Investment Rating - The report maintains a "Buy" rating for ZTO Express (02057) [1] Core Views - ZTO Express's successful inclusion in the Hong Kong Stock Connect is expected to enhance stock liquidity and potentially lead to a valuation recovery as it attracts more mainland investors [3][9] - The company has demonstrated strong fundamentals and has been a leader in the express delivery industry since 2017, but its current valuation is at a low point compared to historical averages [9][10] - The "Build and Share" philosophy is seen as a cornerstone for ZTO's long-term sustainability and competitive advantage in the express delivery sector [19][24] Summary by Sections Recent Developments - On March 1, 2024, ZTO Express was added to the Hong Kong Stock Connect list, effective from March 4, 2024 [2][8] Investment Highlights - The inclusion in the Stock Connect is anticipated to improve stock liquidity and attract new investors, which may lead to a valuation recovery [3][9] - ZTO Express has a solid performance record, with a historical annual growth rate of 25% since its listing, and a 41.11% increase in net profit for the first three quarters of 2023 [9][10] - The current price-to-earnings (P/E) ratio is 13.43, significantly lower than its historical average of 27.83, indicating potential for valuation recovery [9][10] Business Strategy and Competitive Advantage - ZTO Express's "Build and Share" strategy has been pivotal in its growth, focusing on cost reduction and efficiency improvements across its network [19][24] - The company has implemented three key decisions: the launch of inter-provincial express services, the introduction of a paid delivery fee system, and the establishment of a shareholding system, which have collectively strengthened its market position [12][19] - The company aims to achieve a balance of volume, price, cost, and profit, with expectations for upward breakthroughs in performance metrics [31][32] Financial Projections - Revenue forecasts for ZTO Express are projected at CNY 38.514 billion, CNY 45.213 billion, and CNY 52.342 billion for 2023, 2024, and 2025 respectively, with net profits expected to be CNY 9.075 billion, CNY 10.711 billion, and CNY 12.690 billion [32] - The corresponding P/E ratios for the same years are estimated to be 12.80, 10.85, and 9.16, indicating a favorable outlook for the company's financial performance [32]
动态点评：中通快递入港股通，基业长青，长期看好