Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

Over the last six months, each of China's five largest express parcel delivery firms has completed a public listing: <a href="https://www.smartkarma.com/entities/23628" target="_blank" data-smartkarma-citation="entities:23628:1">ZTO Express (ZTO US)</a> listed in the US in late October, of course, and its four closest rivals all achieved listings in Shanghai or Shenzhen via 'backdoor' listings, the most recent being <a href="https://www.smartkarma.com/entities/4128" target="_blank" data-smartkarma-citation="entities:4128:1">S.F. Holding Co Ltd (002352 CH)</a> in February.In our view, the recent 'backdoor' listings of ZTO's four rivals add to medium-term pressures on the company in three distinct ways: <ol><li>ZTO must now compete with four large, listed rivals for investors' attention and capital</li><li>The generally rich valuations obtained on Chinese bourses give ZTO's four Chinese-listed rivals stronger 'currencies of acquisition' that can be exploited to fuel inorganic growth</li><li>Quarterly financial reports from ZTO's newly-listed rivals will provide useful context for evaluating ZTO's performance</li></ol>In this note we present preliminary 2016 results from the five listed Chinese express parcel delivery companies, plus a look at consensus sales and earnings expectations for 2017. We also show ZTO's weak share price performance against its Chinese peers, and describe what needs to occur before we can take a more positive view of the stock. For now, we continue to recommend investors avoid ZTO.

Over the last six months, each of China's five largest express parcel delivery firms has completed a public listing: ZTO Express (ZTO US) listed in the US in late October, of course, and its four closest rivals all achieved listings in Shanghai or Shenzhen via 'backdoor' listings, the most recent being S.F. Holding Co Ltd (002352 CH) in February.In our view, the recent 'backdoor' listings of ZTO's four rivals add to medium-term pressures on the company in three distinct ways: ZTO must now compete with four large, listed rivals for investors' attention and capitalThe generally rich valuations obtained on Chinese bourses give ZTO's four Chinese-listed rivals stronger 'currencies of acquisition' that can be exploited to fuel inorganic growthQuarterly financial reports from ZTO's newly-listed rivals will provide useful context for evaluating ZTO's performanceIn this note we present preliminary 2016 results from the five listed Chinese express parcel delivery companies, plus a look at consensus sales and earnings expectations for 2017. We also show ZTO's weak share price performance against its Chinese peers, and describe what needs to occur before we can take a more positive view of the stock. For now, we continue to recommend investors avoid ZTO.

Suddenly, a Sector: 'Backdoor' Listings Give Express Firms US$70 Bn Valuation, Add to ZTO Pressure

Equity Capital Markets

ZTO Express Cayman  / Equity Capital Markets

On Friday September 30th leading Chinese express parcel delivery company ZTO Express filed with the SEC and reportedly plans to raise as much as US$1.5 bn in its initial public offering on the NYSE later this Fall. Using the information presented in ZTO's form F-1, combined with our background covering Asian logistics and US express giants <a href="https://www.smartkarma.com/entities/19984" target="_blank" data-smartkarma-citation="entities:19984:1">United Parcel Service Cl B (UPS US)</a> and <a href="https://www.smartkarma.com/entities/14577" target="_blank" data-smartkarma-citation="entities:14577:1">Fedex Corp (FDX US)</a>, in this note we describe ZTO's operations, evaluate its market position in China, and compare it to its larger US rivals. We also identify what we view as ZTO's key opportunities and challenges, and close with a list of questions we would put to management once the roadshow commences. We also include summary financial information (through June 2016) taken from ZTO's filing with the SEC.Once an IPO price range is established, we will issue a separate note that covers ZTO's valuation.

On Friday September 30th leading Chinese express parcel delivery company ZTO Express filed with the SEC and reportedly plans to raise as much as US$1.5 bn in its initial public offering on the NYSE later this Fall. Using the information presented in ZTO's form F-1, combined with our background covering Asian logistics and US express giants United Parcel Service Cl B (UPS US) and Fedex Corp (FDX US), in this note we describe ZTO's operations, evaluate its market position in China, and compare it to its larger US rivals. We also identify what we view as ZTO's key opportunities and challenges, and close with a list of questions we would put to management once the roadshow commences. We also include summary financial information (through June 2016) taken from ZTO's filing with the SEC.Once an IPO price range is established, we will issue a separate note that covers ZTO's valuation.

China's ZTO Express Files for NYSE IPO: What It Is, What It Isn't

China

Yunda Holding Co Ltd operates as a holding company. The Company, through its subsidiaries, provides industrial investment, enterprise management, business consulting, car rental, technical development, information technology, and advertising services. Yunda Holding serves customers in China.

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Yunda Holding (002120 CH)

Suddenly, a Sector: 'Backdoor' Listings Give Express Firms US$70 Bn Valuation, Add to ZTO Pressure

Over the last six months, each of China's five largest express parcel delivery firms has completed a public listing: ZTO Express (ZTO US) listed in...

Daniel Hellberg

China's ZTO Express Files for NYSE IPO: What It Is, What It Isn't

On Friday September 30th leading Chinese express parcel delivery company ZTO Express filed with the SEC and reportedly plans to raise as much as...

Daniel Hellberg

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