Summary of China Best Business Models Version 2 Conference Call Industry Overview - The conference focuses on the **China Equity Strategy**, specifically the launch of **China Best Business Models Version 2** by Morgan Stanley, which identifies 26 companies in China with sustainable competitive advantages [1][2]. Core Insights and Arguments - **Identification of Best Business Models**: The framework aims to identify publicly listed Chinese companies with superior return on equity (ROE) and valuation premiums, which are expected to generate sustainable medium-term alpha despite market volatility [3]. - **Performance Metrics**: The identified stocks offer an ROE that is **1.5 times higher** than the benchmark, with a back-tested **3-year Sharpe Ratio of 1.2** [1][8]. - **Portfolio Construction**: The portfolio consists of **26 high-quality companies** across **16 industry groups**, designed to deliver superior risk-adjusted returns and profitability [5][40]. - **Historical Performance**: The portfolio has demonstrated a **101% total return since 2023**, outperforming the MSCI China index by **83%** over the same period [8][33]. Methodology Enhancements - **AI Adaptability**: The framework incorporates AI exposure as a key stock selection criterion, focusing on companies that are AI enablers or adopters while avoiding those at risk from AI disruption [4]. - **Global Thematic Alignment**: The portfolio aligns with four global themes: **AI & Tech Diffusion, Future of Energy, Multipolar World, and Societal Shifts** [4]. - **Sector Allocation**: A proactive approach to sector allocation emphasizes long-term growth trajectories and policy support, resulting in a higher representation of **Materials, Industrials, and Information Technology** compared to the MSCI China index [4]. Key Statistics - **Portfolio Composition**: The portfolio includes a **19% weight** in Information Technology, **19% in Industrials**, and **12% in Materials** [8]. - **Valuation Metrics**: The portfolio exhibits a forward P/E of **14.4x** and a price-to-book ratio of **2.5x**, indicating attractive valuation metrics [8]. - **Market Capitalization**: The median market capitalization of the companies in the portfolio is **US$26 billion**, with a range from **US$587 billion** (Tencent Holdings Ltd.) to **US$4 billion** (Insilico Medicine) [40]. Additional Insights - **Analyst Ratings**: Of the 26 companies, **24 are rated Overweight** and **2 are rated Equal-weight** relative to their industry coverage, indicating strong analyst confidence in these selections [40]. - **Upside Potential**: On average, there is a **37.9% upside** to Morgan Stanley analysts' price targets, with a median upside of **36.7%** [40]. - **Risk-Adjusted Returns**: The portfolio is designed to generate sustainable earnings growth with resilience across market cycles, supported by superior risk-adjusted returns [8]. This summary encapsulates the key points from the conference call regarding the China Best Business Models Version 2, highlighting the strategic focus on quality, profitability, and valuation metrics in the context of the evolving Chinese equity market.

公 司 研 究 中通快递-W（02057.HK）： Q4 市场份额重回 增长，现金回购与提升分红优化股东回报 事件：公司发布 2025 年报，公司全年完成业务量 385.2 亿件，同比增长 13.3%， 其中 Q4 完成业务量 105.6 亿件同比增长 9.2%。公司全年实现调整后净利润 95.1 亿，同比下降 6.3%，其中 Q4 实现调整后净利润 26.9 亿，同比下降 1.4%。 Q4 件量增速跑赢行业均值，26 年业务量指引同比增长 10%-13%：25 年 Q4 公司业务量增速为 9.2%，高于行业均值的 5.0%，市场份额从 25 年同期的 18.8%提升至 19.6%，这是公司 23 年 Q1 以来首次实现单季度市场份额同比 提升。23 年初到 25 年上半年，行业价格竞争烈度逐渐加剧，以价换量现象严 重，而公司坚持量价均衡提升的策略，件量增速一度落后于行业均值，但随着 25 年下半年反内卷政策持续发力，行业以价换量现象受到遏制，公司在服务 质量层面的优势重新凸显，市场份额同比回升。 业务量指引方面，公司预计 2026 年全年包裹量在 423.7-435.2 亿件，对应同 比增长约 10%-13 ...

