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>In Q125, ZTO's rate of volume growth accelerated, but it still lagged overall market growth</li>
<li>Despite a sharp (-18% Y/Y) decline in SG&amp;A expenses, OpInc margin fell by -70 bps Y/Y</li>
<li>Guidance suggests ZTO will chase volume share rest of FY25, pressuring margins further</li>
</ul>


In Q125, ZTO's rate of volume growth accelerated, but it still lagged overall market growth
Despite a sharp (-18% Y/Y) decline in SG&amp;A expenses, OpInc margin fell by -70 bps Y/Y
Guidance suggests ZTO will chase volume share rest of FY25, pressuring margins further


ZTO Express Q125 Results: Adj EBITDA Barely Moved Despite +19% Y/Y Parcel Volume Growth | AVOID

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analysed the earning revision of component stocks of HSCEI in the past month.</li>
<li>We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.</li>
<li>We highlighted EPS revision on Ntes, Meituan, Bidu, CCB, ICBC, Beigene, Shenzhou Intl, Zijin Mining.</li>
</ul>


We analysed the earning revision of component stocks of HSCEI in the past month.
We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.
We highlighted EPS revision on Ntes, Meituan, Bidu, CCB, ICBC, Beigene, Shenzhou Intl, Zijin Mining.


HSCEI Index Earning Revision (Jun): Ntes, Meituan, Bidu, CCB, ICBC, Beigene, Shenzhou Intl

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zto-express-cayman-inc" target="_blank" data-smartkarma-citation="entities:33488:1" rel="noopener">ZTO Express Cayman (2057 HK)</a> will be added to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> next week and to a global index couple of weeks after that.</li>
<li>Despite passives needing to buy more than 5% of float inside a month, the stock has barely budged in a rallying China market.</li>
<li>The increase in cumulative excess volume has been very gradual, indicative of low positioning in the stock. With a lot to buy over the next few weeks, that could change.</li>
</ul>



ZTO Express Cayman (2057 HK) will be added to the Hang Seng China Enterprises Index (HSCEI INDEX) next week and to a global index couple of weeks after that.
Despite passives needing to buy more than 5% of float inside a month, the stock has barely budged in a rallying China market.
The increase in cumulative excess volume has been very gradual, indicative of low positioning in the stock. With a lot to buy over the next few weeks, that could change.


ZTO Express (2057 HK): Not Delivering Despite Double Index Inclusion

Event-Driven

<ul>
<li>With improved liquidity, <a href="https://www.smartkarma.com/entities/zto-express-cayman-inc" target="_blank" data-smartkarma-citation="entities:33488:1" rel="noopener">ZTO Express Cayman (2057 HK)</a> could be added to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI INDEX</a> early March and then to a global index a couple of weeks later.</li>
<li>
<a href="https://www.smartkarma.com/entities/zto-express-cayman-inc" target="_blank" data-smartkarma-citation="entities:33488:1" rel="noopener">ZTO Express Cayman (2057 HK)</a> is a lower probability inclusion to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> given the index committee discretion. Inclusion would further increase the impact.</li>
<li>The stock has had a big drawdown recently and the potential index inclusion and passive demand provide a low-risk entry point into the stock, especially hedged with its peers.</li>
</ul>


With improved liquidity, ZTO Express Cayman (2057 HK) could be added to the HSCEI INDEX early March and then to a global index a couple of weeks later.

ZTO Express Cayman (2057 HK) is a lower probability inclusion to the Hang Seng Index (HSI INDEX) given the index committee discretion. Inclusion would further increase the impact.
The stock has had a big drawdown recently and the potential index inclusion and passive demand provide a low-risk entry point into the stock, especially hedged with its peers.


ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion

<ul>
<li>
<a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene</a> and <a href="https://www.smartkarma.com/entities/zto-express-cayman-inc" target="_blank" data-smartkarma-citation="entities:33488:1" rel="noopener">ZTO Express Cayman</a> are potential inclusions for the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index</a> in March while <a href="https://www.smartkarma.com/entities/sino-biopharmaceutical" target="_blank" data-smartkarma-citation="entities:230:1" rel="noopener">Sino Biopharmaceutical</a> and <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning</a> are potential deletions.</li>
<li>There is a lower probability of <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings (9987 HK)</a> replacing <a href="https://www.smartkarma.com/entities/sunny-optical-technology-group" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical Technology Group (2382 HK)</a> in the index in March.</li>
<li>There could be a few more index inclusions for <a href="https://www.smartkarma.com/entities/zto-express-cayman-inc" target="_blank" data-smartkarma-citation="entities:33488:1" rel="noopener">ZTO Express Cayman</a> in March and the stock could outperform its peers over the next few months.</li>
</ul>



BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.


HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

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 (2057 HK)

ZTO Express Q125 Results: Adj EBITDA Barely Moved Despite +19% Y/Y Parcel Volume Growth | AVOID

ZTO Express reported core margin compression again in Q125, despite an acceleration of volume growth and impressive cost control. "Key accounts"...

Tracking Traffic

HSCEI Index Earning Revision (Jun): Ntes, Meituan, Bidu, CCB, ICBC, Beigene, Shenzhou Intl

We analyzed HSCEI's consensus for Jun 2025 and highlighted changes of EPS in Ntes, Meituan, Bidu, CCB, ICBC, Beigene, Shenzhou Intl, Zijin Mining.

Ke Yan, CFA, FRM

ZTO Express (2057 HK): Not Delivering Despite Double Index Inclusion

ZTO Express is an inclusion to the HSCEI and a global index. Passive trackers will buy over 5% of float. Short interest has jumped, and the stock...

Brian Freitas

ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion

There should be 2, possibly 3, index inclusions for ZTO Express in March. There will be a lot to buy from passives and the stock has underperformed...

Brian Freitas

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

There could be up to 3 changes for the HSCEI in March. Estimated one-way turnover is 5.24% resulting in a round-trip trade of HK$5,276m (US$680m)....

Brian Freitas

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