ZTO Express (Cayman) Inc ADR

ZTO: XNYS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	$52.60	Mqprcp	Xkmzkkvr

ZTO Earnings: Revenue and Cost Control Stronger Than Expected; Increasing Capital Return

Chelsey Tam

Mar 20, 2024

Narrow-moat ZTO Express' fourth-quarter revenue increased 7.6% year on year, 6% higher than our estimate, thanks to stronger-than-expected express delivery industry parcel volume growth. Operating profit grew 14% year on year and beat our estimate by 11%, as ZTO's cost control measures surpassed our expectation. However, ZTO's parcel volume market share in the quarter was 22.4%, flat compared with the third quarter, and below our estimate of 23.5%. Our USD 14.70 fair value estimate on ZTO is unchanged. We think ZTO is overvalued, as we believe price competition will eventually weigh on ZTO's profitability.

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