智通财经APP获悉，大和发布研报称，中通快递-W(02057)管理层对于快递持续涨价仍感到乐观，相信 在推行反内卷政策后，行业价格可逐步复苏。相信行业价格趋势改善可将推动重估，将其评级从"跑赢 大市"上调至"买入"，目标价也从155港元上调至180港元。 ...

Investment Rating - The report upgrades the investment rating of ZTO Express-W to "Buy" from "Accumulate" [4][7]. Core Insights - ZTO Express-W reported a revenue of 11.8 billion yuan for Q2 2025, a year-on-year increase of 10.3%, while the adjusted net profit was 2.1 billion yuan, down 26.8% year-on-year [1][4]. - For the first half of 2025, the company achieved a revenue of 22.7 billion yuan, reflecting a 9.8% year-on-year growth, with an adjusted net profit of 4.3 billion yuan, down 14.3% year-on-year [1][4]. - The adjusted net profit per ticket for Q2 2025 was 0.21 yuan, a decrease of 0.12 yuan year-on-year, while the adjusted net profit per ticket for the first half of 2025 was 0.23 yuan, down 0.09 yuan year-on-year [1][4]. - The gross margin for Q2 2025 was 24.9%, a decline of 8.9 percentage points year-on-year, and for the first half of 2025, it was 24.8%, down 7.2 percentage points year-on-year [1][4]. Summary by Sections Revenue and Profitability - The core revenue for Q2 2025 was 1.18 yuan per ticket, down 0.06 yuan year-on-year, primarily due to increased incentives and a decrease in average ticket weight [2]. - The operating cost per ticket for Q2 2025 was 0.89 yuan, an increase of 0.07 yuan year-on-year, with other costs rising by 134.9% [2]. Market Share and Guidance - The package volume for Q2 2025 was 9.85 billion pieces, a year-on-year increase of 16.5%, with a market share of 19.5%, showing a 0.6 percentage point increase quarter-on-quarter [3]. - The company has lowered its full-year package volume guidance to a range of 38.8 billion to 40.1 billion pieces, corresponding to an annual growth rate of 14.0% to 18.0% [3]. Capital Expenditure and Dividends - Capital expenditure for the first half of 2025 was 3.1 billion yuan, with expectations for 2025 to remain flat or slightly decrease [3]. - The interim dividend declared was 0.3 USD per share, with a payout ratio of 40% [3]. Earnings Forecast - The expected EPS for 2025, 2026, and 2027 are 11.10, 12.07, and 13.28 yuan per share, respectively, with corresponding P/E ratios of 12.74, 11.73, and 10.66 [4][5].

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company achieved a revenue of 118.3 billion yuan in Q2 2025, representing a year-on-year growth of 10.3%, while adjusted net profit decreased by 26.8% to 20.5 billion yuan [1][2] - The increase in revenue was driven by a 16.5% year-on-year growth in business volume, reaching 9.85 billion packages, despite a 4.7% decline in average revenue per package due to increased subsidies and lighter package weights [2] - The company has adjusted its full-year package volume growth target to 14%-18% from the previous 20%-24% due to changes in the economic and competitive landscape [3] Summary by Sections Performance Review - In Q2 2025, the company reported a revenue of 118.3 billion yuan, a 10.3% increase year-on-year, while adjusted net profit fell by 26.8% to 20.5 billion yuan [1] Operational Analysis - The revenue growth of 10.3% in Q2 was attributed to a 16.5% increase in business volume, totaling 9.85 billion packages, although the average revenue per package decreased by 4.7% [2] - The company’s market share was 19.5%, showing a slight year-on-year decline of 0.1 percentage points but an increase of 0.6 percentage points quarter-on-quarter [2] Cost Management - The core cost per package decreased by approximately 0.07 yuan, with transportation costs down by 0.06 yuan due to improved economies of scale and lower oil prices [3] - The gross margin fell by 8.9 percentage points year-on-year to 24.9%, and the adjusted net profit margin also decreased by 8.9 percentage points to 17.3% [3] Profit Forecast and Valuation - The report forecasts the company's net profit for 2025-2027 to be 9 billion yuan, 9.7 billion yuan, and 10.6 billion yuan respectively, maintaining the "Buy" rating [4]

Group 1 - The core viewpoint of the report indicates that ZTO Express's stock price has significantly lagged behind its A-share listed peers since July, primarily due to investor expectations regarding its lower sensitivity to profit from rising average express delivery prices [1] - Management remains optimistic about the continued price increases in the express delivery sector, believing that the industry's prices can gradually recover following the government's anti-involution policies [1] - In response to the slight negative impact of rising express delivery prices on package volume, the company has revised its full-year package volume growth forecast from a range of 20% to 24% down to a range of 14% to 18% [1] Group 2 - Consequently, the forecast for ZTO's earnings per share for 2025 to 2026 has been adjusted downward by 0.4% to 10% to reflect the anticipated decrease in package volume [1] - The report suggests that improvements in industry pricing trends could drive a revaluation of the company, with the rating upgraded from "outperform" to "buy" and the target price increased from 155 HKD to 180 HKD [1]

Summary of ZTO Express Conference Call Company Overview - **Company**: ZTO Express (中通快递) - **Period**: Q2 2025 Key Industry Insights - The express delivery industry experienced a **17.3% year-over-year growth** in Q2 2025, indicating robust market dynamics [2][3]. - ZTO's parcel volume grew by **16.5%**, reaching **9.85 billion parcels**, slightly below the industry average [2][3]. Financial Performance - ZTO's **adjusted net income** was **RMB 2.05 billion**, reflecting a **26.8% decrease** due to intense market competition and price declines [2][14]. - **Total revenue** increased by **10.3%** to **RMB 11.8 billion**, driven by volume growth despite a **4.7% decline** in average selling price (ASP) [14]. - **Total cost of revenue** rose to **RMB 8.9 billion**, marking a **25.1% increase** from the previous year [14]. - **Gross profit** decreased by **18.7%**, with a gross margin drop of **8.9 points** to **24.9%** [14][15]. Operational Strategies - ZTO focused on **optimizing volume structure**, which contributed **RMB 0.17** in revenue and **RMB 0.02** in gross profit per unit for the core express delivery business [2][6]. - **Digitization and intelligent operations** led to a **RMB 0.07** per unit cost reduction in transportation and sortation [2][7]. - The company is enhancing its competitive edge through: 1. Optimizing network policies and costs [8][11]. 2. Deploying automation in sorting and transportation [8]. 3. Engaging with scattered parcel customers to increase revenue [8]. 4. Strengthening digital operations for efficient resource allocation [8]. Market Trends - A shift towards **light and small parcels** was noted, with more merchants opting for economical delivery services [4]. - ZTO's retail parcel volume grew over **50% year-over-year**, now accounting for over **8%** of total volume [5]. Future Outlook - ZTO revised its annual guidance for parcel volume growth to **14% to 18%**, lower than initial expectations [15]. - The company anticipates that **pricing dynamics** and **macroeconomic uncertainties** will impact future growth [15]. - ZTO remains confident in the long-term growth prospects of China's logistics industry, emphasizing the importance of **digitalization** and **intelligent operations** [9][13]. Technological Advancements - ZTO has integrated **AI tools** across various business segments, enhancing operational efficiency and service quality [16][19]. - The implementation of a **3D digital twin model** at central hubs has reduced management personnel by one-third and decreased error rates by over **60%** [17][18]. Pricing and Competition - Recent price adjustments in the industry are viewed as a **rational return** to sustainable pricing, with the lowest price in Guangdong now at **RMB 1.40** per unit [22][32]. - The company expects a more stable pricing environment moving forward, driven by rational market behavior [23][29]. Shareholder Returns - ZTO plans to maintain robust shareholder returns, considering both dividends and share repurchases [26][28]. Conclusion - ZTO Express is navigating a competitive landscape with a focus on operational efficiency, technological integration, and strategic pricing adjustments to ensure sustainable growth and shareholder value amidst evolving market conditions [10][34].

