Description
ZTO Express: Initiation Of Coverage – RMB 13.3 Billion Revenue Signals Stronger Pricing Power!
ZTO Express reported solid operational and financial performance in the first quarter of 2026 amid a moderately improving macroeconomic environment and continued recovery in China’s express delivery industry. Parcel volume grew by 13.2% year-over-year to 9.67 billion shipments, notably outpacing the industry’s 5.8% growth, and expanding its market share by 1.2 percentage points. This volume growth was accompanied by a significant 65% increase in retail parcel volume, reflecting progress in product mix optimization and a strategic focus on higher-value offerings such as reverse logistics. The company’s total revenue rose 22% to RMB 13.3 billion, driven by both volume growth and a higher average selling price (ASP) increase of 8.2%. Adjusted operating profit (excluding non-operating items) increased 22% year-over-year to RMB 2.6 billion, while adjusted net income grew 5.2% to RMB 2.38 billion. Despite gross profit rising 20.3% to RMB 3.2 billion, gross margin slightly declined by 0.3 percentage points to 24.4%. Operating margin also decreased, falling 2.9 points to 19.2%. The company attributed these margin compressions in part to increased unit costs associated with higher key account (KA) volume and volume incentives, though it achieved a reduction in core transportation and sorting unit costs by RMB 0.06 per parcel, supported by digitalization, process improvements, and automation investments. Cost control remains a key focus with expectations for further transit-related cost reductions throughout 2026.
