Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with ZTO Express (Cayman) Inc. identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][6]. Group 1: Earnings Growth - ZTO Express has a historical EPS growth rate of 13.5%, with projected EPS growth of 13.4% for the current year, significantly outperforming the industry average of -3.7% [3]. Group 2: Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 17.3%, which is substantially higher than the industry average of -12.5%. Over the past 3-5 years, ZTO's annualized cash flow growth rate has been 18.6%, compared to the industry average of 14.6% [4]. Group 3: Earnings Estimate Revisions - The current-year earnings estimates for ZTO Express have been revised upward, with the Zacks Consensus Estimate increasing by 0.6% over the past month, indicating a positive trend in earnings estimate revisions [5]. Group 4: Overall Assessment - ZTO Express has achieved a Growth Score of B and a Zacks Rank of 2, suggesting it is a solid choice for growth investors and a potential outperformer in the market [6].

Core Viewpoint - ZTO Express (Cayman) Inc. is currently positioned as a more attractive investment option compared to Grupo Aeroportuario del Sureste based on Zacks Rank and valuation metrics [1][3]. Valuation Metrics - ZTO has a forward P/E ratio of 14.06, while ASR has a forward P/E of 14.75 [2]. - ZTO's PEG ratio is 1.46, significantly lower than ASR's PEG ratio of 3.35, indicating better expected earnings growth relative to its valuation [2]. - ZTO's P/B ratio stands at 1.84, compared to ASR's P/B ratio of 3.65, suggesting ZTO is undervalued relative to its book value [2]. Investment Grades - ZTO holds a Value grade of B, while ASR has a Value grade of D, indicating ZTO is favored by value investors [3]. - ZTO has experienced stronger estimate revision activity, contributing to its more favorable valuation metrics compared to ASR [3].

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

Financial Data and Key Metrics Changes - In Q1 2024, ZTO Express reported a parcel volume of $7.17 billion, a year-over-year increase of 14% [6] - Adjusted net profit reached $2.22 billion, representing a 16% increase year-over-year [6][14] - Total revenue increased by 10.9% to $10.0 billion, while total cost of revenue rose by 7.7% to $7 billion [16] - Gross profit increased by 19% to $3 billion, with a gross profit margin of 30.1%, up 2 percentage points [16] Business Line Data and Key Metrics Changes - The core express delivery business saw an average selling price (ASP) decrease of 2.5% or $0.04, significantly lower than the industry average decrease of about $0.20 [15] - Retail parcel volume grew over 40% year-over-year, with a daily average of 5 million parcels [27] - The company limited incremental volume incentives, focusing on profitable growth rather than volume alone [15][21] Market Data and Key Metrics Changes - The overall express delivery industry volume increased by 25.2% year-over-year, driven by e-commerce growth [6] - ZTO's market share contracted by 1.9 percentage points to 19.3% [15] - The company noted a shift towards lower-priced e-commerce parcels due to competitive pricing strategies in the market [7][15] Company Strategy and Development Direction - ZTO's strategy emphasizes a balance between service quality, profitability, and scale, with a current focus on enhancing service quality [7][12] - The company aims to develop differentiated products and services to meet diverse customer needs and improve brand recognition [7][10] - ZTO is committed to improving transit efficiency and enhancing the product mix to increase market penetration [9][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged fierce price competition in major regions but remains focused on strategic execution to improve quality and efficiency [9][10] - The company anticipates overall industry growth of 15% to 20% for the year, with parcel volume expected to reach between $34.73 billion and $35.64 billion [17][18] - Management highlighted the importance of maintaining a focus on quality and profitability for sustainable growth in the long term [21][30] Other Important Information - Operating cash flow was reported at $2 billion, a decrease of 25.8% year-over-year due to longer receivable terms with new customers [17] - Capital expenditure for the quarter totaled $1.7 billion, with an annual forecast below $6 billion [17] Q&A Session Summary Question: Strategic focus shift on loss-making volumes and industry consolidation - Management explained the shift is aimed at focusing on long-term profitable growth amidst changing market dynamics, emphasizing the need to avoid unnecessary volume [20][21] Question: Expectations on unit profitability - Management indicated that unit profit expansion is expected to continue if competitive strategies remain unchanged, focusing on maintaining a balanced growth approach [20][23] Question: Individual parcel market prospects and measures to increase penetration - Management reported a 40% growth in retail volume and outlined initiatives to improve courier efficiency and service quality to increase market penetration [24][27] Question: Industry landscape and future strategy - Management discussed the potential for consolidation in the industry but emphasized their focus on quality and profitability over market share [29][30] Question: International expansion strategies - Management highlighted ongoing efforts to develop cross-border services in Southeast Asia and Africa, aiming for cost efficiency and growth in international markets [32][33] Question: Market share dynamics and consumer awareness - Management reiterated the importance of balancing volume, profit, and service quality for long-term growth, aiming to enhance brand recognition and consumer awareness [35][36]