Investment Rating - The investment rating for ZTO Express (2057.HK) is "Buy" [1] Core Views - The report highlights a significant decrease in unit costs and a downward adjustment in volume growth guidance due to changes in the economic and competitive landscape [5][6] - The company achieved a revenue of 22.723 billion yuan in H1 2025, representing a year-on-year increase of 9.8%, while the adjusted net profit was 4.312 billion yuan, down 14.3% year-on-year [2][3] Summary by Sections Operating Performance - In Q2 2025, the company handled 9.850 billion parcels, a year-on-year increase of 16.5%, maintaining a market share of approximately 19.5%, which is the highest in the industry [3] - The average revenue per parcel in Q2 2025 was 1.12 yuan, down 4.6% year-on-year, influenced by intensified industry competition and changes in cargo structure [3] - The unit cost for express delivery in Q2 2025 was approximately 0.58 yuan, a decrease of 11.0% year-on-year, with line haul costs down 15.0% and sorting costs down 5.1% [4] Volume Growth Guidance - The company has adjusted its full-year volume growth target for 2025 to 14%-18%, down from the previous 20%-24% due to the current economic and competitive environment [5] Industry Outlook - The report suggests that the express delivery industry still has growth potential, particularly with the rise of e-commerce and live-streaming sales, despite the downward trend in individual parcel values [6] - The report emphasizes the importance of monitoring the "anti-involution" policies and changes in the competitive landscape within the express delivery sector [6] Profit Forecast and Valuation - The adjusted net profit forecast for ZTO Express from 2025 to 2027 is 9.297 billion yuan, 10.881 billion yuan, and 12.782 billion yuan, with a projected year-on-year growth of -7.77%, +17.04%, and +17.48% respectively [7] - The report maintains a "Buy" rating based on the company's leading unit profitability and cash flow, alongside its scale and management advantages [8]

Core Viewpoint - The express delivery industry is currently facing intense price competition, and companies must shift from price wars to value wars by enhancing service quality to achieve sustainable growth [1][2]. Financial Performance - In Q2 2025, ZTO Express reported a package volume of 9.85 billion, a year-on-year increase of 16.5%, and a revenue of 11.83 billion yuan, up 10.3% year-on-year [1]. - Adjusted net profit for the quarter was 2.05 billion yuan, a decrease of 26.8% compared to the previous year [1]. - The company has revised its annual package volume guidance to a range of 38.8 billion to 40.1 billion packages, corresponding to a growth rate of 14.0% to 18.0% [1]. Operational Insights - The average revenue per package in the core express business decreased by 0.06 yuan, influenced by increased incentives and a decline in average package weight, although prices for key accounts rose by 0.17 yuan [2]. - As of June 30, 2025, ZTO operates 94 sorting centers and over 31,000 pickup and delivery points, with approximately 6,000 direct network partners [2]. Strategic Focus - ZTO Express emphasizes a "quality first" strategy, aiming to create differentiated products and service experiences [2]. - The company is focusing on cost reduction and efficiency improvements in the last-mile delivery segment to enhance competitiveness and profitability [2]. Industry Challenges and Opportunities - The express delivery industry is experiencing challenges from aggressive pricing strategies and the rise of instant retail, which could impact traditional delivery volumes [4][5]. - Major internet companies are increasing investments in instant retail, with the market expected to exceed 2 trillion yuan by 2030 [4]. Technological Advancements - ZTO has begun commercializing the use of unmanned vehicles in over 700 locations, deploying more than 2,000 units across over 200 cities [6]. - The company is committed to deepening the application of artificial intelligence across all business segments to enhance efficiency and reduce costs [6][7].

Investment Rating - The report maintains a "Buy" rating for ZTO Express [6][16] Core Views - The second quarter saw ZTO Express achieve a revenue of 11.832 billion yuan, a year-on-year increase of 10%, while adjusted net profit decreased by 27% [6] - The volume of parcels increased by 16.5% year-on-year, indicating a recovery in growth, but profits were pressured by price wars [6] - The report highlights a shift in the industry towards price increases amidst a competitive environment, suggesting that ZTO Express is well-positioned to benefit from this trend [6] Financial Data and Profit Forecast - Revenue projections for ZTO Express are as follows: - 2023: 38.419 billion yuan - 2024: 44.281 billion yuan - 2025E: 47.913 billion yuan - 2026E: 53.746 billion yuan - 2027E: 60.232 billion yuan - Year-on-year growth rates are projected at 9% for 2023, 15% for 2024, 8% for 2025, 12% for 2026, and 12% for 2027 [3] - Adjusted net profit forecasts are: - 2025E: 89.93 billion yuan - 2026E: 95.27 billion yuan - 2027E: 106.89 billion yuan - Corresponding PE ratios are projected at 13x for 2025, 12x for 2026, and 11x for 2027 [6][3] Market Data - As of August 20, 2025, ZTO Express's closing price was 154.70 HKD, with a market capitalization of 124.451 billion HKD [4] - The stock has experienced a 52-week high of 219.00 HKD and a low of 123.70 HKD [4]

[Interim Results Overview](index=1&type=section&id=Interim%20Results%20Overview) ZTO Express (Cayman) Inc. presents its unaudited interim consolidated results for H1 2025, prepared under U.S. GAAP and reviewed by the Audit Committee [Company Information and Reporting Standards](index=1&type=section&id=Company%20Information%20and%20Reporting%20Standards) ZTO Express (Cayman) Inc. announced its unaudited interim consolidated results for the six months ended June 30, 2025, prepared in accordance with U.S. GAAP. These results have been reviewed by the Audit Committee and the Auditor - The interim consolidated results for the six months ended June 30, 2025, are unaudited and prepared in accordance with U.S. GAAP[6](index=6&type=chunk) - The interim results have been reviewed by the Audit Committee and the Auditor (Deloitte Touche Tohmatsu) in accordance with Hong Kong Standard on Review Engagements 2410[6](index=6&type=chunk)[81](index=81&type=chunk) [Weighted Voting Rights Structure](index=1&type=section&id=Weighted%20Voting%20Rights%20Structure) The company operates under a weighted voting rights structure, where Class A ordinary shares carry one vote and Class B ordinary shares carry ten votes. American depositary shares (ADSs) represent Class A ordinary shares and are listed on the New York Stock Exchange - The company's share capital comprises Class A ordinary shares (**one vote per share**) and Class B ordinary shares (**10 votes per share**)[3](index=3&type=chunk) - American depositary shares (ADSs), each representing one Class A ordinary share, are listed on the New York Stock Exchange under the symbol ZTO[3](index=3&type=chunk) [Financial Highlights](index=2&type=section&id=Financial%20Highlights) This section provides a concise overview of ZTO Express's financial performance, key metrics, and the reconciliation of GAAP and non-GAAP measures for the reporting period [Key Financial Metrics](index=2&type=section&id=Key%20Financial%20Metrics) For the six months ended June 30, 2025, ZTO Express reported a 9.8% increase in revenues, but experienced declines in gross profit, net income, and adjusted net income, reflecting increased cost of revenues and other operational factors Key Financial Metrics (RMB in thousands) | Metric | 2024 (RMB in thousands) | 2025 (RMB in thousands) | Change (%) | | :------------------------------------------------- | :---------------------- | :---------------------- | :--------- | | Revenues | 20,685,970 | 22,723,272 | 9.8% | | Cost of revenues | (14,063,408) | (17,089,655) | 21.5% | | Gross profit | 6,622,562 | 5,633,617 | (14.9)% | | Net income | 4,061,744 | 4,003,740 | (1.4)% | | Net income attributable to ordinary shareholders | 4,037,848 | 3,931,579 | (2.6)% | | Non-GAAP Financial Measures: EBITDA | 7,034,205 | 6,913,336 | (1.7)% | | Adjusted EBITDA | 8,000,042 | 7,221,597 | (9.7)% | | Adjusted net income | 5,029,768 | 4,312,027 | (14.3)% | | Adjusted net income attributable to ordinary shareholders | 5,005,872 | 4,239,866 | (15.3)% | | Adjusted basic earnings per ADS attributable to ordinary shareholders | 6.21 | 5.31 | (14.5)% | | Adjusted diluted earnings per ADS attributable to ordinary shareholders | 6.06 | 5.18 | (14.5)% | [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and Adjusted Net Income to assess operating results and aid financial decision-making, believing these metrics offer a clearer view of underlying business trends by excluding certain non-recurring and share-based compensation expenses - **EBITDA** is defined as net income before depreciation, amortization, interest expenses, and income tax expenses[7](index=7&type=chunk) - **Adjusted EBITDA** further excludes share-based compensation expense and non-recurring items like impairment of investment in equity investees and gain/loss on disposal of equity investees and subsidiaries[8](index=8&type=chunk) - **Adjusted net income** excludes share-based compensation expense and non-recurring items, along with their corresponding tax impact[8](index=8&type=chunk) - These non-GAAP measures are used to identify underlying business trends and provide useful information for management's financial and operational decision-making[9](index=9&type=chunk)[10](index=10&type=chunk) [Reconciliation of GAAP and Non-GAAP Results](index=4&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Results) This section provides a