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

ZTO Express (ZTO US) - Still Positive on Profitable Growth Strategy Despite Lower Volume Guidance

Logistics Shift to Quality Amid Evolved Ecommerce Plans

[Blue Lotus Daily]:BEKE US/BZ US/ATAT US/3690 HK/TCOM US/2618 HK/002352 CH/NIO US/XPEV US/1211 HK

China New Economy Equity Analyst, Blue Lotus Research Institute

Robert McKay

China New Economy Equity Analyst

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. 


YTO Express (International) Holdings (6123 HK)

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

ZTO Express Cayman

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