with significant cash dividends and stock buyback plans in place [19][100]