detailed reconciliation between GAAP and non-GAAP financial measures for the six months ended June 30, 2024, and 2025, illustrating the adjustments made for items such as share-based compensation, impairment of investments, and goodwill impairment to arrive at adjusted net income and EBITDA Reconciliation of Adjusted Net Income and EBITDA (RMB in thousands) | Metric | 2024 (RMB in thousands) | 2025 (RMB in thousands) | | :---------------------------------------------------------------- | :---------------------- | :---------------------- | | Net income | 4,061,744 | 4,003,740 | | Add: Share-based compensation expense | 305,155 | 223,263 | | Add: Impairment of investment in equity investees | 672,816 | – | | Add: Impairment of goodwill | – | 84,431 | | Add: (Gain)/Loss on disposal of equity investees and subsidiaries, net of income taxes | (9,947) | 593 | | **Adjusted net income** | **5,029,768** | **4,312,027** | | **EBITDA** | **7,034,205** | **6,913,336** | | Add: Share-based compensation expense | 305,155 | 223,263 | | Add: Impairment of investment in equity investees | 672,816 | – | | Add: Impairment of goodwill | – | 84,431 | | Add: (Gain)/Loss on disposal of equity investees and subsidiaries | (12,134) | 567 | | **Adjusted EBITDA** | **8,000,042** | **7,221,597** | Reconciliation of Adjusted Net Income Attributable to Ordinary Shareholders (RMB in thousands) | Metric | 2024 (RMB in thousands) | 2025 (RMB in thousands) | | :---------------------------------------------------------------- | :---------------------- | :---------------------- | | Net income attributable to ordinary shareholders | 4,037,848 | 3,931,579 | | Add: Share-based compensation expense | 305,155 | 223,263 | | Add: Impairment of investment in equity investees | 672,816 | – | | Add: Impairment of goodwill | – | 84,431 | | Add: (Gain)/Loss on disposal of equity investees and subsidiaries, net of income taxes | (9,947) | 593 | | **Adjusted net income attributable to ordinary shareholders** | **5,005,872** | **4,239,866** | | Adjusted basic earnings per share/ADS attributable to ordinary shareholders | 6.21 | 5.31 | | Adjusted diluted earnings per share/ADS attributable to ordinary shareholders | 6.06 | 5.18 | [BUSINESS REVIEW AND OUTLOOK](index=5&type=section&id=BUSINESS%20REVIEW%20AND%20OUTLOOK) ZTO Express reviews its H1 2025 business performance, including core operations, ecosystem expansion, infrastructure, ESG efforts, and provides updated parcel volume guidance [Business Review during the Reporting Period](index=5&type=section&id=Business%20Review%20during%20the%20Reporting%20Period) In the first half of 2025, ZTO Express achieved solid financial and operating results, with revenue increasing by 9.8% to RMB22,723.3 million, primarily driven by increased express delivery demand from online consumption growth and a strategic shift towards higher-value customers, despite intense industry competition - Revenue increased by **9.8%** from **RMB20,686.0 million** in H1 2024 to **RMB22,723.3 million** in H1 2025[17](index=17&type=chunk) - The revenue increase was primarily due to increased express delivery demand driven by online consumption growth and a mix shift towards higher-value customers[17](index=17&type=chunk) [Core Express Delivery Business](index=6&type=section&id=Core%20Express%20Delivery%20Business) The core express delivery business is a substantial revenue source, primarily from network transit fees charged to network partners for parcel sorting and line-haul transportation, and direct services to enterprise customers. Pricing considers operating costs, market conditions, and service quality, with fees based on waybill amount, parcel weight, and route distance - Revenues are primarily derived from express delivery services provided to network partners (parcel sorting and line-haul transportation) and direct services to enterprise customers[18](index=18&type=chunk) - Network transit fees are based on a fixed amount per waybill and a variable amount per parcel (weight and route distance), considering operating costs, market conditions, and service quality[19](index=19&type=chunk) - Network partners have discretion over their delivery service fees to parcel senders, which have historically declined due to decreasing unit operational costs and market competition[20](index=20&type=chunk) [Ecosystem of Integrated Solutions](index=6&type=section&id=Ecosystem%20of%20Integrated%20Solutions) ZTO is expanding its service offerings beyond core express delivery to become an integrated logistics service provider, building an ecosystem that includes less-than-truckload (LTL), cross-border, warehousing, aviation, cold chain, and commerce solutions to capture diversified market demand - ZTO aims to become an **integrated logistics service provider**, expanding beyond core express delivery[21](index=21&type=chunk) - The expanded ecosystem includes LTL, cross-border, warehousing, aviation, cold chain, and commerce solutions[21](index=21&type=chunk) - This expansion enables the company to capture diversified demand, including heavy cargo and international express delivery in various regions[21](index=21&type=chunk) [Logistics Network and Infrastructure](index=6&type=section&id=Logistics%20Network%20and%20Infrastructure) ZTO operates a highly scalable network partnership model covering 99% of China, supported by continuous investment in its logistics infrastructure, including sorting hubs, automated lines, and a large self-owned line-haul truck fleet, all managed by advanced technology to enhance efficiency and capacity [Network Base](index=6&type=section&id=Network%20Base) ZTO's network base covers 99% of cities and counties in China, comprising approximately 6,000 direct network partners, over 31,000 pickup and delivery outlets, and about 110,000 last-mile posts as of June 30, 2025. The company continuously expands and supports its partners, including in rural areas, to enhance market penetration and service capabilities - As of June 30, 2025, ZTO had approximately **6,000 direct network partners**, over **31,000 pickup and delivery outlets**, and about **110,000 last-mile posts** nationwide[22](index=22&type=chunk) - The network covers **99% of cities and counties** across China[22](index=22&type=chunk) - ZTO supports network partners in expanding last-mile posts, including to countryside and rural areas, and upgrading throughput capacity[23](index=23&type=chunk) [Logistics Infrastructure](index=7&type=section&id=Logistics%20Infrastructure) As of June 30, 2025, ZTO's logistics infrastructure included 94 sorting hubs with 690 automation lines and approximately 3,900 line-haul routes serviced by over 10,000 self-owned trucks. The company continuously invests in this infrastructure to increase parcel handling capacity, manage volume surges, and improve operating efficiency through automation - As of June 30, 2025, the logistics network comprised **94 sorting hubs** with **690 automation lines**[24](index=24&type=chunk) - The network also included approximately **3,900 line-haul routes** serviced by over **10,000 self-owned line-haul trucks**, with more than **9,400 being high-capacity models**[24](index=24&type=chunk) - Continuous investment in sorting hubs and line-haul fleets, along with new technology solutions in automation, aims to increase parcel handling capacity and operating efficiency[25](index=25&type=chunk) [Technology Infrastructure](index=7&type=section&id=Technology%20Infrastructure) ZTO's self-developed Zhongtian system serves as the technology backbone, featuring hundreds of modules for operational management, network management, settlement, and finance. It utilizes proprietary algorithms for real-time monitoring, order dispatchment, and forecasting, optimizing transportation time and costs, and contributing to a decrease in combined unit cost of sorting and transportation - The self-developed and centralized Zhongtian system is the technology backbone for efficient network operations and delivery services, covering operational management, network management, settlement, and finance[26](index=26&type=chunk) - Proprietary algorithms support high-throughput processing (over **100 million orders per day**), dynamically model and predict parcel volume, and adjust resource allocation for optimal time and costs[27](index=27&type=chunk) - Continuous digitization and intelligentization of operations have contributed to a **decrease in the combined unit cost of sorting and transportation** for H1 2025 compared to H1 2024[28](index=28&type=chunk) [Environment, Social and Governance (ESG)](index=8&type=section&id=Environment,%20Social%20and%20Governance%20(ESG)) ZTO is committed to sustainable development, proactively contributing to society and the environment through initiatives like 'green' express delivery, ensuring safety, and enhancing corporate governance. The company has published annual ESG reports since 2019, detailing its progress - ZTO proactively contributes to sustainable development, focusing on 'green' express delivery, safety, economic development, and corporate governance[30](index=30&type=chunk) - The company has published annual ESG reports since 2019, available on its investor relations website[31](index=31&type=chunk) [Important Events after the Reporting Period](index=8&type=section&id=Important%20Events%20after%20the%20Reporting%20Period) No significant events affecting the Group have occurred since the end of the reporting period (June 30, 2025) up to the date of this announcement - No significant events affecting the Group have occurred since June 30, 2025, up to the date of the announcement[32](index=32&type=chunk) [Business Outlook and Guidance](index=8&type=section&id=Business%20Outlook%20and%20Guidance) ZTO remains confident in the growth prospects of China's express