Financial Performance - Adjusted net profit for the fiscal year 2023 reached RMB 9 billion, an increase of 32.3%[3] - Revenue for Q4 2023 was RMB 10,619.4 million (USD 1,495.7 million), a growth of 7.6% compared to Q4 2022[5] - Gross profit for Q4 2023 was RMB 3,128.2 million (USD 440.6 million), up 12.8% year-over-year[5] - Net profit for Q4 2023 was RMB 2,209.8 million (USD 311.2 million), an increase of 3.8% from Q4 2022[5] - Total revenue amounted to RMB 10,619.4 million (USD 1,495.7 million), representing a growth of 7.6% from RMB 9,871.3 million in 2022[10] - Gross profit reached RMB 11,662.5 million ($1,642.6 million), a 29.0% increase from RMB 9,039.3 million last year, improving the gross margin from 25.6% to 30.4%[19] - Net profit amounted to RMB 8,754.5 million ($1,233.0 million), a 31.5% increase from RMB 6,659.0 million last year[20] - Adjusted net profit was RMB 9,005.9 million ($1,268.5 million), up from RMB 6,806.0 million last year[20] - Total revenue for the year ended December 31, 2023, reached RMB 8,749,004, an increase from RMB 6,809,056 in 2022, marking a growth of approximately 28.5%[41] Operational Metrics - Total package volume for the year reached 30.2 billion, expanding market share to 22.9%[3] - The company maintained high service quality and customer satisfaction while increasing its package volume by 5.8 billion, a year-over-year growth of 23.8%[4] - The total package volume reached 8.705 billion, an increase of 32.0% compared to 6.593 billion in the same period of 2022[7] - The company utilized 464 sets of automated sorting equipment as of December 31, 2023, compared to 458 sets a year earlier, enhancing overall sorting operational efficiency[12] - The company operates a highly scalable network partner model, which is deemed suitable for supporting the rapid growth of e-commerce in China[31] Cash Flow and Investments - Operating cash flow for the fiscal year 2023 was RMB 13,361.0 million (USD 1,881.9 million), compared to RMB 11,479.3 million in 2022[6] - Capital expenditures for 2023 were RMB 6.7 billion, with cash flow from operating activities increasing by 16.4% to RMB 13.4 billion[9] - The company reported a net cash outflow from investing activities of RMB 12.25 billion for the year 2023, compared to an outflow of RMB 16.04 billion in 2022, indicating improved cash management[36] - The net cash used in financing activities for the year 2023 was RMB 769 million, compared to an outflow of RMB 1.71 billion in 2022, indicating a reduction in financing costs[36] Shareholder Returns - The company plans to distribute a cash dividend of USD 0.62 per share for 2023, with a dividend payout ratio of no less than 40% for 2024[9] - The company declared a cash dividend of $0.62 per American Depositary Share, representing a 68% increase from the previous fiscal year, with a payout ratio of 40%[22] - The board approved a semi-annual cash dividend policy starting in 2024, with total annual dividends not less than 40% of distributable profits[23] - The company announced a $500 million expansion of its share repurchase program[4] - The share repurchase program was expanded to $2 billion, with a remaining available fund of $437.0 million as of December 31, 2023[24] Future Outlook - The company expects total package volume for 2024 to be between 34.73 billion and 35.64 billion pieces, representing a year-on-year growth of 15% to 18%[25] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[41] Risks and Management - The company faces inherent risks and uncertainties that could lead to significant differences between actual results and forward-looking statements, including reliance on third-party e-commerce platforms[32] - The company emphasizes that non-GAAP metrics should not be considered in isolation from GAAP metrics, and encourages investors to review comprehensive financial data[28] - The management believes that these non-GAAP metrics help identify fundamental business trends and provide useful insights into past performance and future prospects[28] - The management team will discuss performance summaries, user data, future outlook, and guidance during the earnings call[30] Earnings Call Information - The upcoming earnings conference call is scheduled for March 19, 2024, at 8:30 PM ET, with dial-in details provided for various regions[30]

