Core Insights - ZTO Express (Cayman) Inc. has experienced a 4.7% decline in share price over the past month, underperforming the S&P 500 index [1] - The company reported a year-over-year increase in Q1 2024 earnings, with earnings per share at 37 cents and total revenues reaching $1.37 billion [2] Operational Performance - Revenue from the core express delivery business increased by 11% year over year, driven by a 13.9% rise in parcel volume, despite a 2.5% decrease in parcel unit price [3] - KA revenue, which includes delivery fees from direct sales organizations, decreased by 7.1% due to a shift towards higher-value customers [3] - Freight forwarding services revenue grew by 5.2% year over year [3] - Sales of accessories, primarily thermal paper for digital waybills, surged by 31.5% [3] - The gross profit improved by 19% year over year, with gross margin increasing to 30.1% from 28.1% [4] Financial Position - Total operating expenses for the first quarter were RMB735.4 million ($101.8 million), up from RMB573.0 million in the previous year [4] - ZTO Express ended Q1 2024 with cash and cash equivalents of RMB12.58 billion, slightly up from RMB12.33 billion at the end of December 2023 [4] Future Outlook - The company anticipates parcel volumes for 2024 to be between 34.73 billion and 35.64 billion, representing a year-over-year increase of 15-18% [5] - Analysts have not made any earnings estimate revisions in the past two months [5]

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 [2][4] Core Views - ZTO Express reported Q1 2024 earnings with revenue of 9.96 billion RMB, a year-on-year increase of 10.9%, and an adjusted net profit of 2.22 billion RMB, up 15.8% year-on-year, meeting expectations [2] - The company is optimizing its parcel volume structure, achieving steady growth with a business volume of 7.17 billion parcels, a year-on-year increase of 13.9%. The market share reached 19.3%, a decrease of 4.1 percentage points, primarily due to changes in industry volume calculations and a focus on high-quality development [2] - ZTO Express is shifting its strategic focus towards enhancing service quality and operational efficiency, with a positive outlook on the growth of its parcel business driven by competitive advantages in service timeliness and cost-effectiveness [2] - The report highlights ZTO Express's role as a leading company in expanding industry value, with expectations for both short-term growth and long-term development [2] Financial Data and Profit Forecast - Revenue projections for ZTO Express are as follows: 2024E at 44.41 billion RMB, 2025E at 50.05 billion RMB, and 2026E at 56.52 billion RMB, with year-on-year growth rates of 16%, 13%, and 13% respectively [3] - Adjusted net profit forecasts are 10.87 billion RMB for 2024E, 13.09 billion RMB for 2025E, and 15.67 billion RMB for 2026E, with year-on-year growth rates of 21%, 20%, and 20% respectively [3] - The report indicates a projected PE ratio of 13x for 2024E, 11x for 2025E, and 9x for 2026E, reflecting the company's strong competitive position and earnings certainty [2][3]

Investment Rating - The report maintains a "Recommend" rating for ZTO Express (02057 HK) with a target price of HKD 218, representing a 17% upside from the current price [1] Core Views - ZTO Express achieved revenue of RMB 9 96 billion in Q1 2024, up 10 9% YoY, with adjusted net profit increasing 15 8% YoY to RMB 2 22 billion [1] - The company handled 7 17 billion parcels in Q1 2024, a 13 9% YoY increase, maintaining a 19 3% market share [1] - ZTO is focusing on service quality improvement while pursuing profitable growth, with a strategic shift towards quality over quantity [1] Financial Performance - Q1 2024 gross profit was RMB 3 billion, up 19% YoY, while net profit declined 13% YoY to RMB 1 45 billion [1] - Single ticket revenue decreased 2 5% YoY to RMB 1 36, while single ticket cost dropped 5 3% to RMB 0 94 [1] - Adjusted single ticket net profit increased to RMB 0 31, up RMB 0 01 YoY [1] Operational Metrics - ZTO operates 31,000 pickup/delivery outlets and 10,000 self-owned line-haul vehicles, including 9,100 high-capacity vehicles [1] - The company has 3,800 transportation routes and 96 sorting centers [1] - ZTO's market share in Q1 2024 was 19 3%, leading competitors like YTO (15%), Yunda (13 32%), and STO (12 36%) [1] Future Outlook - ZTO expects full-year 2024 parcel volume between 34 73-35 64 billion, representing 15-18% YoY growth [1] - The company forecasts industry growth of 15-20% for 2024 [1] - ZTO plans to maintain a dividend payout ratio of at least 40% starting from 2024, with semi-annual dividend payments [1] Valuation - The report values ZTO at 15x 2024E PE, implying a market cap of RMB 163 9 billion (approximately HKD 180 5 billion) [1] - 2024-2026E net profit is projected at RMB 10 9 billion, RMB 12 8 billion, and RMB 14 1 billion respectively [1] - Corresponding PE ratios are estimated at 13x, 11x, and 10x for 2024-2026 [1]

Investment Rating - The report maintains a "Buy" rating for the company, with a target market price of 188.7 HKD [2][3]. Core Views - In Q1, the company adjusted its strategy, focusing on improving profitability and service quality, resulting in a decline in market share but an increase in profits that exceeded expectations [3][5]. - The company reported a business volume of 7.27 billion parcels in Q1, a year-on-year increase of 13.9%, with a market share of 19.3%, down 1.9 percentage points year-on-year [5][6]. - The report highlights that despite a decrease in market share, the company's net profit for 2024 is projected to be 9.664 billion RMB, with a net profit growth rate of 10.5% [3][5]. Financial Performance Summary - Revenue projections for the company are as follows: - 2022: 35,377 million RMB - 2023: 38,419 million RMB - 2024E: 42,787 million RMB - 2025E: 49,252 million RMB - 2026E: 53,942 million RMB - Net profit projections are: - 2022: 6,809 million RMB - 2023: 8,749 million RMB - 2024E: 9,664 million RMB - 2025E: 12,228 million RMB - 2026E: 13,384 million RMB - The diluted earnings per share (EPS) are projected to be: - 2022: 8.23 RMB - 2023: 10.58 RMB - 2024E: 11.69 RMB - 2025E: 14.79 RMB - 2026E: 16.18 RMB [3][4][5]. Strategic Focus - The company is shifting its focus towards enhancing service quality and profitability, which is expected to lead to stable profit growth in the long term [6][5]. - The report notes that the company is increasing its dividend payout ratio and share buyback amounts, which is anticipated to enhance shareholder returns [6][5].

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

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

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

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