delivery industry, emphasizing digitization, data-driven improvements, and a service mindset. However, the company has revised down its annual parcel volume guidance for 2025 to a range of 38.8 billion to 40.1 billion, representing a 14% to 18% year-over-year increase - ZTO is confident in the growth prospects of China's express delivery industry, focusing on digitization, data-driven process improvements, and an altruistic service mindset[33](index=33&type=chunk)[34](index=34&type=chunk) - The company revised down its annual parcel volume guidance for 2025[35](index=35&type=chunk) 2025 Parcel Volume Guidance | Metric | 2025 Guidance | | :---------------- | :-------------------------------- | | Parcel volume | 38.8 billion to 40.1 billion | | YoY Increase | 14% to 18% | [MANAGEMENT DISCUSSION AND ANALYSIS](index=9&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) This section provides a detailed analysis of ZTO Express's financial performance, including revenues, costs, operating expenses, and net income, along with insights into its financial position and capital management [Revenues Analysis](index=9&type=section&id=Revenues%20Analysis) Total revenues for the six months ended June 30, 2025, increased by 9.8% to RMB22,723.3 million, primarily driven by a 10.4% growth in core express delivery services revenue, despite a decrease in freight forwarding services revenue Revenue by Source (RMB in thousands) | Revenue Source | 2024 (RMB in thousands) | 2025 (RMB in thousands) | % of 2025 revenues | | :---------------------- | :---------------------- | :---------------------- | :----------------- | | Express delivery services | 19,116,095 | 21,106,041 | 92.9 | | Freight forwarding services | 435,989 | 359,477 | 1.5 | | Sale of accessories | 1,065,484 | 1,196,066 | 5.3 | | Others | 68,402 | 61,688 | 0.3 | | **Total revenues** | **20,685,970** | **22,723,272** | **100.0** | [Core Express Delivery Business Revenue](index=9&type=section&id=Core%20Express%20Delivery%20Business%20Revenue) Revenues from the core express delivery business increased by 10.4% to RMB22,363.8 million in H1 2025, driven by a 17.7% growth in parcel volume, despite a 6.2% decrease in parcel unit price. Network transit fees constituted 74.4% of total express delivery service revenue, with KA revenue from enterprise customers increasing by 140.9% - Core express delivery business revenue increased by **10.4%** to **RMB22,363.8 million** in H1 2025[37](index=37&type=chunk) - This growth was a result of a **17.7% increase in parcel volume**, partially offset by a **6.2% decrease in parcel unit price**[37](index=37&type=chunk) - Network transit fees from network partners represented **74.4% of total express delivery services revenue**. KA revenue from enterprise customers increased by **140.9%**, driven by e-commerce return parcels[37](index=37&type=chunk) [Freight Forwarding Services Revenue](index=9&type=section&id=Freight%20Forwarding%20Services%20Revenue) Revenue from freight forwarding services, provided through China Oriental Express Co., Ltd., decreased by 17.5% in H1 2025 compared to the same period in 2024 - Revenue from freight forwarding services decreased by **17.5%** in H1 2025 compared to H1 2024[38](index=38&type=chunk) [Sale of Accessories and Others Revenue](index=9&type=section&id=Sale%20of%20Accessories%20and%20Others%20Revenue) Revenue from the sale of accessories, primarily thermal paper for digital waybills, and other revenues (mainly from financing services) collectively increased by 12.3% in H1 2025 compared to the same period in 2024 - Revenue from sale of accessories and others increased by **12.3%** in H1 2025 compared to H1 2024[39](index=39&type=chunk) - Sale of accessories largely consisted of sales of thermal paper, while other revenues were mainly derived from financing services[39](index=39&type=chunk) [Cost of Revenues Analysis](index=10&type=section&id=Cost%20of%20Revenues%20Analysis) Total cost of revenues increased by 21.5% to RMB17,089.7 million in H1 2025. This was primarily driven by a 114.2% increase in 'Other costs' related to serving higher-valued enterprise customers, despite unit cost reductions in line-haul transportation and sorting hub operations due to economies of scale and automation Cost of Revenues by Component (RMB in thousands) | Cost Component | 2024 (RMB in thousands) | 2025 (RMB in thousands) | % of 2025 revenues | | :-------------------------- | :---------------------- | :---------------------- | :----------------- | | Line-haul transportation cost | 6,654,616 | 6,774,009 | 29.8 | | Sorting hub operating cost | 4,395,871 | 4,729,435 | 20.8 | | Freight forwarding cost | 405,106 | 343,028 | 1.5 | | Cost of accessories sold | 293,140 | 284,463 | 1.3 | | Other costs | 2,314,675 | 4,958,720 | 21.8 | | **Total cost of revenues** | **14,063,408** | **17,089,655** | **75.2** | - Total cost of revenues increased by **21.5%** from **RMB14,063.4 million** in H1 2024 to **RMB17,089.7 million** in H1 2025[40](index=40&type=chunk) - Line-haul transportation unit cost decreased by **14.0% (6 cents)** due to better economies of scale, decreased fuel price, and more effective route planning[40](index=40&type=chunk) - Sorting hub operating cost per unit decreased by **7.1% (2 cents)** due to automation and standardization. Other costs increased by **114.2% (RMB2,312.3 million)** for serving higher-valued enterprise customers[40](index=40&type=chunk) [Gross Profit](index=11&type=section&id=Gross%20Profit) Gross profit decreased by 14.9% to RMB5,633.6 million for the six months ended June 30, 2025, resulting in a decline in gross profit margin to 24.8% from 32.0% in the prior year, primarily due to the higher growth rate of cost of revenues compared to revenue - Gross profit decreased by **14.9%** from **RMB6,622.6 million** in H1 2024 to **RMB5,633.6 million** in H1 2025[41](index=41&type=chunk) - Gross profit margin decreased to **24.8%** in H1 2025 from **32.0%** in H1 2024[41](index=41&type=chunk) [Operating Expenses](index=11&type=section&id=Operating%20Expenses) Total operating expenses decreased by 34.0% to RMB753.2 million in H1 2025, driven by an 8.6% reduction in selling, general and administrative expenses and a significant 74.2% increase in net other operating income, primarily from government subsidies and tax rebates [Selling, General and Administrative Expenses](index=11&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) Selling, general and administrative expenses decreased by 8.6% to RMB1,361.1 million in H1 2025, mainly due to an RMB88.7 million reduction in compensation and benefit expenses - Selling, general and administrative expenses decreased by **8.6%** to **RMB1,361.1 million** in H1 2025[43](index=43&type=chunk) - This decrease was primarily due to an **RMB88.7 million reduction** in compensation and benefit expenses[43](index=43&type=chunk) [Other Operating Income, Net](index=11&type=section&id=Other%20Operating%20Income,%20Net) Net other operating income increased significantly by 74.2% to RMB607.9 million in H1 2025, mainly comprising RMB478.6 million in government subsidies and tax rebates, and RMB96.0 million in rental and other income - Net other operating income increased by **74.2%** to **RMB607.9 million** in H1 2025[44](index=44&type=chunk) - This income mainly consisted of **RMB478.6 million in government subsidies and tax rebates**, and **RMB96.0 million in rental and other income**[44](index=44&type=chunk) [Income from Operations](index=11&type=section&id=Income%20from%20Operations) Income from operations decreased by 11.0% to RMB4,880.5 million in H1 2025, with the operating margin rate declining to 21.5% from 26.5% in the prior year, indicating a reduction in operational profitability - Income from operations decreased by **11.0%** to **RMB4,880.5 million** in H1 2025[45](index=45&type=chunk) - Operating margin rate decreased to **21.5%** from **26.5%** in H1 2024[45](index=45&type=chunk) [Other Income and Expense](index=11&type=section&id=Other%20Income%20and%20Expense) This section details changes in non-operating items for H1 2025, including decreases in interest income and expense, a lower gain from fair value changes of financial instruments, an impairment of goodwill related to China Oriental Express, and a reduced foreign currency exchange gain [Interest Income and Expense](index=11&type=section&id=Interest%20Income%20and%20Expense) Interest income decreased by 23.6% to RMB407.1 million, while interest expense decreased by 16.4% to RMB167.0 million for the six months ended June 30, 2025 - Interest income decreased by **23.6%** to **RMB407.1 million** in H1 2025[46](index=46&type=chunk) - Interest expense decreased by **16.4%** to **RMB167.0 million** in H1 2025[46](index=46&type=chunk) [Gain from Fair Value Changes of Financial Instruments](index=11&type=section&id=Gain%20from%20Fair%20Value%20Changes%20of%20Financial%20Instruments) The gain from fair value changes of financial instruments decreased to RMB33.0 million in H1 2025, compared to RMB97.6 million in the same period last year, with these gains/losses estimated by commercial banks based on market conditions - Gain from fair value changes of financial instruments was **RMB33.0 million** in H1 2025, down from **RMB97.6 million** in H1 2024[47](index=47&type=chunk) [Impairment of Goodwill](index=11&type=section&id=Impairment%20of%20Goodwill) An impairment of goodwill of RMB84.4 million was recognized in H1 2025, related to the acquisition of China Oriental Express Co., Ltd.'s freight forwarding business, as its fair value declined below its carrying amount - Impairment of goodwill of **RMB84.4 million** was recorded in H1 2025[48](index=48&type=chunk) - This impairment relates to the acquisition of China Oriental Express Co., Ltd.'s core freight forwarding