ab 16 September 2025 Global Research China Logistics Sector Heading into a better H225E, but what could be the major risk? Improving earnings outlook As expected, intense price competition was a key earnings drag for China's parcel sector in H125. That said, industry prices have started to recover since late July under the regulator's anti-involution campaign. We were among the first on the street to highlight a potential pricing recovery (APAC Focus), which has progressed even better than we previously env ...

Core Insights - ZTO Express reported second-quarter 2025 earnings of 35 cents per share, a decline from the previous year, while total revenues increased to $1.65 billion [1][8] - The company revised its 2025 parcel volume guidance down to 38.8 billion to 40.1 billion, reflecting a year-over-year growth of 14-18%, from a prior estimate of 40.8 billion to 42.2 billion, which indicated 20-24% growth [1][8] Financial Performance - Revenues from the core express delivery business rose by 11% year over year, driven by a 16.5% increase in parcel volume, despite a 4.7% decrease in parcel unit price [3] - Gross profit decreased by 18.7% compared to the same quarter last year, with the gross margin rate falling to 24.9% from 33.8% [4][8] - Total operating expenses increased to RMB469.3 million ($65.5 million) from RMB405.3 million in the prior year [4] Operational Highlights - ZTO Express handled over 9.8 billion parcels in the second quarter, achieving an adjusted net income of 2.1 billion [2] - Retail volume growth remained strong, exceeding 50% compared to the previous year, positively impacting overall margins [2] - Revenue from KA (Key Accounts) increased significantly by 149.7% due to a rise in e-commerce return parcels [3] Cash Position - At the end of the second quarter, ZTO Express had cash and cash equivalents of $1.85 billion, up from $1.71 billion at the end of the previous quarter [5]

Core Insights - ZTO Express reported first-quarter 2025 earnings of 37 cents per share, matching the previous year's quarter, while total revenues of $1.50 billion fell short of the Zacks Consensus Estimate of $1.67 billion but showed year-over-year improvement [1] Financial Performance - The core express delivery business revenue increased by 9.8% year over year, driven by a 19.1% growth in parcel volume, despite a 7.8% decrease in parcel unit price [3] - Adjusted net income for the quarter was $2.3 billion, with retail volume increasing by 46% year over year [2] - Gross profit decreased by 10.4% from the year-ago quarter, with gross margin falling to 24.7% from 30.1% [4] Operational Highlights - ZTO achieved a parcel volume of 8.5 billion during the first quarter [2] - KA revenues, generated by direct sales organizations, surged by 129.3%, attributed to an increase in e-commerce return parcels [3] - Revenue from freight forwarding services declined by 11.6% year over year due to falling cross-border e-commerce pricing [3] Cash and Share Repurchase Program - As of the end of the first quarter, ZTO had cash and cash equivalents of $1.71 billion, down from $1.84 billion at the end of the previous quarter [5] - The board approved an increase in the share repurchase program to $2 billion, extending the effective period through June 30, 2025 [5][6] Guidance - ZTO reaffirms its 2025 parcel volume guidance of 40.8 billion to 42.2 billion, indicating a year-over-year growth of 20-24% [7]

Core Insights - ZTO Express reported mixed fourth-quarter 2024 earnings, with earnings per share of 44 cents missing the Zacks Consensus Estimate of 46 cents, while total revenues of $1.77 billion surpassed the estimate of $1.65 billion [1][2] Financial Performance - The company's adjusted net income for the quarter was 2.7 billion, and parcel volume reached 9.7 billion, with an average daily retail parcel volume exceeding 7 million, marking a nearly 50% increase year over year [3] - Revenues from the core express delivery business improved by 22.4% year over year, driven by an 11% growth in parcel volume and a 10.3% increase in unit price [4] - Gross profit improved by 20.2% year over year, although the gross margin rate fell to 29.1% from 29.5% in the previous year [5] Operational Statistics - Revenues from freight forwarding services declined by 11.7% year over year due to falling cross-border e-commerce pricing, while revenues from accessory sales increased by 11.7% [5] - Total operating expenses were RMB306.5 million ($42.0 million), down from RMB373.2 million in the previous year [6] Cash and Dividends - ZTO Express ended the fourth quarter with cash and cash equivalents of $1.84 billion, an increase from $1.66 billion at the end of the prior quarter [6] - The board approved a semi-annual cash dividend of 35 cents per American depositary share, representing a 40% dividend payout ratio [7] Share Repurchase Program - The board approved an increase in the share repurchase program to $2 billion, with the effective period extended through June 30, 2025; as of December 31, 2024, ZTO had repurchased 50,546,707 ADSs for $1,222.0 million [8] Future Guidance - ZTO Express expects its parcel volume for 2025 to be in the range of 40.8 billion to 42.2 billion, reflecting a year-over-year growth of 20-24% [9] Stock Performance - ZTO shares have gained 9% year to date, outperforming the transportation-services industry [11]