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 Bottom-Up

<ul>
<li>ZTO Express reported another set of weak results after the US close on November 19</li>
<li>Although Q3 unit prices rose slightly, unit costs increased by much more, crushing margins</li>
<li>On both sides of the price-volume tradeoff, ZTO continues to lose profitability | AVOID</li>
</ul>


ZTO Express reported another set of weak results after the US close on November 19
Although Q3 unit prices rose slightly, unit costs increased by much more, crushing margins
On both sides of the price-volume tradeoff, ZTO continues to lose profitability | AVOID


ZTO Express Q325 Results | Revenue, ASPs Both Up Y/Y | But Earnings, Margins Both Down | AVOID

<ul>
<li>Industry and company reports show ASP declines gained momentum in April</li>
<li>April volume jumped 36% Y/Y on a weak comp from 2022 (Covid-19 lockdowns)</li>
<li>Our thesis: pricing is getting weaker, and this trend will soon impact margins</li>
</ul>


Industry and company reports show ASP declines gained momentum in April
April volume jumped 36% Y/Y on a weak comp from 2022 (Covid-19 lockdowns)
Our thesis: pricing is getting weaker, and this trend will soon impact margins


Monthly Express Tracker | Prices Continue to Slide | Volume Pops | (May 2023)

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<ul>
<li>Active conviction rising: China Industrials allocations are nearing all-time highs, with record participation and expanding net overweights despite a declining MSCI EM benchmark weight.</li>
<li>Clear conviction overweight: 76% of GEM funds are overweight China &amp; HK Industrials, making it the strongest country/sector conviction play across the EM universe.</li>
<li>Broadening beyond CATL: While CATL remains dominant, ownership is widening to emerging names, even as second-tier stocks show sharper rotations and selective positioning.</li>
</ul>


Active conviction rising: China Industrials allocations are nearing all-time highs, with record participation and expanding net overweights despite a declining MSCI EM benchmark weight.
Clear conviction overweight: 76% of GEM funds are overweight China &amp; HK Industrials, making it the strongest country/sector conviction play across the EM universe.
Broadening beyond CATL: While CATL remains dominant, ownership is widening to emerging names, even as second-tier stocks show sharper rotations and selective positioning.


China & HK Industrials: EM’s Key Overweight Grows Stronger

<ul>
<li>Last week in its June quarter earnings release Alibaba "demoted" CaiNiao's status</li>
<li>It's become clear that boosting eComm logistics simply isn't a priority for Alibaba</li>
<li>For firms that took investment from Alibaba &amp; CaiNiao, implications are -Ive</li>
</ul>


Last week in its June quarter earnings release Alibaba "demoted" CaiNiao's status
It's become clear that boosting eComm logistics simply isn't a priority for Alibaba
For firms that took investment from Alibaba &amp; CaiNiao, implications are -Ive


Alibaba's Logistics Arm CaiNiao Relegated To "Others" Status | Implications for Chinese Express?

<ul>
<li>Q424 revenue growth &amp; EBITDA margin both improved noticeably vs Q324 </li>
<li>Additionally, ZTO gave FY25 parcel volume guidance that implies an acceleration of growth</li>
<li>But "key" change in revenue mix is crushing cash returns (Q424 OpCF down -28% Y/Y)</li>
</ul>


Q424 revenue growth &amp; EBITDA margin both improved noticeably vs Q324 
Additionally, ZTO gave FY25 parcel volume guidance that implies an acceleration of growth
But "key" change in revenue mix is crushing cash returns (Q424 OpCF down -28% Y/Y)


Q424 ZTO Express Results & FY25 Guidance: Revenue Growth & Margin Better, But OpCF Shrinking; AVOID

China

ZTO Express (Cayman) Inc. operates as an express delivery company. The Company provides express delivery service through their nationwide network, as well as other value-added logistics services. ZTO Express serves customers globally.

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ZTO Express Cayman (ZTO US)

ZTO Express Q325 Results | Revenue, ASPs Both Up Y/Y | But Earnings, Margins Both Down | AVOID

ZTO reported another weak set of results on Wednesday, as margins collapsed in Q3 despite modest pricing improvement. Oh, and management cut volume...

Tracking Traffic

Monthly Express Tracker | Prices Continue to Slide | Volume Pops | (May 2023)

In April, express volume shot up 36% against easy Y/Y comps, but ASPs deepened their recent decline. We believe pricing will continue to...

Tracking Traffic

China & HK Industrials: EM’s Key Overweight Grows Stronger

China Industrials are back in focus. Active EM managers are increasing exposure, participation is at record highs, and conviction is spreading...

Steven Holden

Alibaba's Logistics Arm CaiNiao Relegated To "Others" Status | Implications for Chinese Express?

As part of its June quarter earnings release last week, Alibaba effectively "demoted" logistics arm CaiNiao by pushing it into a new "Others"...

Tracking Traffic

Q424 ZTO Express Results & FY25 Guidance: Revenue Growth & Margin Better, But OpCF Shrinking; AVOID

ZTO's revenue momentum and core margin improved in Q424, but at the cost of deteriorating Cash Flow. We view the strong recent growth of "key...

Tracking Traffic

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