business[48](index=48&type=chunk) [Foreign Currency Exchange Gain](index=12&type=section&id=Foreign%20Currency%20Exchange%20Gain) Foreign currency exchange gain decreased by 39.8% to RMB12.4 million in H1 2025, primarily due to fluctuations in foreign currency-denominated bank deposits against the Chinese Renminbi - Foreign currency exchange gain decreased by **39.8%** to **RMB12.4 million** in H1 2025[49](index=49&type=chunk) - This decrease was mainly due to the fluctuation of foreign currency-denominated bank deposits against the Chinese Renminbi[49](index=49&type=chunk) [Income Tax Expense](index=12&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by 10.1% to RMB1,107.1 million in H1 2025, with the overall income tax rate decreasing by 1.6 percentage points to 21.79%. This reduction was mainly due to non-tax-deductible impairment losses recorded in the prior year, partially offset by an increase in withholding tax on dividends - Income tax expense decreased by **10.1%** to **RMB1,107.1 million** in H1 2025[50](index=50&type=chunk) - Overall income tax rate decreased by **1.6 percentage points**, primarily due to non-tax-deductible impairment losses in H1 2024 (**RMB478.4 million** on Cainiao investment, **RMB194.5 million** on Zhejiang Yizhan investment)[50](index=50&type=chunk) - This decrease was partially offset by an **RMB112.0 million increase** in withholding tax on dividend payable to ZTO Express (Hong Kong) Limited[50](index=50&type=chunk) [Net Income](index=12&type=section&id=Net%20Income) Net income decreased by 1.4% to RMB4.0 billion for the six months ended June 30, 2025, primarily influenced by the decline in gross profit and income from operations, despite some favorable movements in operating expenses and income tax - Net income decreased by **1.4%** from **RMB4.1 billion** in H1 2024 to **RMB4.0 billion** in H1 2025[51](index=51&type=chunk) [Financial Position and Capital Management](index=12&type=section&id=Financial%20Position%20and%20Capital%20Management) ZTO maintains a strong liquidity position with substantial cash and short-term investments, a stable gearing ratio, and ongoing capital expenditures for infrastructure expansion. The company actively manages foreign exchange and interest rate risks, and has no material contingent liabilities [Future Plans for Material Investments or Capital Asset](index=12&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Asset) As of June 30, 2025, the company did not have detailed future plans for material investments or capital assets - As of June 30, 2025, the company had no detailed future plans for material investments or capital assets[52](index=52&type=chunk) [Gearing Ratio](index=12&type=section&id=Gearing%20Ratio) The gearing ratio, calculated as total liabilities divided by total assets, was 31.5% as of June 30, 2025, a slight decrease from 32.1% as of December 31, 2024 - Gearing ratio was **31.5%** as of June 30, 2025, down from **32.1%** as of December 31, 2024[53](index=53&type=chunk) [Liquidity and Capital Resources](index=12&type=section&id=Liquidity%20and%20Capital%20Resources) ZTO's primary liquidity sources are cash flows from operating and financing activities. As of June 30, 2025, the company held RMB13,291.8 million in cash and cash equivalents, RMB22.7 million in restricted cash, and RMB13,232.5 million in short-term investments. The majority of these resources are held by China-incorporated entities and denominated in Renminbi Liquid Assets (RMB in thousands) | Metric | As of June 30, 2025 (RMB in thousands) | | :-------------------------- | :----------------------------------- | | Cash and cash equivalents | 13,291,796 | | Restricted cash | 22,684 | | Short-term investment | 13,232,512 | - Approximately **83.6%** of cash, cash equivalents, restricted cash, and short-term investments were held by subsidiaries and affiliated entities incorporated in China[54](index=54&type=chunk) - Approximately **83.3%** of these liquid assets were denominated in Renminbi[54](index=54&type=chunk) - Outstanding short-term bank borrowings were **RMB11.0 billion** and long-term borrowings were **RMB180.0 million** as of June 30, 2025, with weighted average interest rates of **1.41%** and **2.76%** respectively[55](index=55&type=chunk) [Significant Investments](index=13&type=section&id=Significant%20Investments) The company did not make or hold any significant investments during the six months ended June 30, 2025 - No significant investments were made or held during the six months ended June 30, 2025[57](index=57&type=chunk) [Material Acquisitions and Disposals](index=13&type=section&id=Material%20Acquisitions%20and%20Disposals) During the reporting period, ZTO Express did not conduct any material acquisitions or disposals of subsidiaries, associates, or joint ventures - No material acquisitions or disposals of subsidiaries, associates, or joint ventures occurred during the reporting period[58](index=58&type=chunk) [Pledge of Assets](index=13&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, interest-bearing time deposits amounting to RMB3.6 billion were pledged for the issuance of bank acceptance notes - As of June 30, 2025, **RMB3.6 billion** of interest-bearing time deposits were pledged for bank acceptance notes[59](index=59&type=chunk) [Foreign Exchange Risk](index=13&type=section&id=Foreign%20Exchange%20Risk) The company's revenues, expenses, assets, and liabilities are mainly denominated in Renminbi, limiting direct foreign exchange risk. However, fluctuations between RMB and USD can impact the value of ADSs and conversion amounts for operations or dividends. As of June 30, 2025, a 10% RMB appreciation against the USD would decrease cash and equivalents by RMB397.7 million - Revenues, expenses, assets, and liabilities are mainly denominated in Renminbi, limiting direct foreign exchange risk[60](index=60&type=chunk) - The value of ADSs is affected by the exchange rate between U.S. dollar and Renminbi[60](index=60&type=chunk) - As of June 30, 2025, a **10% appreciation of Renminbi** against the U.S. dollar would result in a decrease of **RMB397.7 million** in cash and cash equivalents, restricted cash, and short-term investment[63](index=63&type=chunk) [Interest Rate Risk](index=14&type=section&id=Interest%20Rate%20Risk) Interest rate risk primarily relates to interest income from bank deposits and costs of floating rate borrowings. The company has not been, and does not expect to be, exposed to material risks from interest rate changes and has not used derivative financial instruments to manage this risk - Exposure to interest rate risk primarily relates to interest income from interest-bearing bank deposits and costs of floating rate borrowings[64](index=64&type=chunk) - The company has not been, and does not expect to be, exposed to material risks due to changes in interest rates and has not used derivative financial instruments for interest risk management[64](index=64&type=chunk) [Contingent Liabilities](index=14&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the company had no material contingent liabilities - The company had no material contingent liabilities as of June 30, 2025[65](index=65&type=chunk) [Capital Expenditures and Capital Commitment](index=14&type=section&id=Capital%20Expenditures%20and%20Capital%20Commitment) Capital expenditures for H1 2025 amounted to approximately RMB3.1 billion, primarily for property, equipment, land use rights, and fleet expansion. Capital commitments as of June 30, 2025, totaled RMB6.0 billion, mainly for construction of office buildings, sorting hubs, and warehouse facilities, to be funded by existing cash and other financing - Capital expenditures for H1 2025 were approximately **RMB3.1 billion** (H1 2024: RMB3.0 billion), for property, equipment, land use rights, and fleet/facility upgrades[66](index=66&type=chunk) - Capital commitments as of June 30, 2025, amounted to **RMB6.0 billion**, primarily for construction of office buildings, sorting hubs, and warehouse facilities[67](index=67&type=chunk) - Future capital expenditures are intended to be funded by existing cash balance and other financing alternatives[66](index=66&type=chunk) [Employees and Remuneration](index=15&type=section&id=Employees%20and%20Remuneration) As of June 30, 2025, ZTO had 23,913 employees, with total remuneration costs decreasing by 7.4% compared to H1 2024. The company offers competitive compensation, training programs, and complies with PRC statutory employee benefit plans, maintaining good working relationships and no major labor disputes - As of June 30, 2025, the company had a total of **23,913 employees**[68](index=68&type=chunk) Employee Distribution by Functional Area | Functional Area | Number of Employees | % of Total | | :-------------------------- | :------------------ | :--------- | | Sorting | 7,716 | 32.3 | | Transportation | 3,337 | 14.0 | | Management and Administration | 4,453 | 18.6 | | Operation Support & Customer Service | 6,918 | 28.9 | | Technology and Engineering | 1,080 | 4.5 | | Sales and Marketing | 409 | 1.7 | | **Total** | **23,913** | **100.0** | - Total remuneration cost of employees (excluding share-based compensation) decreased to **RMB1,590.3 million** in H1 2025 from **RMB1,717.8 million** in H1 2024[69](index=69&type=chunk) - The company participates in various PRC government statutory employee benefit plans and provides continuous training and education programs[70](index=70&type=chunk)[73](index=73&type=chunk) [CORPORATE GOVERNANCE](index=16&type=section&id=CORPORATE%20GOVERNANCE) This section details ZTO Express's adherence to corporate governance standards, including compliance with the CG Code and Model Code, and the role of its Audit Committee [Compliance with the CG Code](index=16&type=section&id=Compliance%20with%20the%20CG%20Code) The