Jinwu Finance News | Citi International issued a research report stating that ZTO Express (02057) saw a 17% year-on-year increase in EBIT to 2.8 billion RMB, in line with the bank's expectations. Although the net income in 3Q24 only increased by 1% year-on-year to 2.46 billion RMB, this was mainly due to the high base caused by a one-time tax refund in 3Q23. Despite price competition in the industry, ZTO's gross margin per shipment in 3Q24 still increased by 6.5% year-on-year to 0.38 RMB per shipment. ZTO has revised its full-year parcel volume growth guidance down to 11.6-12.3% (from 15-18% in August), implying a growth of 7.5-10% in 4Q24. Nevertheless, the bank believes that the lower parcel volume target aligns with ZTO's profit-driven growth strategy.
The bank has lowered its profit forecast for 2024-26 by 5-9%, mainly due to the bank's revised assumptions on sales volume and gross margin per shipment. The bank has revised down its target prices for its US/Hong Kong stocks to $34.5/271 HKD, based on a 22x PE ratio for 2024 (previously 23x), equivalent to the historical average level. The bank remains bullish on ZTO's strong free cash flow ability. Maintain buy rating.