Financial Performance - Full Year Adjusted Net Income reached RMB9.0 billion, growing 32.3% year over year[1] - Fourth Quarter Revenues were RMB10,619.4 million (US$1,495.7 million), a 7.6% increase from RMB9,871.3 million in Q4 2022[2] - Gross profit for Q4 was RMB3,128.2 million (US$440.6 million), up 12.8% from RMB2,772.6 million in the same period last year[2] - Net income for Q4 was RMB2,209.8 million (US$311.2 million), reflecting a 3.8% increase from RMB2,129.3 million in Q4 2022[2] - Adjusted EBITDA for the fiscal year was RMB14,107.3 million (US$1,987.0 million), a 25.0% increase from RMB11,289.1 million in 2022[3] - Total Revenues increased by 8.6% to RMB38,418.9 million (US$5,411.2 million) from RMB35,376.9 million last year, driven by a 9.8% increase in express delivery revenue[17] - Net income rose by 31.5% to RMB8,754.5 million (US$1,233.0 million) compared to RMB6,659.0 million in the previous year[24] - Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB10.83 (US$1.53), up from RMB8.41 last year, reflecting a significant increase[25] - Adjusted EBITDA reached RMB14,107.3 million (US$1,987.0 million), compared to RMB11,289.1 million last year, indicating strong operational performance[25] - Operating margin improved to 26.0%, up from 21.9% in the previous year, showcasing enhanced profitability[22] Expenses and Income - Total Operating Expenses were RMB1,654.6 million (US$233.0 million), an increase from RMB1,302.8 million last year, primarily due to higher compensation and benefit expenses[21] - Interest income increased to RMB706.8 million (US$99.5 million) from RMB503.7 million last year, reflecting improved financial management[22] - Gross Profit increased by 29.0% to RMB11,662.5 million (US$1,642.6 million), with a gross margin rate improvement to 30.4% from 25.6% last year[21] - Other operating income, net was RMB770.7 million (US$108.5 million), slightly down from RMB774.6 million last year, indicating stable supplementary income sources[22] - Interest expenses for Q4 2023 decreased to RMB61,804 from RMB76,147 in Q4 2022, a reduction of 18.7%[47] - Income tax expenses for the year ended December 31, 2023, were RMB1,938,600, up from RMB1,633,330 in 2022, reflecting an increase of 18.7%[47] Dividends and Shareholder Returns - The company approved a regular dividend policy starting with US$0.62 per share for 2023, with a minimum payout ratio of 40% for 2024[7] - The company declared a cash dividend of US$0.62 per ADS, representing a 68% increase compared to the previous fiscal year[26] - The Company has approved a semi-annual regular cash dividend policy starting from 2024, with a minimum of 40% of distributable profit to be distributed each year[27] - The share repurchase program has been increased to US$2.0 billion, with US$437.0 million remaining available for repurchase as of December 31, 2023[28] Operational Metrics - Annual parcel volume increased to 30.2 billion, expanding market share to 22.9%[1] - The number of parcel delivery outlets exceeded 31,000, with over 10,000 self-owned line-haul vehicles as of December 31, 2023[4] - The core express average selling price (ASP) declined by 11.3% in 2023, primarily due to intense price competition[7] - The parcel volume for 2024 is expected to be between 34.73 billion and 35.64 billion, reflecting a year-over-year increase of 15% to 18%[29] Cash Flow and Assets - Capital spending for 2023 was RMB6.7 billion, with operating cash flow growing 16.4% to RMB13.4 billion[7] - Total current assets increased to RMB 26,953,548 as of December 31, 2023, from RMB 24,475,027 as of December 31, 2022, representing an increase of 10.1%[43] - Cash and cash equivalents at the end of the period were RMB 12,333,884, up from RMB 11,692,773 at the end of 2022, indicating an increase of 5.5%[46] - Total liabilities increased to RMB 28,184,813 as of December 31, 2023, from RMB 24,051,116 as of December 31, 2022, marking an increase of 17.2%[43] - Net cash provided by operating activities for the year ended December 31, 2023, was RMB 13,360,967, an increase of 16.4% from RMB 11,479,308 in 2022[44] - Total equity increased to RMB 60,280,408 as of December 31, 2023, from RMB 54,472,470 as of December 31, 2022, reflecting an increase of 10.5%[43] - Short-term bank borrowing rose to RMB 7,765,990 as of December 31, 2023, compared to RMB 5,394,423 as of December 31, 2022, an increase of 43.9%[43] Earnings and Share Metrics - Basic earnings per share for the year ended December 31, 2023, was RMB 10.83, down from RMB 10.60 in 2022, reflecting a decrease of 1.9%[41] - Basic earnings per share for Q4 2023 was RMB 2.72, up from RMB 2.67 in Q4 2022, indicating a 1.9% increase[48] - Diluted earnings per share for the year ended December 31, 2023, was RMB 10.60, compared to RMB 8.36 in 2022, marking a 26.8% increase[48] - The weighted average shares used in calculating diluted earnings per share for Q4 2023 was 837,291,253, slightly down from 841,226,602 in Q4 2022[48] Other Financial Metrics - Adjusted net income for the year ended December 31, 2023, reached RMB 9,005,920, up 32.5% from RMB 6,805,999 in 2022[47] - EBITDA for Q4 2023 was RMB 3,647,210, a 7.1% increase compared to RMB 3,406,549 in Q4 2022[47] - Adjusted EBITDA for the year ended December 31, 2023, was RMB 14,107,290, reflecting a 25.5% growth from RMB 11,289,073 in 2022[47] - The Company reported an income from operations of RMB 10,007,924 for the year ended December 31, 2023, compared to RMB 7,736,481 in 2022, marking an increase of approximately 29.5%[40] - Interest income for the three months ended December 31, 2023, was RMB 201,383, compared to RMB 111,768 for the same period in 2022, reflecting an increase of approximately 80%[40] - The company reported a foreign currency translation adjustment of RMB 70,677 for the three months ended December 31, 2023, compared to RMB 35,752 for the same period in 2022, indicating a significant increase[41] - The effective exchange rate used for translating Renminbi amounts into U.S. dollars was RMB 7.0999 to US$1 as of December 29, 2023[30] - The Company emphasizes the importance of non-GAAP financial measures for understanding underlying business trends and operational performance[32]