company generally complies with the Corporate Governance Code (CG Code), with a noted deviation from provision C.2.1 where Mr. Meisong LAI holds both Chairman and CEO roles. The Board believes this structure ensures consistent leadership and efficient strategic planning, and will review it as appropriate - The company has complied with all code provisions of the CG Code, save for one deviation[75](index=75&type=chunk) - Mr. Meisong LAI performs both the roles of chairperson and chief executive officer, which deviates from code provision C.2.1[76](index=76&type=chunk) - The Board believes this combined role ensures consistent leadership and effective strategic planning, and will review the structure if and when appropriate[76](index=76&type=chunk)[77](index=77&type=chunk) [Compliance with the Model Code](index=16&type=section&id=Compliance%20with%20the%20Model%20Code) The company has adopted a Code for Dealings in Securities by Management, with terms no less exacting than the Model Code. All Directors and relevant employees confirmed compliance with this code during the reporting period - The company adopted a Code for Dealings in Securities by Management, with terms no less exacting than the Model Code[78](index=78&type=chunk) - All Directors and relevant employees confirmed compliance with the Code and Model Code during the reporting period[79](index=79&type=chunk) [Audit Committee](index=17&type=section&id=Audit%20Committee) The Audit Committee, composed of independent non-executive and non-executive Directors, reviewed the unaudited interim results, accounting policies, internal controls, and financial reporting. Mr. Herman YU serves as the chairman and qualifies as an 'audit committee financial expert' - The Audit Committee consists of two independent non-executive Directors (Mr. Herman YU, Mr. Qin Charles HUANG) and one non-executive Director (Mr. Xing LIU)[80](index=80&type=chunk) - Mr. Herman YU is the chairman of the Audit Committee and qualifies as an 'audit committee financial expert'[80](index=80&type=chunk) - The Audit Committee reviewed the unaudited condensed consolidated interim results for H1 2025, discussed accounting policies, internal control, and financial reporting with management and the independent auditor[81](index=81&type=chunk) [OTHER INFORMATION](index=18&type=section&id=OTHER%20INFORMATION) This section covers ZTO Express's share repurchase activities and the declaration of interim dividends for the reporting period [Purchase, Sale or Redemption of the Company's Listed Securities](index=18&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During H1 2025, the company repurchased 352,791 ADSs on the NYSE for an aggregate consideration of US$6,341,912.13, which have since been cancelled. No other listed securities were purchased, sold, or redeemed by the company or its subsidiaries - The company repurchased **352,791 ADSs** on the NYSE during H1 2025[82](index=82&type=chunk) - The aggregate consideration for these repurchases was **US$6,341,912.13** (before expense)[82](index=82&type=chunk) - All repurchased shares have been cancelled as of the announcement date[82](index=82&type=chunk) [Interim Dividend](index=18&type=section&id=Interim%20Dividend) The Board approved an interim dividend of US$0.30 per ADS and ordinary share for the six months ended June 30, 2025, representing a 40% dividend payout ratio. The payment date is expected to be October 24, 2025, for ordinary shareholders and October 31, 2025, for ADS holders - The Board approved an interim dividend of **US$0.30 per ADS and ordinary share** for H1 2025[84](index=84&type=chunk) - This dividend payment represents a **40% dividend payout ratio**[84](index=84&type=chunk) - The payment date is expected to be **October 24, 2025**, for ordinary shareholders and **October 31, 2025**, for ADS holders[84](index=84&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=19&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of comprehensive income, changes in shareholders' equity, and cash flows for the reporting period [UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS](index=19&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The unaudited condensed consolidated balance sheets show the company's financial position as of December 31, 2024, and June 30, 2025, detailing assets, liabilities, and equity. Total assets increased to RMB94,620.8 million, while total liabilities slightly increased to RMB29,765.0 million Unaudited Condensed Consolidated Balance Sheets (RMB in thousands) | Metric | As of Dec 31, 2024 (RMB in thousands) | As of Jun 30, 2025 (RMB in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Total current assets | 30,353,721 | 34,520,605 | | Total assets | 92,340,330 | 94,620,760 | | Total current liabilities | 28,273,235 | 28,454,751 | | Total liabilities | 29,665,497 | 29,764,954 | | ZTO Express (Cayman) Inc. shareholders' equity | 62,062,392 | 64,197,609 | | Total Equity | 62,674,833 | 64,855,806 | [UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](index=21&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) The unaudited condensed consolidated statements of comprehensive income for H1 2025 show total revenues of RMB22,723.3 million, gross profit of RMB5,633.6 million, and net income of RMB4,003.7 million. Comprehensive income increased to RMB4,054.3 million Unaudited Condensed Consolidated Statements of Comprehensive Income (RMB in thousands) | Metric | Six months ended June 30, 2024 (RMB in thousands) | Six months ended June 30, 2025 (RMB in thousands) | | :---------------------------------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Revenues | 20,685,970 | 22,723,272 | | Cost of revenues | (14,063,408) | (17,089,655) | | Gross profit | 6,622,562 | 5,633,617 | | Income from operations | 5,481,898 | 4,880,462 | | Income before income tax and share of gain in equity method investments | 5,272,687 | 5,080,953 | | Income tax expense | (1,231,316) | (1,107,105) | | Net income | 4,061,744 | 4,003,740 | | Net income attributable to ordinary shareholders | 4,037,848 | 3,931,579 | | Basic earnings per share | 5.01 | 4.92 | | Diluted earnings per share | 4.90 | 4.81 | | Comprehensive income | 3,944,184 | 4,054,272 | | Comprehensive income attributable to ZTO Express (Cayman) Inc. | 3,920,288 | 3,982,111 | [UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY](index=23&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY) The unaudited condensed consolidated statements of changes in shareholders' equity for H1 2024 and H1 2025 detail movements in equity components, including net income, foreign currency translation adjustments, share-based compensation, share repurchases, and dividend distributions. Total equity increased to RMB64,855.8 million as of June 30, 2025 Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity (RMB in thousands) | Metric | As of Jan 1, 2025 (RMB in thousands) | As of Jun 30, 2025 (RMB in thousands) | | :------------------------------------------------ | :----------------------------------- | :----------------------------------- | | Ordinary shares (outstanding) | 798,622,719 | 799,752,637 | | Additional paid-in capital | 24,389,905 | 24,358,069 | | Treasury shares, at cost | (1,131,895) | (271,027) | | Retained earnings | 39,098,553 | 40,354,210 | | Accumulated other comprehensive (loss)/income | (294,694) | (244,162) | | ZTO Express (Cayman) Inc. shareholders' equity | 62,062,392 | 64,197,609 | | Non-controlling interests | 612,441 | 658,197 | | **Total Equity** | **62,674,833** | **64,855,806** | - Key movements in H1 2025 include net income of **RMB3,931.6 million**, foreign currency translation adjustments of **RMB50.5 million**, share-based compensation of **RMB223.3 million**, and dividend distribution of **RMB2,023.6 million**[92](index=92&type=chunk) [UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=25&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The unaudited condensed consolidated statements of cash flows for H1 2025 show net cash provided by operating activities of RMB4,531.2 million, net cash used in investing activities of RMB4,322.0 million, and net cash used in financing activities of RMB378.8 million. Cash, cash equivalents, and restricted cash at period-end increased to RMB13,329.1 million Unaudited Condensed Consolidated Statements of Cash Flows (RMB in thousands) | Cash Flow Activity | Six months ended June 30, 2024 (RMB in thousands) | Six months ended June 30, 2025 (RMB in thousands) | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | | Net cash provided by operating activities | 5,511,115 | 4,531,184 | | Net cash used in investing activities | (7,044,941) | (4,321,982) | | Net cash used in financing activities | (973,492) | (378,804) | | Effect of exchange rate changes | 35,077 | (32,266) | | Net change in cash, cash equivalents and restricted cash | (2,472,241) | (201,868) | | Cash, cash equivalents and restricted cash at end of period | 10,579,069 | 13,329,079 | - Purchases of property and equipment were **RMB2,925.6 million** in H1 2025[93](index=93&type=chunk) - Proceeds from short-term borrowings were **RMB10,486.3 million**, and repayment of short-term borrowings was **RMB8,945.8 million** in H1 2025[93](index=93&type=chunk) [NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=27&type=section&id=NOTES%20TO%20THE%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering organization, significant accounting policies, and specific financial statement line items [1. ORGANIZATION AND PRINCIPAL ACTIVITIES](index=27&type=section&id=1.