Summary of the Express Delivery Industry Conference Call Industry Overview - The express delivery industry experienced a growth rate of 21.6% in Q1, but dropped below 20% in April due to ongoing price wars. The competition is primarily concentrated in the central and northern regions of China, while traditional grain-producing areas maintain stable prices [1][3][5]. - Major companies like Shentong (申通) and YTO Express (圆通) have shown strong performance, with Shentong achieving a 19% increase in single ticket revenue in April, surpassing the industry average [1][7]. Key Insights and Arguments - **Price Stability and Competition**: Shentong has demonstrated remarkable price stability, with its franchisees showing resilience and actively capturing market share without excessive support from headquarters. This contrasts with other companies where franchisees lack motivation to seize market share [1][7]. - **Cost Control Strategies**: Companies are optimizing core costs such as transit and trunk transportation to cope with price competition. Yunda (运达) has achieved a historical low cost of 0.62 yuan per ticket, which is the lowest in the industry [1][8]. - **Single Ticket Delivery Fees**: Delivery fees have gradually decreased with the growth in business volume, but the extent of decline varies among companies. Shentong's delivery fees remained stable in Q1, validating its strategy of balancing profit and growth [1][9]. - **Capital Expenditure Disparities**: There is a divergence in capital expenditures among express delivery companies, with Zhongtong (中通) and YTO maintaining strong investments, indicating potential shifts in market share post-2025 [1][10]. Additional Important Points - **Market Sentiment and Stock Performance**: The overall market sentiment remains low, with stock prices of major companies declining despite Shentong's positive performance in Q1. SF Express (顺丰) has shown relative resilience due to its franchise model [2][13]. - **Regional Price Variations**: Prices in traditional grain-producing areas have not decreased significantly, while central and northern regions have seen substantial price drops, with some provinces experiencing growth rates of 30%-40% [6]. - **Future Industry Trends**: The express delivery industry is expected to face challenges in the upcoming months, with potential growth rates dropping to around 15% during the peak season. Companies may resort to price policies to enhance capacity utilization [14][15]. - **Impact of New Regulations**: New regulations are expected to influence the logistics industry significantly, promoting high-quality development and potentially providing government subsidies to leading companies [19][21]. Conclusion The express delivery industry is navigating a complex landscape characterized by price wars, varying performance among companies, and significant regional differences. Companies that effectively manage costs and maintain price stability, like Shentong and YTO, are likely to emerge stronger in the evolving market. The anticipated changes in capital expenditure and regulatory environment will also play a crucial role in shaping the industry's future dynamics.

Core Viewpoint - Jitu has managed to turn a profit in China despite a 7% decline in average order value, highlighting the intense competition in the express delivery market and the challenges faced by other companies in achieving profitability [3][4]. Group 1: Market Dynamics - The express delivery market in China is characterized by fierce competition, with Jitu entering during a period of intense price wars and emerging as a strong player [3][4]. - In 2024, Jitu's delivery volume in China exceeded that of Southeast Asia by 15.2 billion packages, yet its adjusted EBITDA was significantly lower than that of competitors [3][6]. - The express delivery market has seen a massive increase in volume, with 1.745 billion packages delivered in 2024, quadrupling since 2017, indicating ongoing growth potential [12]. Group 2: Profitability Challenges - The profitability of express delivery companies varies significantly, with Jitu's EBITDA at 3.14 billion yuan compared to SF Express's 32.7 billion yuan, illustrating the challenges of maintaining margins in a low-price environment [6][12]. - The market is heavily influenced by e-commerce, with over 80% of express deliveries linked to online retail, which has led to aggressive price competition [8][12]. - The cost structure of express delivery is highly dependent on volume, with costs per package decreasing significantly as daily volumes increase [11]. Group 3: Competitive Landscape - The express delivery sector is divided into two main categories: time-sensitive deliveries dominated by SF Express and e-commerce deliveries primarily handled by the Tongda system [6][8]. - The anticipated consolidation of the market has not materialized as expected, with the number of major players remaining high despite expectations of a reduction [14][16]. - The entry of new players like Jitu has further complicated the competitive landscape, leading to a situation where the market has not stabilized as hoped [16][20]. Group 4: Role of E-commerce - E-commerce platforms like Pinduoduo have significantly influenced the express delivery market, contributing to a substantial increase in order volume and altering competitive dynamics [22][23]. - The dependency of express delivery companies on e-commerce platforms has created a complex relationship, where platforms can exert significant influence over pricing and service standards [23][24]. - Jitu's rapid growth has been facilitated by its strategic partnerships with e-commerce platforms, allowing it to offer competitive pricing and gain market share quickly [22][25].