Emphasizing Profitable Growth amidst Consumption Mix-shiftAdjusted Net Income Grew 15.8% to RMB2.2 BillionParcel Volume Increased 13.9% to 7.2 BillionSHANGHAI, May 15, 2024 /PRNewswire/ -- ZTO Express (Cayman) Inc. (NYSE: ZTO and SEHK: 2057), a leading and fast-growing express delivery company in China ("ZTO" or the "Company"), today announced its unaudited financial results for the first quarter ended March 31, 2024[1]. The Company grew parcel volume by 13.9% year over year while maintaining high quality o ...

Core Insights - Inceptio Technology has achieved a significant milestone by surpassing 100 million kilometers in safe commercial operations of its autonomous heavy-duty trucks, reinforcing its leadership in the commercialization of autonomous trucks [1][2] - The company's autonomous driving system has been successfully deployed across various sectors of line-haul logistics, including express delivery and contract logistics, demonstrating the value it offers to logistics operators [1][5] Group 1: Commercialization and Adoption - Inceptio-powered trucks reached 50 million kilometers of safe commercial operations in August 2023 and quickly surpassed 100 million kilometers by April 2024 [2] - The autonomous driving system covers 83% of China's national highways, connecting seven major economic zones, indicating extensive operational reach [2] - A total of 1,864 drivers have safely operated Inceptio-powered L3 and L2+ trucks during the 100 million kilometers [2] Group 2: Customer Base and Partnerships - Current customers include leading logistics companies in China such as ZTO Express, YTO Express, and JD Logistics, showcasing a strong market presence [3] - Inceptio has partnered with major truck manufacturers like Dongfeng and Sinotruk to pre-load trucks with its autonomous driving system, expanding its operational fleet [4] Group 3: Operational Efficiency and Cost Savings - The use of Inceptio's autonomous trucks has allowed express delivery companies to reduce the number of drivers per truck from two to one on routes of 500 to 1,200 kilometers, resulting in a 40% to 50% reduction in labor costs [6] - Contract logistics companies have reported a decrease in driver-to-truck ratios and a reduction in fuel consumption by 3-5 liters per 100 kilometers, leading to a 7-15% decrease in total cost of ownership per kilometer [7] - Individual operators have experienced increases of 10-20% in monthly kilometers per truck and additional monthly net income due to improved safety and driving comfort [8] Group 4: Technological Advancements - Inceptio leverages a data-driven R&D system to enhance its autonomous driving technology, focusing on real-world data to refine its T-NOA algorithm [9] - The company's CEO highlighted the rapid progress in commercialization and the profound impact of its technology on the logistics industry, emphasizing a user-driven approach to innovation [10] Group 5: Company Overview - Inceptio Technology is a leading developer of autonomous driving technologies for heavy-duty trucks, having launched the first mass-produced L3 autonomous trucks in China in late 2021 [11] - The company aims to develop fully driverless trucks and was the first in China to receive a public road-testing permit for such vehicles [11]

Core Viewpoint - ZTO Express (Cayman) Inc. is set to release its unaudited financial results for Q1 2024 on May 15, 2024, after U.S. market closes, indicating the company's ongoing commitment to transparency and investor communication [1]. Company Overview - ZTO Express is a leading and fast-growing express delivery company in China, providing express delivery and value-added logistics services through a reliable nationwide network [4]. - The company operates a scalable network partner model, which supports the growth of e-commerce in China by leveraging partners for pickup and last-mile delivery while controlling critical line-haul transportation and sorting [4]. Earnings Conference Call - The management team will host an earnings conference call on May 15, 2024, at 8:30 P.M. U.S. Eastern Time, which corresponds to 8:30 A.M. Beijing Time on May 16, 2024 [1]. - Dial-in details for the conference call are provided for various regions, including the U.S., Hong Kong, Singapore, and Mainland China [2]. - A replay of the conference call will be available until May 22, 2024, with specific numbers for access [3].

