Summary of Conference Call on the Express Delivery Industry Industry Overview - The express delivery industry is currently facing pressure from price wars, with no room for further reductions in delivery fees. Companies are implementing cost-cutting measures at their network points to cope with this pressure [1][4] - Regulatory requirements are pushing brands to address network exit issues to ensure stability, with common strategies including short-term subsidies or larger networks absorbing smaller ones [1][5] - The focus for the future will be on improving end-service quality and controlling costs, with technologies like autonomous vehicles being utilized to reduce expenses [1][6] Key Points and Arguments - The "anti-involution" policy aims to prevent excessive competition that could lead to performance downgrades. It is expected that there will be no large-scale price cuts in Q3 2025, although significant price increases are also unlikely [1][7] - Capital expenditure in the express delivery industry is projected to increase in 2025, but growth rates are expected to slow to around 15%. Some brands are underperforming and facing cost pressures, necessitating measures to ensure volume growth [1][8] - Management challenges include ensuring consistent pricing control from headquarters, the impact of automation on capacity utilization, and the complexities introduced by franchise pricing strategies [1][9] Regional Pricing Trends - Recent price increases have been noted in various regions, such as a 0.1 yuan increase in the base price in Yiwu, with similar adjustments expected in Guangdong starting in August [1][10][11] - The self-initiated price hikes by franchisees indicate a response to the need for recovery before peak seasons, with headquarters not capitalizing on these increases [1][12] Investment Recommendations - It is recommended to focus on leading companies like YTO and ZTO, which have low valuations, increasing growth rates, and strong market shares. These companies are seen as having robust risk resistance and potential for commercial growth [2][14] - J&T Express has exceeded expectations in its international business, particularly in Southeast Asia, with a growth rate of 66% in Q2, leading to an upward adjustment of its target price to 15 yuan [2][15] Future Outlook - The overall performance trend for the e-commerce express delivery industry in 2025 can be assessed based on the first half's performance, with leading companies like Zhongtong showing strong fundamentals and low valuations [1][13] - The future of the e-commerce express delivery industry appears promising, with expectations for continued high growth in international markets and potential positive impacts from the anti-involution policy in the domestic market [1][18]

Group 1 - The express delivery industry is experiencing sustained high demand, with an expected business volume growth rate of around 15% for the foreseeable future [1] - The current competitive landscape is expected to last for a long time, with anti-involution policies favoring mid-to-late stage companies, leading to a potential easing of competition in the second half of the year [1] - There is a recommendation to focus on the efficiency improvements in e-commerce express delivery, as factors like autonomous vehicles may enhance the competitive advantage of mid-to-late stage companies [1] Group 2 - The express delivery industry's price competition has gone through four phases: 1) moderate price competition (2016-2019), 2) intense price wars (2019-2021), 3) stabilization phase (2021-2022), and 4) a return to competition since 2023 [2] - Historical anti-involution policies have included multiple measures from April to September 2021 aimed at curbing vicious price wars, leading to a price rebound starting in September 2021 [2] - The current industry fundamentals align with anti-involution demands, with clear low-price support, but the likelihood of a comprehensive price increase similar to 2021 is low due to ongoing competition [3] Group 3 - If a price increase occurs, e-commerce express delivery companies could see significant profit elasticity, with past data showing substantial profit rebounds following price hikes [4] - Profit margins for major companies post-price increase in 2022 showed significant year-on-year improvements, with ZTO Express up by 26% and YTO Express up by 105% [4] - Under hypothetical price increases of 3-10%, the profit elasticity for various companies ranges significantly, indicating that mid-to-late stage companies may experience more pronounced profit elasticity due to lower profit baselines [4]

