ZTO EXPRESS(US:ZTO)2022-08-18 06:10Financial Data and Key Metrics Changes - In Q2 2022, ZTO delivered a parcel volume of 6.2 billion, an increase of 7.5%, expanding market share by 2 percentage points to 23% [7][23] - Adjusted net income grew 38.2% to 1.76 billion RMB, while total revenue increased 18.2% to 8.7 billion RMB [23][28] - Average Selling Price (ASP) for the core express delivery business increased by 10.5% [23] - Gross profit increased 31.6% to 2.2 billion RMB, with a gross profit margin rate of 25.4%, up 2.6 points [27][28] - Operating cash flow grew 95.7% to 3.8 billion RMB [28] Business Line Data and Key Metrics Changes - The total cost of revenue was 6.5 billion RMB, an increase of 14.2%, with unit costs for core express delivery rising by 6.2% [25][27] - Line haul transportation costs per parcel increased by 2% to 0.49 RMB, while unit sorting costs rose by 9.1% to 0.30 RMB [25][26] Market Data and Key Metrics Changes - The company maintained its annual volume guidance in the range of 24.96 billion to 25.86 billion parcels, representing a 12% to 16% year-over-year increase [30] Company Strategy and Development Direction - ZTO aims to improve efficiency through digitalization and standardization of operations, enhancing resource utilization [13][14] - The company plans to strengthen its partner network management and develop last-mile presence to reduce costs and improve service quality [15][16] - ZTO is focused on expanding its business in five key logistics segments, including LTL and cloud warehousing, to establish competitive advantages [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the logistics industry despite short-term uncertainties due to the pandemic [19][28] - The company believes that the express delivery industry is resilient and has significant market potential, with a consistent strategy for market share expansion and profit targets [19][28] Other Important Information - The company is exploring dual primary listing options on the Hong Kong Stock Exchange [53] Q&A Session Summary Question: Service operation recovery in EHU and ASP trends - Management confirmed that operations in EHU are gradually resuming, with express delivery businesses coordinating with government inspections [33] - ASP is expected to stabilize, with slight increases anticipated in the second half of the year [34][35] Question: Margin trends and e-commerce portion - Management indicated that margin expansion may slow in the second half of the year due to base effects, but cost productivity initiatives are in place [39][40] - E-commerce remains a stable portion of the business, with no significant changes expected [42] Question: CapEx and cost efficiency guidance - CapEx is projected to remain around 9 billion RMB, with a focus on managing investments against demand [45] - Cost productivity improvements are expected to continue in the second half of the year [46] Question: Investment strategies and long-term market share goals - The company is investing in differentiated products and expanding its ecosystem, aiming for a long-term market share target of 30% to 40% [51][49] Question: Industry growth and dual primary listing - Management remains confident in the long-term growth of the logistics industry, particularly in rural and agricultural sectors [52] - A dual primary listing is being considered as a viable option [53] Question: Digitalization compared to peers - ZTO has invested significantly in technology, positioning itself as a leader in digitalization within the industry [56]