China New Economy Equity Analyst, Blue Lotus Research Institute

Robert McKay

China New Economy Equity Analyst

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>ZTO's market share losses may accelerate as peers continue to cut prices. Worse yet, margins of its competitors are improving, which will sustain the war for a longer time;</li>
<li>ZTO has maintained profitability growth despite the price war, but we think this situation is unsustainable. Management will eventually need to sacrifice profitability or suffer accelerated share loss. </li>
<li>We now take a more bearish view on ZTO as we see no quick solution to the profit and market share balancing act. </li>
</ul>


ZTO's market share losses may accelerate as peers continue to cut prices. Worse yet, margins of its competitors are improving, which will sustain the war for a longer time;
ZTO has maintained profitability growth despite the price war, but we think this situation is unsustainable. Management will eventually need to sacrifice profitability or suffer accelerated share loss. 
We now take a more bearish view on ZTO as we see no quick solution to the profit and market share balancing act. 


China Logistics (Part 1): ZTO Has a Unit Economics Problem

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

<ul>
<li>2024 ECM offerings in the Greater China logistics &amp; transport segment included TS Lines (in Hong Kong), SF Holding(Hong Kong), and BingEx (US)</li>
<li>Generally, recent share offerings in the segment have <em>not</em> performed well at all</li>
<li>Looking to 2025, we see several deals, including SHEIN and a possible Didi return</li>
</ul>


2024 ECM offerings in the Greater China logistics &amp; transport segment included TS Lines (in Hong Kong), SF Holding(Hong Kong), and BingEx (US)
Generally, recent share offerings in the segment have not performed well at all
Looking to 2025, we see several deals, including SHEIN and a possible Didi return


2024 Greater China Logistics & Transport ECM Review & A Look at Potential 2025 Deals

<ul>
<li>Volume growth &amp; price declines both moderated in November vs preceding months</li>
<li>We believe most express companies should be experiencing margin expansion in Q424</li>
<li>We finish with a review 2024's winners and losers in China's ecomm fulfillment space</li>
</ul>


Volume growth &amp; price declines both moderated in November vs preceding months
We believe most express companies should be experiencing margin expansion in Q424
We finish with a review 2024's winners and losers in China's ecomm fulfillment space


Monthly Chinese Express Tracker | November Volume, ASPs | Review of YTD Performance (December 2024)

<ul>
<li>SF's revenue base is far larger, and in Q324 SF's revenue also grew faster than JD Logistics</li>
<li>SF and JD Log reported similar EBITDA margins in Q324, &amp; both enjoyed Y/Y improvement</li>
<li>JD Log appears far cheaper on EV/Revenue, perhaps due to its reliance on parent JD.com</li>
</ul>


SF's revenue base is far larger, and in Q324 SF's revenue also grew faster than JD Logistics
SF and JD Log reported similar EBITDA margins in Q324, &amp; both enjoyed Y/Y improvement
JD Log appears far cheaper on EV/Revenue, perhaps due to its reliance on parent JD.com


SF Holding Pre-IPO: Head-To-Head Comparison of SF Holding & JD Logistics

<ul>
<li>US President-elect Trump has proposed new tariffs on China (and others) by January</li>
<li>Higher tariffs on Chinese goods could make Chinese imports more expensive in the US</li>
<li>For SHEIN &amp; Temu, larger threat still comes from potential reform of <em>de minimis</em> rules</li>
</ul>


US President-elect Trump has proposed new tariffs on China (and others) by January
Higher tariffs on Chinese goods could make Chinese imports more expensive in the US
For SHEIN &amp; Temu, larger threat still comes from potential reform of de minimis rules


SHEIN and Temu: Higher Tariffs Under 2nd Trump Admin an Additional Threat Beyond "De Minimis" Reform

China

JD Logistics, Inc. offers logistics services. The Company provides cargo transportation, cargo distribution, warehousing, and other services. JD Logistics is located in China.

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JD Logistics (2618 HK)

China Logistics (Part 1): ZTO Has a Unit Economics Problem

ZTO faces increasing market share losses and margin pressure as competitors cut prices, leading to a more bearish outlook on the company's future...

Blue Lotus Research Institute

2024 Greater China Logistics & Transport ECM Review & A Look at Potential 2025 Deals

After 2024 began with raised expectations, actual ECM activity in the Greater China logistics & transportation space disappointed. But there are a...

Tracking Traffic

Monthly Chinese Express Tracker | November Volume, ASPs | Review of YTD Performance (December 2024)

Year-over-year parcel volume growth and price declines both moderated somewhat in November. We believe most Chinese express companies are...

Tracking Traffic

SF Holding Pre-IPO: Head-To-Head Comparison of SF Holding & JD Logistics

We offer a head-to-head comparison of SF Holding and JD Logistics, direct competitors in Chinese e-comm fulfillment that are now both listed in...

Tracking Traffic

SHEIN and Temu: Higher Tariffs Under 2nd Trump Admin an Additional Threat Beyond "De Minimis" Reform

Despite noise from the new US administration regarding additional tariffs on imported Chinese goods, the bigger threat to SHEIN and Temu remains...

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Logistics (Part 1): ZTO Has a Unit Economics Problem

​ZTO faces increasing market share losses and margin pressure as competitors cut prices, leading to a more bearish outlook on the company's future...

Blue Lotus Research Institute

2024 Greater China Logistics & Transport ECM Review & A Look at Potential 2025 Deals

After 2024 began with raised expectations, actual ECM activity in the Greater China logistics & transportation space disappointed. But there are a...

Tracking Traffic

Monthly Chinese Express Tracker | November Volume, ASPs | Review of YTD Performance (December 2024)

Year-over-year parcel volume growth and price declines both moderated somewhat in November. We believe most Chinese express companies are...

Tracking Traffic

SF Holding Pre-IPO: Head-To-Head Comparison of SF Holding & JD Logistics

We offer a head-to-head comparison of SF Holding and JD Logistics, direct competitors in Chinese e-comm fulfillment that are now both listed in...

Tracking Traffic

SHEIN and Temu: Higher Tariffs Under 2nd Trump Admin an Additional Threat Beyond "De Minimis" Reform

Despite noise from the new US administration regarding additional tariffs on imported Chinese goods, the bigger threat to SHEIN and Temu remains...

Tracking Traffic

ZTO faces increasing market share losses and margin pressure as competitors cut prices, leading to a more bearish outlook on the company's future...