Investment Rating - The report assigns a "Buy" rating for the company for the first time [2]. Core Views - The company is positioned as a leading comprehensive logistics provider, achieving record high performance. It has rapidly transformed from a leading express delivery service provider in China to a global comprehensive logistics service provider through its "1 to N" expansion strategy. The company benefits from steady growth in express delivery, ongoing diversification strategies, improved profitability from new businesses, and significant cost reduction and efficiency gains [6][12]. Summary by Sections 1. Company Overview - The company aims to become a global leader in smart logistics solutions, having established a strong market position in China since its inception in 1993. It has undergone three major development phases: focusing on domestic express logistics, diversifying its services, and now positioning itself for global comprehensive logistics [19][21]. 2. Competitive Advantages - The company possesses a unique business model characterized by direct management, comprehensive logistics, and independent third-party services. This model ensures high service quality, significant resource advantages, and substantial growth potential [7][46]. 3. Cost Reduction and Lean Management - The company has implemented a multi-network integration strategy that has led to significant cost reductions, with cumulative savings exceeding 3.8 billion yuan from 2021 to 2024. The operational model has been simplified to enhance efficiency, with automation and unmanned logistics being key components [8][36]. 4. Growth Potential - The express delivery business is expected to grow, driven by consumer and industrial demand. The company anticipates an 11.8% year-on-year increase in express delivery volume in 2024, with significant contributions from e-commerce returns and industrial logistics [9][11]. 5. Financial Forecast and Investment Recommendations - The company is projected to achieve revenues of 312.49 billion yuan, 339.27 billion yuan, and 370.38 billion yuan from 2025 to 2027, with corresponding net profits of 11.86 billion yuan, 14.01 billion yuan, and 16.22 billion yuan. The report emphasizes the company's strong competitive advantages and high growth potential, leading to a positive long-term investment outlook [14][18].

Core Insights - ZTO Express reported Q2 2025 revenue of 11.832 billion RMB, a year-on-year increase of 10.3% [1] - Net profit for the quarter was 1.965 billion RMB, with adjusted diluted earnings per American Depositary Share at 2.53 RMB and 2.48 RMB [1] - Package volume reached 9.847 billion, up 16.5% from 8.452 billion in Q2 2024 [1] Operational Metrics - As of June 30, 2025, ZTO had over 31,000 collection and delivery points and approximately 6,000 direct network partners [1] - The fleet included over 10,000 self-owned vehicles, with over 9,400 being high-capacity models [1] - The company operated 94 sorting centers, with 90 managed by ZTO and 4 by network partners [1] Management Commentary - The CEO emphasized the company's commitment to quality and differentiated service, despite a market trend towards lower-priced offerings [1] - The CFO noted a slight decrease in net revenue per package, attributed to increased incentives and a decline in average package weight, partially offset by higher prices for key accounts [1] - The company adjusted its full-year package volume guidance to a range of 38.8 billion to 40.1 billion, reflecting a growth rate of 14.0% to 18.0% [1] Revenue Breakdown - Core express service revenue grew by 11.0% year-on-year, driven by a 16.5% increase in package volume and a 4.7% decrease in package price [1] - Freight forwarding service revenue decreased by 22.7% compared to the same period in 2024 [1] - Material sales, primarily from thermal paper for electronic waybills, increased by 9.5% [1]