%20ORGANIZATION%20AND%20PRINCIPAL%20ACTIVITIES) ZTO Express (Cayman) Inc. and its Group are primarily engaged in express delivery services in the People's Republic of China through a nationwide network partner model - The Group is principally engaged in express delivery services in the PRC through a nationwide network partner model[99](index=99&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=27&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the significant accounting policies applied in preparing the condensed consolidated financial statements, including adherence to U.S. GAAP for interim reporting, principles of consolidation for subsidiaries and VIEs, use of management estimates, convenience translation rates, revenue recognition details, income tax accounting, and earnings per share calculation methods [Basis of presentation](index=27&type=section&id=Basis%20of%20presentation) The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, condensing or omitting certain disclosures consistent with Regulation S-X. They should be read in conjunction with the audited consolidated financial statements for the preceding fiscal year - Financial statements are prepared in accordance with U.S. GAAP for interim financial information[100](index=100&type=chunk) - Certain information and note disclosures are condensed or omitted consistent with Article 10 of Regulation S-X[100](index=100&type=chunk) [Principles of consolidation](index=27&type=section&id=Principles%20of%20consolidation) The condensed consolidated financial statements include the Company, its subsidiaries, and Variable Interest Entities (VIEs) where the Group is the primary beneficiary. All intercompany transactions and balances are eliminated upon consolidation - The consolidated financial statements include the Company, its subsidiaries, and VIEs[101](index=101&type=chunk) - The Group consolidates VIEs where it is the primary beneficiary, considering power to direct activities and obligation/right to absorb losses/benefits[102](index=102&type=chunk) [Use of estimates](index=28&type=section&id=Use%20of%20estimates) The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, which are based on historical experience and other relevant factors, and actual results may differ - Management makes estimates and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses[105](index=105&type=chunk) [Convenience translation](index=28&type=section&id=Convenience%20translation) For convenience, RMB amounts are translated into U.S. dollars using the noon buying rate of US$1.00 = RMB7.1636 as of June 30, 2025. This translation is solely for readers outside the PRC and does not imply convertibility at this rate - RMB amounts are translated into U.S. dollars at a rate of **US$1.00 = RMB7.1636** as of June 30, 2025, for convenience[106](index=106&type=chunk) - This translation does not represent that RMB amounts could have been, or could be, converted, realized, or settled into US$ at that rate[106](index=106&type=chunk) [Revenue recognition](index=28&type=section&id=Revenue%20recognition) Revenue is disaggregated into express delivery services (92.9% of total), freight forwarding services (1.5%), sale of accessories (5.3%), and others (0.3%) for H1 2025. Contract assets and liabilities, including unbilled receivables and advance payments, were not material Revenue Disaggregation (RMB) | Revenue Source | 2024 (RMB) | % (2024) | 2025 (RMB) | % (2025) | | :---------------------- | :--------- | :------- | :--------- | :------- | | Express delivery services | 19,116,095 | 92.4 | 21,106,041 | 92.9 | | Freight forwarding services | 435,989 | 2.1 | 359,477 | 1.5 | | Sale of accessories | 1,065,484 | 5.2 | 1,196,066 | 5.3 | | Others | 68,402 | 0.3 | 61,688 | 0.3 | | **Total revenues** | **20,685,970** | **100.0** | **22,723,272** | **100.0** | - Contract assets (unbilled receivables) and contract liabilities (advance payments, deferred revenue) were not material as of December 31, 2024, and June 30, 2025[108](index=108&type=chunk) [Income taxes](index=28&type=section&id=Income%20taxes) Income taxes are accounted for using the asset and liability method, recognizing deferred income taxes for temporary differences. Tax benefits from uncertain positions are recognized only if more likely than not to be sustained. An estimated annual effective tax rate (AETR) is applied to year-to-date ordinary income for interim tax provisions - Income taxes are accounted for using the asset and liability method, recognizing deferred income taxes for temporary differences[109](index=109&type=chunk) - Tax benefits from uncertain tax positions are recognized only if it is more likely than not that the position will be sustained upon examination[109](index=109&type=chunk) - An estimated annual effective tax rate (AETR) is determined and applied to year-to-date ordinary income for interim tax provisions[110](index=110&type=chunk) [Earnings per share](index=29&type=section&id=Earnings%20per%20share) Basic earnings per share are calculated by dividing income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding. Diluted earnings per share reflect potential dilution from convertible securities, with anti-dilutive effects excluded. The dual-class share structure (Class A and Class B) does not impact EPS calculation as both classes have the same dividend rights - Basic EPS is computed by dividing income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding[111](index=111&type=chunk) - Diluted EPS reflects potential dilution from securities convertible into ordinary shares, such as convertible senior notes[112](index=112&type=chunk) - The dual-class share structure (Class A and Class B) has no impact on EPS calculation as both classes are entitled to the same dividend right[113](index=113&type=chunk) [3. ACCOUNTS RECEIVABLE, NET](index=29&type=section&id=3.%20ACCOUNTS%20RECEIVABLE,%20NET) Net accounts receivable decreased to RMB1,395.6 million as of June 30, 2025, from RMB1,503.7 million as of December 31, 2024. The majority of receivables (RMB1,319.4 million) were within 6 months old Accounts Receivable, Net (RMB in thousands) | Metric | As of Dec 31, 2024 (RMB in thousands) | As of Jun 30, 2025 (RMB in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Accounts receivable, gross | 1,539,338 | 1,422,210 | | Less: Allowance for credit losses | (35,632) | (26,585) | | **Total** | **1,503,706** | **1,395,625** | Accounts Receivable Aging Analysis (RMB in thousands) | Aging Analysis | As of Dec 31, 2024 (RMB in thousands) | As of Jun 30, 2025 (RMB in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Within 6 months | 1,366,198 | 1,319,417 | | Between 6 months and 1 year | 49,799 | 12,137 | | Between 1 year and 2 years | 48,687 | 25,404 | | More than 2 years | 74,654 | 65,252 | [4. PROPERTY AND EQUIPMENT, NET](index=30&type=section&id=4.%20PROPERTY%20AND%20EQUIPMENT,%20NET) Net property and equipment increased to RMB34,861.8 million as of June 30, 2025, from RMB33,915.4 million as of December 31, 2024. This includes increases in buildings and machinery, with depreciation expenses of RMB1,635.5 million for H1 2025 Property and Equipment, Net (RMB in thousands) | Component | As of Dec 31, 2024 (RMB in thousands) | As of Jun 30, 2025 (RMB in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Buildings | 24,774,679 | 27,381,238 | | Machinery and equipment | 10,006,532 | 10,422,093 | | Vehicles | 5,544,713 | 5,521,588 | | Construction in progress | 4,649,302 | 3,792,710 | | Total | 47,179,925 | 49,427,231 | | Accumulated depreciation | (13,236,644) | (14,549,504) | | Impairment | (27,915) | (15,956) | | **Property and equipment, net** | **33,915,366** | **34,861,771** | - Depreciation expenses were **RMB1,635.5 million** for H1 2025 (H1 2024: RMB1,473.0 million)[116](index=116&type=chunk) - No impairment charges related to property and equipment were recorded for H1 2025 (H1 2024: RMB22.6 million)[117](index=117&type=chunk) [5. ACCOUNTS PAYABLE](index=30&type=section&id=5.%20ACCOUNTS%20PAYABLE) Total accounts payable slightly decreased to RMB2,415.7 million as of June 30, 2025, from RMB2,463.4 million as of December 31, 2024. The majority of accounts payable (RMB2,403.1 million) were within 6 months old Accounts Payable Aging Analysis (RMB in thousands) | Aging Analysis | As of Dec 31, 2024 (RMB in thousands) | As of Jun 30, 2025 (RMB in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Within 6 months | 2,448,751 | 2,403,058 | | Between 6 months and 1 year | 9,154 | 8,068 | | Between 1 year and 2 years | 2,840 | 2,530 | | More than 2 years | 2,650 | 2,015 | | **Total** | **2,463,395** | **2,415,671** | [6. INCOME TAX](index=31&type=section&id=6.%20INCOME%20TAX) Income tax expense decreased to RMB1,107.1 million in H1 2025, with the effective tax rate declining to 21.79% from 23.35% in H1 2024. This change was influenced by a decrease in deferred tax and the absence of certain non-tax-deductible impairment losses present in the prior year Income Tax Components (RMB in thousands) | Component | Six months ended June 30, 2024 (RMB in thousands) | Six months ended June 30, 2025 (RMB in thousands) | | :------------------ | :------------------------------------------------ | :------------------------------------------------ | | Current tax expenses | 1,319,902 | 1,427,696 | | Deferred tax | (88,586) | (320,591) | | **Total** | **1,231,316** | **1,107,105** | - The Group's effective tax rate for H1 2025 was **21.79%**, down from **23.35%** in H1 2024[120](index=120&type=chunk) [7. SHARE-BASED COMPENSATION](index=31&type=section&id=7.