Summary of Key Points from the Conference Call on the Express Delivery Industry Industry Overview - The express delivery industry is projected to reach a business volume of 204 billion pieces by 2025, reflecting a growth rate of 16.6%. The growth rate for the first half of the year was 19.3%, while the second half is expected to be around 14% [1][5] - The average price decline for the year is anticipated to be -6.9%, indicating a slowdown in price competition due to the application of unmanned technologies that reduce costs [1][5] Core Insights and Arguments - The State Post Bureau has emphasized anti-involution policies to alleviate low-price competition during the summer off-peak season, similar to measures taken in 2021 [1][6] - E-commerce platforms are undermining express companies' data control capabilities through data privacy measures, which restrict their commercial development and service quality improvements [1][10] - The rise of instant retail may harm seller interests, prompting the State Administration for Market Regulation to address related platforms [1][11] - The changing global manufacturing landscape is impacting international express companies, with Chinese logistics firms expected to dominate the global market by 2035, with five out of the top ten express logistics companies projected to be from China [1][17][18] Regional Competition and Market Dynamics - There is a notable regional price competition phenomenon, particularly in Hebei and Henan, where aggressive pricing strategies are observed [1][7] - The express delivery market in Zhejiang is experiencing a decline in its national share, indicating a shift in business dynamics due to high labor and rental costs [1][12][15] Company-Specific Insights - J&T Express is recognized for its innovative internet-based approach, rapidly expanding market share through a unique shareholding model that combines direct sales and franchising [1][4][22] - SF Express reported a business volume growth of 25.7% in the first half of 2025, outperforming the industry average by 6.4 percentage points, attributed to operational model innovations [1][32][33] Future Outlook - The express delivery industry is expected to generate revenues of 1.52 trillion yuan in 2025, with potential growth to four to five trillion yuan in the future [1][29] - The anticipated growth in cross-border e-commerce and customized logistics services is expected to significantly contribute to the industry's expansion [1][29][30] Additional Important Insights - The impact of leadership changes in postal companies can significantly affect performance, with new leadership often driving positive results [1][35] - The performance evaluation systems differ between postal and private enterprises, with private companies focusing on profit maximization [1][36] This summary encapsulates the key points discussed in the conference call regarding the express delivery industry, highlighting growth projections, competitive dynamics, and the implications of regulatory policies.

Investment Rating - The report maintains a "Recommended" rating for SF Express, Shentong Express, and Yunda Express, indicating a positive outlook for these companies in the express delivery sector [8]. Core Insights - The express delivery industry showed robust performance in the first half of 2025, with a total business volume of 956.4 billion pieces, reflecting a year-on-year growth of 19.3%. The total revenue reached 7187.8 billion yuan, growing by 10.1% year-on-year [3][5]. - The report highlights that the demand for express delivery is driven by trends such as the increasing volume of small packages, reverse logistics, and the benefits from lower-tier markets. The growth rate of express delivery volume significantly outpaces the growth of retail sales and online retail sales [6]. - Price competition in the industry is intensifying due to the trend of smaller packages and ongoing price wars. However, the report suggests that the intensity of price competition may be controllable due to policy guidance aimed at promoting high-quality development [6][7]. Summary by Sections Industry Data - In June 2025, the express delivery business volume reached 168.7 billion pieces, with revenue of 1263.2 billion yuan, marking a year-on-year increase of 15.8% and 9.0%, respectively [3]. - For the first half of 2025, the express delivery revenue was 7187.8 billion yuan, with a year-on-year growth of 10.1%, while the business volume was 956.4 billion pieces, growing by 19.3% [3][5]. Company Performance - In June 2025, SF Express reported a revenue of 199.62 billion yuan, with a year-on-year growth of 14.2%. The business volume was 14.60 billion pieces, growing by 31.8% year-on-year [4]. - For the first half of 2025, SF Express's revenue was 1091.55 billion yuan, with a year-on-year growth of 10.2%, and a business volume of 78.13 billion pieces, reflecting a growth of 25.7% [5]. Investment Recommendations - The report suggests that the express delivery sector is currently undervalued, with expectations of continued growth driven by the expanding e-commerce market and new demands from lower-tier markets. It recommends focusing on leading companies in the e-commerce express delivery sector, such as ZTO Express, YTO Express, Yunda Express, Shentong Express, and Jitu Express, as well as the comprehensive logistics leader SF Express [7].