Market Overview - The three major U.S. stock indices closed lower, with the Dow Jones down 0.46% at 44,632.99 points, the S&P 500 down 0.30% at 6,370.86 points, and the Nasdaq down 0.38% at 21,098.29 points [2][3] - Popular tech stocks led the decline, with the U.S. Tech Giants Index down 0.59%, Facebook down over 2%, and Tesla, Apple, and Intel down over 1% [3] Company Performance - Starbucks reported Q3 net revenue of $9.5 billion, up from $9.11 billion year-over-year, exceeding analyst expectations of $9.29 billion. Adjusted EPS was $0.50, below the expected $0.65. Same-store sales in China grew by 2%, surpassing the expected 1.44% [8] - Visa's Q3 net revenue reached $10.2 billion, up from $8.9 billion year-over-year, beating analyst expectations of $9.83 billion. Adjusted EPS was $2.98, above the forecast of $2.85 [10] Sector Movements - The weight loss sector saw significant declines, with Novo Nordisk dropping over 21%. United Parcel Service fell over 10% due to Q2 earnings impact, while Eli Lilly and FedEx dropped 5.59% and over 3%, respectively [4] - The oil and gas sector showed strength, with ExxonMobil, Shell, and Imperial Oil rising over 1% [6] Chinese Stocks - The Nasdaq Golden Dragon China Index fell 1.35%, with major Chinese stocks mostly declining. Li Auto dropped over 6%, JD.com fell over 3%, and Baidu declined nearly 3% [5] Federal Reserve Focus - The market is awaiting the Federal Reserve's monetary policy meeting, with a 97.9% probability that interest rates will remain unchanged. The probability of a 25 basis point cut in September is 63.2% [11][14]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has shown strong growth in business volume and revenue, with June revenue reaching 26.254 billion, a year-on-year increase of 13.43%, and express logistics business volume at 1.46 billion tickets, up 31.77% year-on-year [2][3] - The company has successfully transformed into a comprehensive logistics leader, with new business segments achieving market-leading positions and contributing to revenue and profit improvements [6][7] Summary by Sections Business Performance - In Q2, the company reported a business volume increase of 31.20% year-on-year and revenue growth of 12.41% [3] - The company’s business volume has been accelerating since 2025, significantly outpacing industry growth rates [4] Revenue and Profitability - The total revenue for the company in 2025 is projected to be 315.54 billion, with a year-on-year growth rate of 10.9% [8] - The net profit attributable to the parent company is expected to reach 11.91 billion in 2025, reflecting a year-on-year growth of 17.1% [8] Financial Metrics - The company’s gross margin is projected to improve from 12.8% in 2023 to 14.0% in 2025 [8] - The return on equity (ROE) is expected to increase from 8.9% in 2023 to 12.1% in 2025 [8] Future Outlook - The company is expected to maintain a strong growth trajectory, with net profits projected to reach 14.26 billion in 2026 and 16.85 billion in 2027, representing growth rates of 19.7% and 18.2% respectively [7][8] - The company’s price-to-earnings ratio is projected to decrease from 29.33 in 2023 to 20.28 in 2025, indicating potential value appreciation [8]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company is expected to improve liquidity through the issuance of new H shares and convertible bonds, with a total expected fundraising net amount of approximately HKD 58.33 billion [2][3] - The company has successfully transformed into a comprehensive logistics leader, expanding into various emerging sectors such as express delivery, cold chain, and international logistics, which are expected to enhance profitability and revenue growth [4] - The projected net profit for the company from 2025 to 2027 is expected to grow by 17.1%, 19.7%, and 18.2% respectively, indicating a strong growth trajectory [4] Summary by Sections Fundraising and Liquidity Improvement - The company plans to issue 70 million new H shares at a price of HKD 42.15 per share, which is a discount of approximately 8.8% from the closing price on June 25 [2] - Additionally, the company intends to issue zero-coupon convertible bonds worth HKD 29.5 billion, with an initial conversion price of HKD 48.47 per share, representing a premium of about 5.3% [3] - The funds raised will be used to enhance international and cross-border logistics capabilities, develop advanced technologies, and optimize the company's capital structure [3] Financial Projections - The total revenue for the company is projected to reach HKD 315.54 billion in 2025, with a year-on-year growth rate of 10.9% [5] - The company's gross profit margin is expected to improve from 12.8% in 2023 to 14.8% in 2027 [5] - The earnings per share (EPS) is forecasted to increase from CNY 2.39 in 2025 to CNY 3.37 in 2027 [5] Profitability and Valuation - The company is expected to maintain a strong cash flow, with cash assets amounting to approximately CNY 427.71 billion as of the end of Q1 2025 [3] - The projected price-to-earnings (P/E) ratios for 2025, 2026, and 2027 are 21.1x, 17.6x, and 14.9x respectively, indicating a favorable valuation outlook [4]

Investment Rating - The report maintains a positive outlook on the express delivery sector, suggesting that it is currently undervalued and highlighting the growth potential driven by the e-commerce market and new demands in lower-tier markets [61]. Core Insights - The express delivery industry shows strong growth resilience, with a year-on-year increase of 21.6% in business volume for Q1 2025 and a 13.8% increase in total revenue for 2024, reaching 1.4 trillion yuan [1][21]. - Major companies in the sector, including Zhongtong and Shentong, have demonstrated solid revenue growth, with Shentong achieving a remarkable 205% increase in net profit for 2024 [2][34]. - The market share of Zhongtong remains dominant at 19.6% in 2024, leading the sector by a margin of 4.2 percentage points over its closest competitor [2][31]. Summary by Sections Industry Overview - The express delivery business volume in 2024 reached 1.758 billion pieces, a 21.5% increase year-on-year, while Q1 2025 saw 451.4 million pieces, marking a 21.6% increase [11][1]. - The average price per ticket in the express delivery industry faced slight pressure, decreasing by 14.2% in 2024 and 7.7% in Q1 2025 [25][21]. Performance Overview - All major express delivery companies reported steady growth in both business volume and revenue, with Shentong leading in growth rates at 29.8% for 2024 [2][28]. - In terms of revenue, major players like Shunfeng, Shentong, and Yunda achieved revenues of 2.844 billion, 471.7 million, and 485.4 million yuan respectively in 2024, with year-on-year growth rates of 10.1%, 15.3%, and 7.9% [34][36]. Asset Layout - Zhongtong possesses the largest fleet of self-owned vehicles and sorting equipment, with over 10,000 self-owned trucks and 95 sorting centers as of 2024 [3][56]. - Capital expenditures for 2024 show an increase for Shentong and Yunda, while Zhongtong, Yunda, and Shunfeng have slowed their capital spending [3][58]. Investment Recommendations - The report recommends focusing on leading e-commerce express delivery companies such as Zhongtong, Yunda, Shentong, and Jitu Express, as well as logistics leader Shunfeng, due to the expected recovery in demand in the mid-to-high-end express market [61][62].