Summary of ZTO Express Conference Call Company Overview - Company: ZTO Express - Industry: Transportation & Infrastructure - Market: Asia Pacific, primarily Mainland China Key Points and Arguments Market Dynamics and Volume Growth - ZTO's volume is expected to grow by approximately 10% year-over-year (YoY) in 3Q25, while industry volume growth is projected to slow from 17% in 2Q25 to 13% YoY in 3Q25 due to soft consumption and competition from instant shopping [2][4] - The anti-involution initiatives are impacting the market, leading to decreased low-value parcels and limiting upside for ZTO's market share gains in 3Q25 [2][5] Earnings Outlook - Adjusted net profit (NP) growth for 3Q25 is likely to remain negative at -8% YoY, an improvement from previous expectations of a drop greater than 15% YoY [3][4] - Unit operating profit is expected to improve by Rmb0.03 quarter-over-quarter (QoQ) to Rmb0.28 in 3Q25, influenced by various factors including anti-involution initiatives and market pricing [3][4] - There is mild potential for earnings growth to turn positive in 4Q25, with EPS forecasts for 2025-2027 raised by 9.1%, 5.8%, and 5.7% respectively [4][14] Price Target and Valuation - The price target remains unchanged at US$23.80, implying a 15x 2025 estimated price-to-earnings (P/E) ratio, which is below the domestic peer average of 20x [4][15] - The stock is currently trading at 12x 2025 estimated P/E, with a forward free cash flow (FCF) yield of 6-7%, which is attractive compared to the peer average of 1% [6][28] Competitive Landscape - More provinces are announcing price hikes amid anti-involution, but the competition outlook for 2026 remains uncertain [5][28] - ZTO aims to prioritize market share gains in the long run, despite potential disruptions from anti-involution initiatives [5][28] Financial Metrics - Current market capitalization is Rmb109,666 million, with a share price of US$19.24 as of September 25, 2025 [8] - The company has a projected non-GAAP net profit of Rmb9.3 billion for 2025, exceeding consensus estimates of Rmb8.9 billion [13][42] Risks and Considerations - Risks include potential pricing competition resuming after peak season, which could lead to near-term earnings cuts and market share gains for ZTO [5][43] - The company faces challenges from intensified industry competition and potential market consolidation stagnation [43] Additional Important Information - ZTO's strategic initiatives include cash dividends with a 40% payout and share repurchases to enhance shareholder returns [28] - The company is focused on maintaining its market leadership position and improving unit profitability despite the competitive pressures [6][23]
中通快递 - 2025 年第三季度预览：反内卷提升我们的预期