Company Reports

The network partner model-based companies in China have gained parcel volume share from direct operation-based companies, with share rising to 78% in 2023 from 76% in 2022. The six largest express delivery companies controlled around 87% of China’s parcel deliveries by volume in 2023, based on data from the companies and China’s State Post Bureau. With share already high, we think further volume share gain is limited for the network partner model-based companies.

Yunda Holding reported that full-year 2023 revenue and operating profit were 6% and 9% below our expectations, respectively. In 2023, Yunda’s parcel volume market share fell 160 basis points to 14.3%, broadly in line with our forecast. First-quarter 2024 revenue rose 6.5% year on year while operating income increased at a strong rate of 21% year on year as lower management and sales expenses as a percentage of sales offset the impact from the lower gross margin.

We initiate wide-moat SF Holding, or SF, with a fair value estimate of CNY 54.00; narrow-moat ZTO Express with a fair value estimate of USD 14.70 per ADS and HKD 115.00 per share; no-moat Yunda Holding with a fair value estimate of CNY 10.00; no-moat YTO Express with a fair value estimate of CNY 7.80; no-moat STO Express with a fair value estimate of CNY 9.60; no-moat Kerry Logistics Network, or KLN, with a fair value estimate of HKD 11.90; and no-moat JD Logistics, or JDL, with a fair value estimate of HKD 10.70. We think SF and KLN are undervalued; Yunda, STO, and JD Logistics are fairly valued; and ZTO and YTO are overvalued.

The network partner model-based companies in China have gained parcel volume share from direct operation-based companies, with share rising to 76% in 2022 from 66% in 2011. The six largest express delivery companies controlled around 86% of China’s parcel deliveries by volume in 2022, based on data from the companies and China’s State Post Bureau. With share already high, we think further volume share gain is limited for the network partner model-based companies.