Investment Rating - The report maintains a "Strong Buy" rating for ZTO Express (02057.HK) [5] Core Insights - ZTO Express achieved a total business volume of 38.52 billion packages in 2025, representing a year-on-year growth of 13.3%. In Q4 alone, the business volume reached 10.56 billion packages, up 9.2% year-on-year [1] - The adjusted net profit for the entire year was 9.51 billion, a decline of 6.3% compared to the previous year, while Q4 adjusted net profit was 2.69 billion, down 1.4% year-on-year [1] - The company’s market share increased from 18.8% in the same period last year to 19.6%, marking the first quarterly year-on-year increase since Q1 2023 [1] - ZTO Express expects a package volume of 42.37 to 43.52 billion for 2026, indicating a year-on-year growth of approximately 10%-13% [2] - The average revenue per package in Q4 was 1.35 RMB, an increase of 0.04 RMB year-on-year and 0.14 RMB quarter-on-quarter, driven by a reduction in price competition and growth in the parcel business [2] - The core cost per package decreased by 0.04 RMB year-on-year, with transportation costs dropping from 0.40 RMB to 0.37 RMB and sorting costs from 0.27 RMB to 0.26 RMB [3] - The company has increased its dividend payout ratio from 40% to 50% starting in 2026 and has approved a stock buyback plan of 1.5 billion USD over two years [3] Financial Forecast and Valuation - The projected net profits for ZTO Express from 2026 to 2028 are 10.42 billion, 11.69 billion, and 13.08 billion respectively, with corresponding P/E ratios of 12.7X, 11.3X, and 10.1X [4]

Investment Rating - The report maintains a recommendation for the express delivery industry, indicating a positive outlook for investment opportunities in the sector [1]. Core Insights - The express delivery industry is experiencing price increases due to rising oil prices and a trend against excessive competition, with multiple regions implementing price hikes [1][10]. - The industry is entering a new phase of high-quality development, focusing on improving service quality and maintaining stable pricing, which is expected to benefit leading companies [3][84]. - The volume growth in the express delivery sector is gradually recovering, with a notable increase in the growth rate of delivery volumes in early 2026 compared to the previous year [2][12]. Summary by Sections Price Adjustments - Multiple express delivery companies have raised prices in response to increased transportation costs due to rising oil prices, with adjustments starting from March 23, 2026, in various provinces [1][10]. - The price adjustments reflect a broader trend of stabilizing prices in the industry, with significant increases in single-package revenue reported by major companies [2][11]. Volume Growth - The growth rate of express delivery volumes has shown signs of recovery, with January and February 2026 reporting a 7.1% increase compared to previous months [2][12]. - Major companies like YTO and ZTO have outperformed the market in terms of volume growth, indicating a strengthening competitive position [15][16]. Market Positioning - Leading companies in the express delivery sector are expected to gain market share as they benefit from improved volume structures and pricing strategies [3][13]. - ZTO is highlighted as a key player with a commitment to enhancing investor returns, while YTO continues to show strong performance metrics [18][19][86]. Investment Recommendations - The report suggests continued investment in leading express delivery companies such as ZTO, YTO, and Shentong, emphasizing their potential for growth in the evolving market landscape [3][20][21]. - The report also highlights the importance of maintaining a focus on performance elasticity and dividend value in the transportation sector, particularly in shipping and express delivery [7][82].

