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ZTO Express (Cayman) Inc Ordinary Shares 02057

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Stock XHKG Rating as of
HKD 155.30 +0.50 (0.32%)
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As of Delayed Price Closed
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Company Report

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ZTO: Fair Value Estimate Unchanged After Model Tweaks; Shares Expensive Due to Price War

Chelsey Tam

We maintain narrow-moat ZTO’s fair value estimate at USD 14.70 per ADS and HKD 115.00 per share. Our 2024-26 EBIT forecasts increase by 6% as we assume better cost control. We forecast revenue to increase by a 5% compound annual growth rate during 2023-33. We assume a 5% CAGR for express delivery services business revenue—92% of total revenue in 2023—in the coming 10 years. While we think ZTO is a quality economy express company, the shares are overvalued due to the threat of the current price war in the industry.

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Price vs Fair Value

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02057 is trading at a 35% premium.
Price
HKD 154.80
Fair Value
HKD 659.00
Uncertainty
High
1-Star Price
HKD 136.18
5-Star Price
HKD 77.00
Economic Moat
Bldcwx
Capital Allocation
Nbnzskxc

Bulls Say, Bears Say

Bulls

If ZTO achieves the top end of its targeted 30%-40% market share by 2032, it implies faster-than-expected revenue growth and higher-than-expected economies of scale and profits.

Bears

A rising mix of a lower-margin non-express delivery business leads to faster deterioration of margin.

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Trading Information

Previous Close Price
HKD 154.80
Day Range
HKD 154.00–159.90
52-Week Range
HKD 124.10–236.40
Bid/Ask
HKD 155.30 / HKD 155.40
Market Cap
HKD 124.97 Bil
Volume/Avg
1.6 Mil / 1.1 Mil

Key Statistics

Price/Earnings (Normalized)
13.47
Price/Sales
3.11
Dividend Yield (Trailing)
3.14%
Dividend Yield (Forward)
24.57%
Total Yield
3.14%

Company Profile

ZTO Express is China’s largest express delivery company by parcel volume, with a volume share of 22.1% in 2022. It operates a network partner model where it provides line-haul transportation and sorting services, while its local network partners provide first-mile pickup and last-mile delivery services under the ZTO brand name. Headquartered in Shanghai, the company was founded in 2002 by Meisong Lai, who remains the Chairman, CEO, and its major shareholder with 77% voting rights as of June 30, 2023. ZTO’s strategic shareholder is leading China e-commerce company, Alibaba Group, with around an 11.7% interest.
Sector
Industrials
Industry
Integrated Freight & Logistics
Stock Style Box
Large Core
Total Number of Employees
23,554
Website
http://ir.zto.com

Competitors

Valuation

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Metric
02057
DHL
FDX
Price/Earnings (Normalized)
 13.4712.8815.19
Price/Book Value
 2.012.012.46
Price/Sales
 3.110.570.76
Price/Cash Flow
 8.875.755.58
Price/Earnings
02057
DHL
FDX

Financial Strength

Metric
02057
DHL
FDX
Quick Ratio
 0.920.741.17
Current Ratio
 1.170.951.31
Interest Coverage
 33.297.2216.46
Quick Ratio
02057
DHL
FDX

Profitability

Metric
02057
DHL
FDX
Return on Assets (Normalized)
 10.57%5.51%5.74%
Return on Equity (Normalized)
 15.68%16.07%19.12%
Return on Invested Capital (Normalized)
 11.83%9.19%8.22%
Return on Assets
02057
DHL
FDX
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Integrated Freight & Logistics Industry Comparables

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Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
UPS
United Parcel Service Inc Class BGktsklvlkQvvd$121.8 Bil
FDX
FedEx CorpKvnjcqxdmRlvdlhy$64.8 Bil
DPSTF
DHL Group—Njmxxs$48.2 Bil
DHLGY
DHL Group ADRLgfkpfgmKdwpmm$48.2 Bil
JBHT
JB Hunt Transport Services IncFrrfsypbBmfzkz$16.9 Bil
EXPD
Expeditors International of Washington IncYfvnyhznVbwh$16.3 Bil
ZTO
ZTO Express (Cayman) Inc ADRMwzgqxdqRtwpsv$15.9 Bil
CHRW
C.H. Robinson Worldwide IncRmkbkflljYnvpj$8.1 Bil
LSTR
Landstar System IncDddhvttyRgpt$6.0 Bil
HUBG
Hub Group Inc Class AXfzhyntBvqswgv$2.4 Bil

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