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.

Equity Bottom-Up

<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>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

Thematic (Sector/Industry)

<ul><li>We believe the price floor of RMB1.4/parcel shipment set by the Guangdong’s authority is a forceful move to put the brakes on the price war in the express delivery sector.</li><li>Most importantly, we believe Guangdong, being the largest province in terms of both parcel volume and revenue, will set an example of “anti-involution”, which will potentially trigger more provinces to follow suit.</li><li>We reiterate our view that this round of “anti-involution” campaign will be similar to the one in 2021, which will boost parcel price hike and serve as a positive catalyst over the coming 3-6 months. </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 the price floor of RMB1.4/parcel shipment set by the Guangdong’s authority is a forceful move to put the brakes on the price war in the express delivery sector.Most importantly, we believe Guangdong, being the largest province in terms of both parcel volume and revenue, will set an example of “anti-involution”, which will potentially trigger more provinces to follow suit.We reiterate our view that this round of “anti-involution” campaign will be similar to the one in 2021, which will boost parcel price hike and serve as a positive catalyst over the coming 3-6 months. 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.

Logistics - Price Floor in Guangdong Likely Set an Example for Other Regions...

<ul><li>We believe the Chinese government’s aspiration to promote “anti-involution”, followed by the meeting held by the State Post Bureau with express delivery operators as well as the comments by NDRC last week to propose a revision of the price law, will serve as a positive catalyst for the express delivery sector over the coming 3-6 months.</li><li>We see chances for a moderate parcel ASP hike going forward, though not as strong as the uptrend in 2022 after the government’s intervention.</li><li>Government actions to curb price war. On 29 Jul, the State Post Bureau held a meeting with major express delivery operators to address the "involution" competition in the industry.</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 the Chinese government’s aspiration to promote “anti-involution”, followed by the meeting held by the State Post Bureau with express delivery operators as well as the comments by NDRC last week to propose a revision of the price law, will serve as a positive catalyst for the express delivery sector over the coming 3-6 months.We see chances for a moderate parcel ASP hike going forward, though not as strong as the uptrend in 2022 after the government’s intervention.Government actions to curb price war. On 29 Jul, the State Post Bureau held a meeting with major express delivery operators to address the "involution" competition in the industry.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.

Logistics - Strong Policy Momentum to Curb Price War; a Similar Price Hike Story like 2022

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 (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

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

Logistics - Price Floor in Guangdong Likely Set an Example for Other Regions...

We believe the price floor of RMB1.4/parcel shipment set by the Guangdong’s authority is a forceful move to put the brakes on the price war in the...

CMB International

Logistics - Strong Policy Momentum to Curb Price War; a Similar Price Hike Story like 2022

We see chances for a moderate parcel ASP hike going forward, though not as strong as the uptrend in 2022 after the government’s intervention.

CMB International

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