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ZTO Express (Cayman) Inc ADR ZTO

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Stock XNYS Rating as of
$19.94 −0.06 (0.30%)
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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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ZTO is trading at a 36% premium.
Price
$20.00
Fair Value
$88.10
Uncertainty
High
1-Star Price
$59.11
5-Star Price
$7.98
Economic Moat
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Capital Allocation
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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
$20.00
Day Range
$19.66–19.95
52-Week Range
$15.90–30.05
Bid/Ask
$19.50 / $20.49
Market Cap
$16.05 Bil
Volume/Avg
3.4 Mil / 4.6 Mil

Key Statistics

Price/Earnings (Normalized)
13.63
Price/Sales
3.15
Dividend Yield (Trailing)
3.10%
Dividend Yield (Forward)
3.10%
Total Yield
3.10%

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
ZTO
DHL
FDX
Price/Earnings (Normalized)
 13.6312.8815.19
Price/Book Value
 2.032.012.46
Price/Sales
 3.150.570.76
Price/Cash Flow
 8.975.755.58
Price/Earnings
ZTO
DHL
FDX

Financial Strength

Metric
ZTO
DHL
FDX
Quick Ratio
 1.220.741.17
Current Ratio
 1.340.951.31
Interest Coverage
 35.487.2216.46
Quick Ratio
ZTO
DHL
FDX

Profitability

Metric
ZTO
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
ZTO
DHL
FDX
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