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>ZTO Express (ZTO) EBIT grew 17% YoY to RMB2.8bn, which is in line with our expectation.</li><li>Reported net profit in 3Q24 grew only 1% YoY to RMB2.46bn, but this was largely due to one-off tax refunds in 3Q23.</li><li>Unit gross margin expanded 6.5% YoY to RMB0.38/parcel in 3Q24 amid industry price competition. ZTO revised down the full year parcel volume growth guidance to 11.6-12.3% (from 15-18% in Aug), which implies 7.5-10% growth in 4Q24E. </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) EBIT grew 17% YoY to RMB2.8bn, which is in line with our expectation.Reported net profit in 3Q24 grew only 1% YoY to RMB2.46bn, but this was largely due to one-off tax refunds in 3Q23.Unit gross margin expanded 6.5% YoY to RMB0.38/parcel in 3Q24 amid industry price competition. ZTO revised down the full year parcel volume growth guidance to 11.6-12.3% (from 15-18% in Aug), which implies 7.5-10% growth in 4Q24E. 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) - Still Positive on Profitable Growth Strategy Despite Lower Volume Guidance

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Going into FY24, ZTO aimed to focus on price,  cede volume share in support of margins</li>
<li>It hasn't worked: in Q324, adj EBITDA margin fell -290 bps Y/Y despite higher ASPs</li>
<li>Q324 results reveal weak earnngs growth, &amp; reduced FY24 volume target; AVOID</li>
</ul>


Going into FY24, ZTO aimed to focus on price,  cede volume share in support of margins
It hasn't worked: in Q324, adj EBITDA margin fell -290 bps Y/Y despite higher ASPs
Q324 results reveal weak earnngs growth, &amp; reduced FY24 volume target; AVOID


ZTO Express Q324 Results: Shift in Strategy Leads to Lower Core Margins & FY24 Guidance Cut | AVOID

China New Economy Equity Analyst, Blue Lotus Research Institute

Robert McKay

China New Economy Equity Analyst

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

<ul>
<li>Amid fierce low-price competition in 1H24, low-end couriers  benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;</li>
<li>The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang's business model in China. We believe there is a sizable market;</li>
<li>We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&amp;T and SFE in the least favorable positions.</li>
</ul>


Amid fierce low-price competition in 1H24, low-end couriers  benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang's business model in China. We believe there is a sizable market;
We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&amp;T and SFE in the least favorable positions.


Logistics Shift to Quality Amid Evolved Ecommerce Plans

<ul>
<li>Industry and company reports show ASP declines gained momentum in April</li>
<li>April volume jumped 36% Y/Y on a weak comp from 2022 (Covid-19 lockdowns)</li>
<li>Our thesis: pricing is getting weaker, and this trend will soon impact margins</li>
</ul>


Industry and company reports show ASP declines gained momentum in April
April volume jumped 36% Y/Y on a weak comp from 2022 (Covid-19 lockdowns)
Our thesis: pricing is getting weaker, and this trend will soon impact margins


Monthly Express Tracker | Prices Continue to Slide | Volume Pops | (May 2023)

<ul><li>Core net profit grew 10% YoY. Reported net income in 2Q24 increased 3% YoY to RMB2.6bn, due to an impairment of RMB194mn (investment in Zhejiang Yizhan Network, a subsidiary of Cainiao Smart Logistics).</li><li>Excluding the one-off items, the adjusted net profit grew 10% YoY to RMB2.74bn.</li><li>The earnings growth was driven by (1) 10% YoY revenue growth, (2) a stable gross margin, and (3) an 82% YoY increase in net finance income.</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.

Core net profit grew 10% YoY. Reported net income in 2Q24 increased 3% YoY to RMB2.6bn, due to an impairment of RMB194mn (investment in Zhejiang Yizhan Network, a subsidiary of Cainiao Smart Logistics).Excluding the one-off items, the adjusted net profit grew 10% YoY to RMB2.74bn.The earnings growth was driven by (1) 10% YoY revenue growth, (2) a stable gross margin, and (3) an 82% YoY increase in net finance income.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) - 2Q24 Core Earnings +10% with Stable Unit Margin

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) - Still Positive on Profitable Growth Strategy Despite Lower Volume Guidance

ZTO Express (ZTO) EBIT grew 17% YoY to RMB2.8bn, which is in line with our expectation. Reported net profit in 3Q24 grew only 1% YoY to RMB2.46bn

CMB International

ZTO Express Q324 Results: Shift in Strategy Leads to Lower Core Margins & FY24 Guidance Cut | AVOID

ZTO's focus on price over volume share gains simply hasn't worked so far in 2024. Until management developts a path towards a return to profitable...

Tracking Traffic

Logistics Shift to Quality Amid Evolved Ecommerce Plans

In 2H24, low-end couriers face shift towards quality logistics and O2O, with ZTO and Meituan best positioned and SFE most negatively affected

Blue Lotus Research Institute

Monthly Express Tracker | Prices Continue to Slide | Volume Pops | (May 2023)

In April, express volume shot up 36% against easy Y/Y comps, but ASPs deepened their recent decline. We believe pricing will continue to...

Tracking Traffic

ZTO Express (ZTO US) - 2Q24 Core Earnings +10% with Stable Unit Margin

ZTO Express (ZTO) continued its strategic focus on profitable growth in 2Q24. Core net profit in 2Q24 grew 10% YoY to RMB2.74bn, which is largely...

CMB International

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

ZTO Express (ZTO) EBIT grew 17% YoY to RMB2.8bn, which is in line with our expectation. Reported net profit in 3Q24 grew only 1% YoY to RMB2.46bn

CMB International

ZTO Express Q324 Results: Shift in Strategy Leads to Lower Core Margins & FY24 Guidance Cut | AVOID

ZTO's focus on price over volume share gains simply hasn't worked so far in 2024. Until management developts a path towards a return to profitable...

Tracking Traffic

Logistics Shift to Quality Amid Evolved Ecommerce Plans

​In 2H24, low-end couriers face shift towards quality logistics and O2O, with ZTO and Meituan best positioned and SFE most negatively affected

Blue Lotus Research Institute

Monthly Express Tracker | Prices Continue to Slide | Volume Pops | (May 2023)

In April, express volume shot up 36% against easy Y/Y comps, but ASPs deepened their recent decline. We believe pricing will continue to...

Tracking Traffic

ZTO Express (ZTO US) - 2Q24 Core Earnings +10% with Stable Unit Margin

ZTO Express (ZTO) continued its strategic focus on profitable growth in 2Q24. Core net profit in 2Q24 grew 10% YoY to RMB2.74bn, which is largely...

CMB International

In 2H24, low-end couriers face shift towards quality logistics and O2O, with ZTO and Meituan best positioned and SFE most negatively affected