丨证券研究报告丨 [Table_scodeMsg1] 港股研究丨公司点评丨中通快递-W（02057.HK） [Table_Title] "反内卷"驱动盈利修复，股东回报提升凸显配 置价值 报告要点 [Table_Summary] 2025Q4，公司营业收入同比增长 12.3%至 145.1 亿元，调整后净利同比下降 1.4%至 26.9 亿 元。2025Q4，公司份额同比提升 0.8pct 至 19.6%，伴随电商税落地，低价电商加速退出，驱 动行业集中度提升。2025Q4，单票经营利润环比提升 0.05 元，"反内卷"驱动利润逐步改善。 同时，公司明确 2026 年起，年度股东回报比例（含现金股息及回购）不低于 50%，回报确定 性大幅提升。伴随头部快递回归舒适区，持续推荐中通快递，建议重视低估值、高回报的"HALO" 资产估值修复。 分析师及联系人 [Table_Author] 韩轶超 鲁斯嘉 胡俊文 SAC：S0490512020001 SAC：S0490519060002 SAC：S0490524120001 SFC：BQK468 SFC：BWN875 请阅读最后评级说明和重要声明 %% %% %% ...

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Insights - In Q4 2025, the company's revenue increased by 12.3% year-on-year to 14.51 billion yuan, while adjusted net profit decreased by 1.4% to 2.69 billion yuan. The company's market share rose by 0.8 percentage points to 19.6%, driven by the implementation of e-commerce taxes and the accelerated exit of low-cost e-commerce players, leading to increased industry concentration [2][4]. - The company has announced that starting in 2026, the annual shareholder return ratio (including cash dividends and buybacks) will not be less than 50%, significantly enhancing return certainty. With leading express companies returning to a comfortable zone, the report continues to recommend ZTO Express, emphasizing the importance of undervalued, high-return "HALO" asset valuation recovery [2][7]. Summary by Relevant Sections Financial Performance - In 2025, the company's revenue grew by 10.9% year-on-year to 49.1 billion yuan, while adjusted net profit decreased by 6.3% to 9.51 billion yuan. In Q4 2025, revenue was 14.51 billion yuan, with a year-on-year growth of 12.3% [4]. - The company’s parcel volume increased by 9.2% year-on-year to 10.56 billion parcels in Q4 2025, with a significant rise in express prices due to the "anti-involution" policy [7]. Cost Management - In Q4 2025, the single parcel transportation cost was 0.37 yuan, sorting cost was 0.26 yuan, and other costs were 0.36 yuan, showing a mixed trend in cost management. The single parcel gross profit improved by 0.04 yuan to 0.35 yuan, benefiting from price increases and cost optimization [7]. Shareholder Returns - The board approved a new share buyback plan, authorizing up to 1.5 billion USD in buybacks over the next 24 months. The company aims to maintain a stable dividend policy with a payout ratio of no less than 40% of adjusted net profit starting from March 2024 [7]. Market Positioning - The report highlights that as the "anti-involution" consensus deepens and e-commerce taxes are implemented, low-cost express services are gradually shrinking, leading to a substantial upgrade in industry competition. The company is expected to continue improving its market share and profitability [7].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 223.58 HKD for the Hong Kong stock and 28.57 USD for the US stock [4]. Core Insights - The company has shown steady revenue growth, with a projected increase in main revenue from 44.28 billion RMB in 2024 to 63.96 billion RMB in 2028, reflecting a compound annual growth rate (CAGR) of approximately 15.3% [2][9]. - The adjusted net profit for 2025 is expected to be 9.51 billion RMB, with a slight decline of 6.3% year-on-year, while the fourth quarter revenue for 2025 reached 14.51 billion RMB, up 12.3% year-on-year [9]. - The company is transitioning from a growth model driven solely by low prices to one that emphasizes quality and customer satisfaction, aiming to maintain its leading position in both business volume and profitability [9]. Financial Projections - Main revenue projections for the upcoming years are as follows: - 2024: 44,281 million RMB - 2025: 49,099 million RMB - 2026: 55,682 million RMB - 2027: 60,366 million RMB - 2028: 63,955 million RMB - The expected growth rates for these years are 15.3%, 10.9%, 13.4%, 8.4%, and 5.9% respectively [2][9]. - The projected earnings per share (EPS) are 10.88 RMB for 2024, increasing to 17.17 RMB by 2028 [2][9]. Cost Management and Efficiency - The company has successfully reduced its single-package transportation costs by 12.2% year-on-year, and sorting center operational costs by 3.7%, attributed to economies of scale and improved operational efficiencies [9]. - The ratio of selling, general, and administrative expenses to revenue has decreased from 6.1% to 5.4%, indicating ongoing cost control improvements [9]. Shareholder Returns - The company plans to enhance its shareholder return mechanism, targeting a total annual return of no less than 50% of the previous fiscal year's adjusted net profit starting in 2026 [9]. - A new share buyback plan of up to 1.5 billion USD is authorized for the next 24 months, reflecting management's confidence in long-term growth [9].

Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057) [2][7] Core Insights - ZTO Express reported a revenue of 49.099 billion RMB for 2025, reflecting a year-on-year growth of 10.9%, while the adjusted net profit was 9.513 billion RMB, a decrease of 6.3% [7] - The company achieved a business volume of 10.558 billion parcels in Q4 2025, with a year-on-year growth of 9%, significantly exceeding industry growth rates [7] - ZTO Express emphasizes shareholder returns, committing to a target of at least 50% of adjusted net profit for comprehensive shareholder returns starting in 2026 [7] - The company has completed a share repurchase plan of 2 billion USD and has authorized an additional 1.5 billion USD repurchase plan valid for 24 months [7] - The report has raised profit forecasts for 2026-2028, expecting adjusted net profits of 11.127 billion, 12.604 billion, and 14.106 billion RMB respectively, with corresponding year-on-year growth rates of 16.97%, 13.27%, and 11.92% [7] Financial Data and Profit Forecast - Revenue projections for ZTO Express are as follows: - 2024: 44.281 billion RMB - 2025: 49.099 billion RMB - 2026E: 54.388 billion RMB - 2027E: 59.562 billion RMB - 2028E: 64.532 billion RMB [6][8] - Adjusted net profit forecasts are: - 2024: 10.151 billion RMB - 2025: 9.513 billion RMB - 2026E: 11.127 billion RMB - 2027E: 12.604 billion RMB - 2028E: 14.106 billion RMB [6][8] - The report indicates a projected PE ratio of 12x for 2026E, 10x for 2027E, and 9x for 2028E [7]

Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057) [2][7] Core Insights - ZTO Express reported a revenue of 49.099 billion RMB for 2025, reflecting a year-on-year growth of 10.9%, while the adjusted net profit was 9.513 billion RMB, a decrease of 6.3% [7] - The company achieved a business volume of 10.558 billion parcels in Q4 2025, with a year-on-year growth of 9%, significantly outpacing industry growth [7] - ZTO Express emphasizes shareholder returns, committing to a target of at least 50% of adjusted net profit for comprehensive shareholder returns starting in 2026 [7] - The company has completed a share repurchase plan of 2 billion USD and has authorized an additional 1.5 billion USD repurchase plan valid for 24 months [7] - The report has raised profit forecasts for 2026-2028, expecting adjusted net profits of 11.127 billion, 12.604 billion, and 14.106 billion RMB respectively, with corresponding year-on-year growth rates of 16.97%, 13.27%, and 11.92% [7] Financial Data and Profit Forecast - Revenue projections for ZTO Express are as follows: - 2024: 44.281 billion RMB - 2025: 49.099 billion RMB - 2026E: 54.388 billion RMB - 2027E: 59.562 billion RMB - 2028E: 64.532 billion RMB [6][8] - Adjusted net profit forecasts are: - 2024: 10.151 billion RMB - 2025: 9.513 billion RMB - 2026E: 11.127 billion RMB - 2027E: 12.604 billion RMB - 2028E: 14.106 billion RMB [6][8] - The report indicates a projected PE ratio of 12x for 2026E, 10x for 2027E, and 9x for 2028E [7]

Core Viewpoint - ZTO Express (Cayman) Inc. has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Company Performance and Outlook - The recent upgrade reflects an improvement in ZTO Express's underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - For the fiscal year ending December 2026, ZTO Express is expected to earn $1.83 per share, with a 1.1% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of generating significant returns for top-ranked stocks [7]. - ZTO Express's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].