Investment Rating - The report assigns a "Buy-A/Buy-H" rating to ZTO Express-W (02057.HK/ZTO.N) [2] Core Views - ZTO Express is a high-margin player in the mid-to-low-end e-commerce express delivery sector, demonstrating resilience through market cycles [2] - From 2014 to 2023, ZTO's business volume grew 16x, profits increased 21x, with an average gross margin of 29% and diluted ROE of 13% [2] - The express delivery industry is entering a period of rising returns as the capital cycle nears its end, with capital expenditure peaking in 2021 for the industry and 2023 for companies [3] - ZTO's market share increased from 15% in 2016 to 23% in 2023, while its profit share among the "Tongda" group rose from 30% to 62% [3] - The company is positioned at a triple inflection point: easing price wars, improving industry structure, and enhanced liquidity through inclusion in the Hong Kong Stock Connect [3] Company Background - ZTO operates in the mid-to-low-end e-commerce express delivery sector, with over 90% of its parcels being e-commerce related [14] - Despite being the last among the "Tongda" group to be established, ZTO has become the industry leader through innovative strategies and a shared network model [15] - The company's business volume CAGR reached 32% over the past decade, with 2023 volume estimated at 30.2 billion parcels [17] - ZTO's franchise model, combined with its shared network mechanism, has enabled rapid expansion and cost efficiency [19][20] - The company maintains a dual-class share structure, with founder Lai Meisong holding 25.9% and Alibaba as the second-largest shareholder with 8.8% [22] Market Supply and Demand - The express delivery industry is transitioning to the fourth stage of the capital cycle, characterized by improved supply-side conditions and rising returns [32] - Demand growth remains resilient due to trends in parcel miniaturization, increasing e-commerce penetration in lower-tier markets, and rising consumer spending power [36] - Short-term demand is driven by the continuation of parcel miniaturization trends, with low-price e-commerce platforms contributing significantly to GMV growth [38] - Medium-term growth potential lies in the untapped e-commerce penetration in lower-tier markets, where internet penetration and per capita consumption are still growing [40] - Long-term industry growth will follow consumption trends, potentially aligning with the growth rates of total retail sales and online retail sales [41] Industry Landscape - The mid-to-low-end express delivery sector is shaped by three key factors: policy, supply-demand dynamics, and e-commerce capital [45] - Policy changes, particularly the 2021 express delivery regulations, have played a crucial role in stabilizing the industry and improving profitability [49] - ZTO's competitive advantage stems from its cost and efficiency leadership, supported by scale, investment, and management capabilities [51] - The company's scale advantage is evident in its leading position in daily parcel volume, with over 45 million parcels per day in 2023 [52] - ZTO's strategic investments in infrastructure, including land, buildings, and transportation equipment, have created significant competitive barriers [54][55] Financial Performance and Valuation - ZTO's financial performance demonstrates industry-leading profitability, with a 2022 gross margin of 25.6% and net margin of 18.8% [25] - The company's cash flow position is strong, with 2022 operating cash flow reaching RMB 11.5 billion and cash reserves leading the mid-to-low-end express sector [26] - For 2024-2026, the report forecasts EPS of RMB 12.55, 14.69, and 17.16 per share, respectively [3] - The target price is set at HKD 207.34 for the Hong Kong-listed shares and USD 26.17 for the US-listed shares, based on a 15x PE multiple for 2024 [72] - Compared to domestic peers, ZTO commands a valuation premium due to its leading market position and profitability [72]
穿越周期，强者恒强