RMB9.0 Billion Full Year Adjusted Net Income Grew 32.3% 30.2 Billion Annual Parcels Expanded Market Share to 22.9%US$0.62 per Share Annual Dividend Increased 68%Upsizes Share Repurchase Program by USD500 million SHANGHAI, March 19, 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 fourth quarter and fiscal year ended December 31, 2023[1]. The ...

Investment Rating - The report maintains a "Buy" rating for ZTO Express (2057.HK) with a target price of HKD 257.63, based on a 18x PE for 2024 [4][5]. Core Insights - ZTO Express has been included in the Hong Kong Stock Connect, effective March 4, 2024, which is expected to enhance its market liquidity and valuation [3]. - The company achieved a total business volume of 30.2 billion parcels in 2023, representing a year-on-year growth of 23.8%, maintaining a market share of 22.9% [3]. - The profitability of ZTO Express continues to improve, with a net profit of CNY 23.5 billion in Q3 2023, up 24.0% year-on-year, and an adjusted net profit of CNY 23.4 billion, reflecting a 25.0% increase [3]. - The company has increased its share buyback program from USD 1 billion to USD 1.5 billion, which is expected to boost market confidence [3]. - The report projects net profits for 2023, 2024, and 2025 to be CNY 90 billion, CNY 107 billion, and CNY 123 billion respectively, up from previous estimates [3]. Financial Summary - Total shares outstanding: 824 million, with a circulating share count of 617 million [5]. - Total market capitalization: HKD 142.058 billion, circulating market value: HKD 106.505 billion [5]. - Earnings per share (EPS) forecast for 2023, 2024, and 2025 are CNY 10.96, CNY 12.99, and CNY 14.93 respectively [5][10]. - The company’s revenue is projected to grow from CNY 39.244 billion in 2023 to CNY 52.677 billion by 2025, with a compound annual growth rate (CAGR) of approximately 15% [10].