Operational Performance - In 2023, ZTO Express handled 30.2 billion parcels, representing a year-on-year growth of 23.8%[26] - The company's market share reached 22.9%, maintaining its position as the industry leader for eight consecutive years[26] - ZTO Express operated more than 31,000 outlets and 99 domestic sorting hubs by the end of 2023[26] - The company has approximately 6,000 direct network partners and over 10,000 line-haul vehicles, including about 9,200 high-capacity trailer trucks[26] Technological Innovation - ZTO Express aims to enhance user experience through the introduction of advanced technologies such as artificial intelligence and big data analysis[22] - The "Express Butler System" has been upgraded to provide intelligent AI group chat after-sales service for small and medium-sized vendors, improving service efficiency[102] - ZTO Express aims to enhance operational efficiency through technological innovations, integrating digital technology into the entire express delivery business[92] Environmental Sustainability - The company is committed to reducing its carbon footprint and building a sustainable logistics system[21] - ZTO Express has implemented a top-down ESG governance structure, with the Board of Directors holding ultimate responsibility for ESG initiatives[34] - The company aims to achieve long-term sustainable development through continuous improvement of its ESG governance system[33] - In 2023, ZTO Express recycled 150 million cartons, demonstrating a commitment to waste management and sustainability[57] - The company achieved a 34% year-on-year growth in photovoltaic power generation, reflecting its investment in clean energy[57] - ZTO Express implemented green packaging initiatives, including fully biodegradable bags and recycled express boxes, with an average of 360,000 boxes recycled 8 times[57] - The company aims to achieve carbon neutrality and has integrated climate change into its corporate governance and strategic framework[58] - ZTO Express has 464 sets of automated sorting equipment, enhancing efficiency while reducing energy consumption and pollution[57] - The company utilizes LNG-powered vehicles in some areas to promote eco-friendly transportation solutions[57] - ZTO Express's new energy vehicles are part of its strategy to reduce greenhouse gas emissions and improve energy efficiency[57] - The company has established policies for emergency response to mitigate the impact of climate-related physical risks on operations[58] - ZTO Express's Board of Directors oversees climate change-related risks and opportunities, linking board compensation to climate performance[59] - ZTO Express aims for a 20% reduction in GHG emissions intensity per parcel by 2028[75] - In 2023, ZTO Express's total energy consumption was 732,619.73 tons of standard coal equivalent, with direct energy consumption at 648,856.31 tons[78] - The company generated 40,150 megawatt-hours of renewable energy, a 34% increase from the previous year, with 26,010 megawatt-hours used for self-consumption[78] - The proportion of e-commerce parcels without secondary packaging reached 93.34%, and standardized packaging materials usage was 91.83%[82] - ZTO Express's direct greenhouse gas emissions (Scope 1) totaled 1,402,275 metric tons CO2e, while indirect emissions (Scope 2) were 388,692 metric tons CO2e[78] - The company installed approximately 370,000 square meters of photovoltaic panels, generating 40,150 megawatt-hours of electricity[78] - ZTO Express has committed to enhancing resource efficiency and reducing waste through sustainable practices and circular economy concepts[70] - The company has developed a dedicated network for the distribution and recycling of environmentally friendly bags, improving operational efficiency[85] - ZTO Express is actively exploring voluntary emission reduction projects in the express delivery industry[74] Employee Rights and Development - ZTO Express has strengthened employee rights protection and enhanced vocational skills training[23] - By the end of the reporting period, the coverage rate of collective agreements for employee rights was 100%, with no incidents of human rights violations reported[180] - The company is committed to creating a diverse and inclusive workplace, enhancing employee satisfaction and promoting a people-oriented