%20SHARE-BASED%20COMPENSATION) ZTO's share-based compensation includes an Employee Share Holding Platform and the 2024 Share Incentive Plan. In H1 2025, the company granted ordinary share units and restricted share units, incurring RMB149.4 million and RMB66.1 million in compensation expenses, respectively. Share options were also granted under the 2024 Plan, with RMB7.8 million in related expenses [Employee Share Holding Platform](index=31&type=section&id=Employee%20Share%20Holding%20Platform) The Share Holding Platform, established in June 2016, uses ZTO ES and LLPs to grant indirect economic interests in ordinary shares to employees. In March 2025, 5,138,560 ordinary share units (corresponding to 1,027,712 ordinary shares) were granted, resulting in RMB149.4 million in share-based compensation expense - The Share Holding Platform was established in June 2016, using ZTO ES and LLPs to grant indirect economic interests in ordinary shares to employees[121](index=121&type=chunk)[122](index=122&type=chunk) - In March 2025, **5,138,560 ordinary share units** (corresponding to **1,027,712 ordinary shares**) were granted to officers and employees[123](index=123&type=chunk) - Share-based compensation of **RMB149.4 million** was recorded for H1 2025 based on the market price of **US$20.05 per ordinary share** at grant date[123](index=123&type=chunk) [2016 Share Incentive Plan](index=32&type=section&id=2016%20Share%20Incentive%20Plan) The 2016 Share Incentive Plan, approved in June 2016, was terminated in 2024, with no outstanding awards as of December 31, 2024 - The 2016 Share Incentive Plan was terminated in 2024, with no outstanding awards as of December 31, 2024[124](index=124&type=chunk) [2024 Share Incentive Plan](index=32&type=section&id=2024%20Share%20Incentive%20Plan) The 2024 Share Incentive Plan was approved in March 2024, authorizing the grant of up to 30,000,000 Class A ordinary shares to directors, employees, and consultants - The 2024 Share Incentive Plan was approved in March 2024[125](index=125&type=chunk) - The maximum number of shares underlying awards is **30,000,000 Class A ordinary shares**[125](index=125&type=chunk) [Restricted Share Units](index=32&type=section&id=Restricted%20Share%20Units) In March 2025, 454,997 Restricted Share Units (RSUs) were granted under the 2024 Share Incentive Plan, vesting immediately upon grant. This resulted in a share-based compensation expense of RMB66.1 million for H1 2025 - In March 2025, **454,997 RSUs** were granted under the 2024 Share Incentive Plan, vesting immediately[127](index=127&type=chunk) - Share-based compensation of **RMB66.1 million** was recorded for H1 2025 based on a market price of **US$20.05 per ordinary share**[127](index=127&type=chunk) [Share Options](index=32&type=section&id=Share%20Options) On March 22, 2024, 916,200 share options were granted under the 2024 Share Incentive Plan with an exercise price of US$21.88 and a 10-year contractual term, vesting over three anniversary dates. As of June 30, 2025, 886,248 options remained outstanding, with RMB7.8 million in compensation expense for H1 2025 - On March 22, 2024, **916,200 share options** were granted under the 2024 Share Incentive Plan, with an exercise price of **US$21.88** and a **10-year contractual term**[128](index=128&type=chunk) - The options vest **33%, 33%, and 34%** on each of three anniversary dates from the grant date[128](index=128&type=chunk) Share Options Activity | Metric | As of Jan 1, 2025 | As of Jun 30, 2025 | | :-------------------------------- | :---------------- | :---------------- | | Share options outstanding | 916,200 | 886,248 | | Share options exercisable | - | 292,462 | | Weighted Average Exercise Price (US$) | 21.88 | 21.88 | | Weighted Average Remaining Contractual Life (Years) | 9.23 | 8.67 | - Total share-based compensation expenses relating to these options was **RMB7,774** for H1 2025 (H1 2024: RMB9,024)[130](index=130&type=chunk) [8. EARNINGS PER SHARE](index=34&type=section&id=8.%20EARNINGS%20PER%20SHARE) Basic earnings per share for H1 2025 was RMB4.92, and diluted earnings per share was RMB4.81. The calculation includes adjustments for the dilutive effect of convertible senior notes, while anti-dilutive share options are excluded Earnings Per Share (RMB) | Metric | Six months ended June 30, 2024 (RMB) | Six months ended June 30, 2025 (RMB) | | :------------------------------------------------ | :----------------------------------- | :----------------------------------- | | Net income attributable to ordinary shareholders – basic | 4,037,848 | 3,931,579 | | Plus: Interest expense of convertible senior notes | 74,977 | 75,927 | | Net income attributable to ordinary shareholders – diluted | 4,112,825 | 4,007,506 | | Weighted average ordinary shares outstanding – basic | 805,806,731 | 799,123,030 | | Plus: Dilutive effect of convertible senior notes | 33,029,400 | 34,237,800 | | Weighted average ordinary shares outstanding – diluted | 838,836,131 | 833,360,830 | | **Earnings per share – basic** | **5.01** | **4.92** | | **Earnings per share – diluted** | **4.90** | **4.81** | - **3,941,928** and **2,914,216 ordinary shares** transferred to ZTO ES were considered issued but not outstanding and excluded from EPS calculation for H1 2024 and H1 2025, respectively[132](index=132&type=chunk) - **886,248 share options** were excluded from diluted EPS computation for H1 2025 as their effects would have been anti-dilutive[133](index=133&type=chunk) [9. RELATED PARTY TRANSACTIONS](index=34&type=section&id=9.%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions and balances with related parties, including revenues, cost of revenues, other operating income, and amounts due to/from. Key related parties include Shanghai Mingyu Barcode Technology Ltd. and various ZTO equity investees. Amounts due to related parties decreased to RMB131.3 million, while amounts due from related parties (current and non-current) also decreased Related Party Transactions (RMB in thousands) | Transaction Type | Six months ended June 30, 2024 (RMB in thousands) | Six months ended June 30, 2025 (RMB in thousands) | | :---------------------------------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Revenues from related parties | 111,354 | 222,316 | | Cost of revenues paid to related parties | 608,562 | 647,473 | | Other operating income from related parties | 68,639 | 58,200 | | Other income from related parties | 15,573 | 9,399 | Related Party Balances (RMB in thousands) | Balance Type | As of Dec 31, 2024 (RMB in thousands) | As of Jun 30, 2025 (RMB in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Amounts due to related parties | 202,766 | 131,294 | | Amounts due from related parties (current) | 168,160 | 85,585 | | Amounts due from related parties (non-current) | 421,667 | 366,917 | - Trade related amounts due to and from related parties are normally settled within one year[137](index=137&type=chunk)[139](index=139&type=chunk) [10. REPURCHASE OF ORDINARY SHARES](index=37&type=section&id=10.%20REPURCHASE%20OF%20ORDINARY%20SHARES) The Board approved a share repurchase program in November 2018, subsequently modified to US$2.0 billion and extended through June 30, 2025. As of that date, the company had repurchased 50,899,498 ADSs at an average price of US$24.13 under this program - The share repurchase program was approved in November 2018, with the latest modification increasing the aggregate value to **US$2.0 billion** and extending it through June 30, 2025[140](index=140&type=chunk) - As of June 30, 2025, the company had purchased **50,899,498 ADSs** at an average price of **US$24.13** under the program[140](index=140&type=chunk) [11. DIVIDENDS](index=37&type=section&id=11.%20DIVIDENDS) The Board approved an interim dividend of US$0.30 per ordinary share for H1 2025, totaling US$239,926 (RMB1,718,732). This follows previous dividend approvals for H2 2024 (US$0.35 per share) and H1 2024 (US$0.35 per share) - On August 19, 2025, an interim dividend of **US$0.30 per ordinary share** (aggregate **US$239,926** or **RMB1,718,732**) was approved for H1 2025[142](index=142&type=chunk) - A cash dividend of **US$0.35 per ordinary share** (aggregate **US$279,913** or **RMB2,023,602**) was approved on March 18, 2025, for H2 2024[142](index=142&type=chunk) - An interim dividend of **US$0.35 per ordinary share** (aggregate **US$282,239** or **RMB2,012,929**) was approved on August 20, 2024, for H1 2024[141](index=141&type=chunk) [PUBLICATION OF THE INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT](index=38&type=section&id=PUBLICATION%20OF%20THE%20INTERIM%20RESULTS%20ANNOUNCEMENT%20AND%20INTERIM%20REPORT) This section outlines the publication details for the interim results announcement and the forthcoming full interim report on the Hong Kong Stock Exchange and company websites [Publication of Interim Results Announcement and Interim Report](index=38&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement is published on the websites of the Hong Kong Stock Exchange and the Company. The full interim report for the six months ended June 30, 2025, will be available on the same websites in due course - The interim results announcement is published on the Hong Kong Stock Exchange and the Company's websites[145](index=145&type=chunk) - The interim report for H1 2025 will be made available on the same websites in due course[145](index=145&type=chunk) [DEFINITIONS](index=38&type=section&id=DEFINITIONS) This section provides a comprehensive glossary of key terms and expressions used throughout the interim results announcement, ensuring clarity and consistent understanding of co

Group 1 - The research service "Asia Value & Moat Stocks" targets value investors looking for Asia-listed stocks with significant discrepancies between price and intrinsic value, focusing on deep value balance sheet bargains and wide moat stocks [1][2] - ZTO Express (NYSE: ZTO) is currently rated as a Hold, considering both its earnings miss and favorable regulatory developments [1] Group 2 - The author of the investing group provides investment ideas specifically for the Hong Kong market, emphasizing deep value balance sheet bargains and wide moat stocks, along with monthly updates on watch lists [2]