Core Viewpoint - ZTO Express is set to report its fourth-quarter 2023 results on March 19, with a history of outperforming earnings estimates, averaging a 17.31% beat over the last four quarters [1]. Group 1: Q4 Expectations - Fourth-quarter 2023 revenues for ZTO Express are anticipated to benefit from strong performance in the express delivery services unit [2]. - However, rising operating expenses, particularly in selling, general and administrative expenses (SG&A), are expected to negatively impact ZTO's profitability, with SG&A costs driven up by increases in compensation, benefits, and office expenditures [2]. - The Zacks Consensus Estimate for ZTO's fourth-quarter 2023 earnings has been revised downward by 7.5% over the past 90 days [2]. Group 2: Earnings Prediction Model - The current model does not predict a definitive earnings beat for ZTO Express, as it has an Earnings ESP of 0.00% and a Zacks Rank of 4 (Sell) [3]. - A combination of a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) typically increases the likelihood of an earnings beat, which is not applicable in this case [3]. Group 3: Highlights of Q3 - In the third quarter of 2023, ZTO Express reported earnings of 39 cents per share, surpassing the Zacks Consensus Estimate of 36 cents, and showing year-over-year improvement [4]. - Total revenues for Q3 were $1,244 million, which fell short of the Zacks Consensus Estimate of $1,452.5 million [4].

Investment Rating - The report maintains a "Buy" rating for ZTO Express (2057.HK) [1][5] Core Views - ZTO Express is a leading player in the express delivery industry with a market share of 22.9%, significantly ahead of its closest competitor by 6.8 percentage points, indicating a strong market position [5] - The company is expected to achieve stable earnings growth, with a projected PE ratio of only 12 times for 2024, suggesting good investment value [5] - The inclusion of ZTO in the Hong Kong Stock Connect is anticipated to improve stock liquidity and catalyze a revaluation of its stock price [5] Financial Summary - Total shares outstanding: 824 million [2] - Circulating shares: 617 million [2] - Market price: HKD 165.4 [2] - Market capitalization: HKD 136.2 billion [2] - Revenue projections for 2023E to 2025E are HKD 41.19 billion, HKD 46.57 billion, and HKD 52.81 billion respectively, with growth rates of 16%, 13%, and 13% [4] - Net profit forecasts for the same period are HKD 9.16 billion, HKD 10.43 billion, and HKD 12.23 billion, with growth rates of 34%, 14%, and 17% respectively [4] - The diluted earnings per share (EPS) are projected to be HKD 11.07, HKD 12.61, and HKD 14.79 for 2023E, 2024E, and 2025E respectively [4] Competitive Advantages - ZTO Express benefits from significant economies of scale, which reduce average unit costs and allow for competitive pricing [5] - The company has maintained a strong management capability, which has been crucial in stabilizing its franchise network and facilitating expansion [5] - ZTO's capital expenditures from 2016 to 2022 totaled HKD 40.7 billion, with substantial investments in infrastructure, ensuring it remains competitive in the industry [5]

Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057.HK) [4] Core Views - ZTO Express has been included in the Hong Kong Stock Connect program effective March 4, 2024, which is expected to enhance liquidity and valuation [2] - The company has a solid industry position, high earnings certainty, and a strong balance sheet, making it an attractive investment opportunity [2] - Historical performance of other companies after being included in the Stock Connect indicates potential positive stock price movements [2] Financial Data and Earnings Forecast - Revenue projections for ZTO Express are as follows: - 2023: 43.35 billion RMB, 2024: 50.92 billion RMB, 2025: 56.87 billion RMB, with year-on-year growth rates of 23%, 17%, and 12% respectively [6] - Adjusted net profit forecasts are: - 2023: 9.31 billion RMB, 2024: 12.04 billion RMB, 2025: 14.69 billion RMB, with year-on-year growth rates of 34%, 29%, and 22% respectively [6] - The company’s price-to-earnings (PE) ratios are projected to be 12.5x for 2023, 9.6x for 2024, and 7.9x for 2025 [6]

Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057) [1] Core Views - ZTO Express's successful inclusion in the Hong Kong Stock Connect is expected to enhance stock liquidity and potentially lead to a valuation recovery as it attracts more mainland investors [3][9] - The company has demonstrated strong fundamentals and has been a leader in the express delivery industry since 2017, but its current valuation is at a low point compared to historical averages [9][10] - The "Build and Share" philosophy is seen as a cornerstone for ZTO's long-term sustainability and competitive advantage in the express delivery sector [19][24] Summary by Sections Recent Developments - On March 1, 2024, ZTO Express was added to the Hong Kong Stock Connect list, effective from March 4, 2024 [2][8] Investment Highlights - The inclusion in the Stock Connect is anticipated to improve stock liquidity and attract new investors, which may lead to a valuation recovery [3][9] - ZTO Express has a solid performance record, with a historical annual growth rate of 25% since its listing, and a 41.11% increase in net profit for the first three quarters of 2023 [9][10] - The current price-to-earnings (P/E) ratio is 13.43, significantly lower than its historical average of 27.83, indicating potential for valuation recovery [9][10] Business Strategy and Competitive Advantage - ZTO Express's "Build and Share" strategy has been pivotal in its growth, focusing on cost reduction and efficiency improvements across its network [19][24] - The company has implemented three key decisions: the launch of inter-provincial express services, the introduction of a paid delivery fee system, and the establishment of a shareholding system, which have collectively strengthened its market position [12][19] - The company aims to achieve a balance of volume, price, cost, and profit, with expectations for upward breakthroughs in performance metrics [31][32] Financial Projections - Revenue forecasts for ZTO Express are projected at CNY 38.514 billion, CNY 45.213 billion, and CNY 52.342 billion for 2023, 2024, and 2025 respectively, with net profits expected to be CNY 9.075 billion, CNY 10.711 billion, and CNY 12.690 billion [32] - The corresponding P/E ratios for the same years are estimated to be 12.80, 10.85, and 9.16, indicating a favorable outlook for the company's financial performance [32]

Core Viewpoint - ZTO Express (Cayman) Inc. is set to release its unaudited financial results for Q4 and the fiscal year 2023 on March 19, 2024, after U.S. market closure [1] Group 1: Financial Results Announcement - The unaudited financial results for the fourth quarter ended December 31, 2023, and the annual results for the fiscal year ended December 31, 2023, will be announced after the U.S. market closes on March 19, 2024 [1] - An earnings conference call will be hosted by ZTO's management team at 8:30 P.M. U.S. Eastern Time on March 19, 2024, which corresponds to 8:30 A.M. Beijing Time on March 20, 2024 [1] Group 2: Conference Call Details - Dial-in details for the earnings conference call include numbers for the United States, Hong Kong, Singapore, Mainland China, and international callers [2] - A replay of the conference call will be available until March 26, 2024, with specific numbers provided for different regions [2] - A live and archived webcast of the conference call will be accessible on the Company's investor relations website [2] Group 3: Company Overview - ZTO Express is recognized as a leading and fast-growing express delivery company in China, providing express delivery and value-added logistics services through a nationwide network [3] - The company operates a scalable network partner model to support the growth of e-commerce in China, focusing on pickup and last-mile delivery services while managing critical line-haul transportation and sorting [3]

Core Insights - ZTO Express held its National Network Conference on January 23, 2024, to review 2023 achievements and outline 2024 goals, focusing on high-quality development of its network [1][3] Company Performance - In 2023, ZTO achieved a parcel volume of 30.2 billion, marking a year-on-year growth of 23.8% and capturing a market share of 22.9%, further solidifying its leadership position [2] Strategic Focus for 2024 - The conference emphasized the need to integrate "development" and "security," with key tasks including prioritizing safety, enhancing capabilities, strengthening services, improving efficiency, ensuring transparency, activating potential, promoting collaboration, and building a strong team [3] Industry Outlook - The chairman highlighted the potential of the Chinese express delivery market and ZTO's advantages in scale, cost, foundation, brand, and network, aiming for excellence in core business, ecological expansion, and channel building [4] Business Model - ZTO operates a scalable network partner model, which supports the growth of e-commerce in China by leveraging network partners for pickup and last-mile delivery while controlling critical line-haul transportation and sorting [5]