management philosophy[176] - The total number of employees decreased from 24,888 in 2022 to 23,554 in 2023, with 6,120 new employees hired in 2023[182] - The overall employee turnover rate for 2023 was 24.32%, with a voluntary turnover rate of 24.21%[182] - The annual turnover rate for operational staff decreased by 3.59% to 55.06% in 2023, compared to 58.65% in 2022, achieving the target reduction of 3%[183] - Female employees accounted for 36.01% of the total workforce, with female managers making up 31.00%[188] - The company achieved a 100% contribution rate for employee social insurance and housing provident fund during the reporting period[184] - ZTO Express recruited over 1,000 local workers from economically disadvantaged areas in 2023 to address local employment issues[186] - The number of accountable accidents decreased by 8.1% in 2023 compared to 2022, indicating improved safety management practices[195] - The proportion of unclear monthly turnover reasons decreased from 89.4% to below 20% during 2023, enhancing employee retention strategies[183] - The company implemented targeted recruitment for disabled individuals and ethnic minorities to foster a diverse workforce[185] - The average cost of employment per person in 2023 was RMB 289.69[182] Customer Satisfaction and Service Quality - ZTO Express achieved a customer satisfaction rate of 94% in 2023, up from 91% in 2022[135] - The all-channel connection rate of ZTO Express was 96.07% in 2023, an increase of 2.56% compared to 2022[133] - The complaints per 10,000 orders decreased to 1.99 in 2023, down by 2.45% from 2022[133] - A total of 178 customer service training sessions were conducted, with 3,510 trainees participating[136] - The utilization rate of privacy waybills in the entire network reached 76% in 2023[144] - ZTO Express maintained 100% coverage of privacy policies, ensuring all customers were informed[154] - The company experienced zero information security breaches in 2023, with no customers affected[154] - The company conducted an internal audit of its information security management system annually, ensuring compliance with ISO certifications[152] - ZTO Express has developed the "Blue Bee Index" project, achieving a 56.20% success rate in compliance rectification among over 2,700 couriers nationwide[159] - The overall learning completion rate for courier training modules exceeded 92% by the end of 2023, focusing on safety and operational skills[160] Strategic Partnerships and Expansion - ZTO Express signed a strategic cooperation agreement with NEOLIX to promote the large-scale application of autonomous driving vehicles, with initial operations commencing in cities like Yancheng and Hefei[173] - The company actively collaborates with Nanjing University of Aeronautics and Astronautics to advance drone logistics, focusing on core technologies and scientific project applications[174] - ZTO Express is actively pursuing global expansion, leveraging the "Belt and Road" initiative to build an international logistics network[113] Financial Performance and Cost Management - The company has reduced logistics costs by approximately 10% for customers through enhanced flexibility and responsiveness in the spare parts logistics supply chain[110] - ZTO Express continues to expand its product matrix and launched several high value-added products during the reporting period[106] - The company has developed a one-stop production and research work platform to improve R&D efficiency and collaboration[93] - The percentage of customers using online services/platforms increased from 92% in 2021 to 95% in 2023[132] - The percentage of total revenue generated from online channels rose from 90.3% in 2021 to 92.4% in 2023[132]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OR ☐ SHELL COMPANY REPORT PURSUANT TO SE ...

研究报告Research Report 25 Mar 2024 中通快递（开曼） ZTO Express Cayman (ZTO US) 业绩符合预期，分红、回购超预期 Results in Line with Expectations; Dividends and Share Repurchase Program Exceed Expectations 观点聚焦 Investment Focus [Table_Info] (Please see APPENDIX 1 for English summary) 维持优于大市Maintain OUTPERFORM 公司发布 23Q4 及 23年全年业绩： 评级 优于大市OUTPERFORM 23Q4 公司实现营业收入 106.2 亿元/+7.6%，实现净利润 22.1 亿元 现价 US$21.02 目标价 US$31.40 /+3.8%，调整后净利润 22.1 亿元/+4.4%。23 年全年公司营业收入 384.2 亿元/+8.6%，实现净利润 87.5 亿元/+31.5%，调整后净利润 HTI ESG 5.0-5.0-5.0 90.06 亿元/+32.3%。 ...