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>The Bad: Margins &amp; cash flow both declined sharply compared to Q224 </li>
<li>The Ugly: ZTO cut FY25 parcel volume growth target after a sluggish H1</li>
<li>With no signs of a turnaround in sight, we retain our negative view of ZTO</li>
</ul>


The Bad: Margins &amp; cash flow both declined sharply compared to Q224 
The Ugly: ZTO cut FY25 parcel volume growth target after a sluggish H1
With no signs of a turnaround in sight, we retain our negative view of ZTO


ZTO Express Q225 Results: No 'Good', Just the 'Bad' and the 'Ugly'

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We believe ZTO’s lower parcel volume growth guidance for the full year (14- 18%, vs. 20-24% previously) is a response to the government’s anti-involution campaign.</li><li>While weak 2Q25 profit (-26% YoY) and lower guidance look unattractive, we see chances of an ASP surprise over the coming 6-12 months which will likely serve as a major share price catalyst.</li><li>We only slightly fine-tune our 2025E-27E earnings forecast by 1-2%. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We believe ZTO’s lower parcel volume growth guidance for the full year (14- 18%, vs. 20-24% previously) is a response to the government’s anti-involution campaign.While weak 2Q25 profit (-26% YoY) and lower guidance look unattractive, we see chances of an ASP surprise over the coming 6-12 months which will likely serve as a major share price catalyst.We only slightly fine-tune our 2025E-27E earnings forecast by 1-2%. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTO Express (ZTO US/2057 HK) - Lower Volume Guidance but Likely ASP Surprise

<ul><li>ZTO Express (ZTO)’s 1Q25 core net profit grew 5% YoY to RMB1.96bn, based on our calculation.</li><li>In particular, such increase was only supported by RMB407mn (+2.4x YoY) government subsidies and tax rebates, which are likely to be one-off in nature.</li><li>With ASP dropping 8% YoY in 1Q25, ZTO’s parcel volume growth (19.1%) was still lagging behind the industry average (21.6%) and all the major players. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTO Express (ZTO)’s 1Q25 core net profit grew 5% YoY to RMB1.96bn, based on our calculation.In particular, such increase was only supported by RMB407mn (+2.4x YoY) government subsidies and tax rebates, which are likely to be one-off in nature.With ASP dropping 8% YoY in 1Q25, ZTO’s parcel volume growth (19.1%) was still lagging behind the industry average (21.6%) and all the major players. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTO Express (ZTO US/2057 HK) - 1Q25 Earnings Below Expectation...

<ul>
<li>March and Q125 parcel volume growth slowed only slightly vs strong Q424 and FY24</li>
<li>Single-Digit unit price declines should be manageable for most of the express companies</li>
<li>But express "story" generally unexciting, and most shares should continue to lag Alibaba</li>
</ul>


March and Q125 parcel volume growth slowed only slightly vs strong Q424 and FY24
Single-Digit unit price declines should be manageable for most of the express companies
But express "story" generally unexciting, and most shares should continue to lag Alibaba


Monthly Chinese Express Tracker | March, Q125 Growth Solid | But Shares Lag Alibaba (April 2025)

<ul><li>ZTO Express (ZTO)’s 4Q24 core net profit grew 11% YoY to RMB2.49bn, which is in line with our expectation.</li><li>The company targets to achieve full year parcel volume of 40.8-42.2bn (20-24% YoY growth), which is expected to outpace the industry growth of 15% (ZTO’s forecast).</li><li>This suggests a shift of strategy from profitability to volume growth, which we believe was due to the continuous decline in market share (18.8% in 4Q24, in terms of parcel volume). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTO Express (ZTO)’s 4Q24 core net profit grew 11% YoY to RMB2.49bn, which is in line with our expectation.The company targets to achieve full year parcel volume of 40.8-42.2bn (20-24% YoY growth), which is expected to outpace the industry growth of 15% (ZTO’s forecast).This suggests a shift of strategy from profitability to volume growth, which we believe was due to the continuous decline in market share (18.8% in 4Q24, in terms of parcel volume). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTO Express (ZTO US/2057 HK) - Shifting Back to Volume Growth Strategy

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

ZTO Express Cayman (ZTO US)

ZTO Express Q225 Results: No 'Good', Just the 'Bad' and the 'Ugly'

ZTO reported a weak set of results for Q225, with margins and cash flow declining sharply. Management also cut FY25 volume growth targets. We...

Tracking Traffic

ZTO Express (ZTO US/2057 HK) - Lower Volume Guidance but Likely ASP Surprise

We believe ZTO’s lower parcel volume growth guidance for the full year (14- 18%, vs. 20-24% previously) is a response to the government’s anti...

CMB International

ZTO Express (ZTO US/2057 HK) - 1Q25 Earnings Below Expectation...

In particular, such increase was only supported by RMB407mn (+2.4x YoY) government subsidies and tax rebates, which are likely to be one-off in...

CMB International

Monthly Chinese Express Tracker | March, Q125 Growth Solid | But Shares Lag Alibaba (April 2025)

In March and Q125, express volume growth remained firm, and unit price declines should be manageable for most express companies. But as an...

Tracking Traffic

ZTO Express (ZTO US/2057 HK) - Shifting Back to Volume Growth Strategy

The company targets to achieve full year parcel volume of 40.8-42.2bn (20-24% YoY growth), which is expected to outpace the industry growth of 15%...

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)