Macquarie expects ZTO Express to have better unit economics and stable shareholder returns, raising the target price to $26.6

Macquarie's research report points out that ZTO Express-W (02057.HK) performed strongly in the last quarter of last year, leading the industry in growth. According to its preliminary results, the business volume increased by 9% year-on-year; revenue grew between 8% and 19% year-on-year, with a gross profit margin ranging from 23% to 28%. Macquarie believes that in the logistics industry's "anti-involution" policy environment, combined with ZTO's high-quality and cost-effective value positioning, the group is in a favorable position to capture the shift in customer price preferences.

Looking ahead to 2026, Macquarie forecasts that ZTO's total package volume will grow by 8% annually, while the expected industry growth rate is 7%; with the recovery of industry pricing and favorable retail strategies for key customers and returns, the average unit price is expected to increase by 0.02 RMB year-on-year, reaching 1.28 RMB; it is also believed that after hitting bottom last year, the unit economic benefits should continue to improve, driven by the expansion of scale effects and the increase in average unit price. It is predicted that this year's adjusted total operating profit will reach 12.4 billion RMB, with the unit operating profit expected to increase by 0.03 RMB year-on-year, reaching 0.28 RMB. In addition, the group issued convertible preferred notes, allowing it to enhance shareholder returns through share buybacks and dividend distributions.

Macquarie slightly raised its net profit forecasts for ZTO in 2025 and 2026 by less than 1% and 5%, respectively, to reflect updated business volume growth and profit outlook; it also significantly raised the target price for ZTO (ZTO.US) in the US stock market by 45%, from $18.4 to $26.6; the rating was upgraded to "Outperform"; considering the potential upside in earnings, the target price-to-earnings ratio for this year was increased from 11 times to 15 times