HSBC Research raises ZTO Express target price to 230 yuan, rating "Buy"

HSBC Research published a report indicating that, driven by policy support, ZTO Express-W (02057.HK) unit profitability will bottom out in the first half of this year, mainly benefiting from the stabilization of average revenue per parcel and its ability to defend market share as an industry leader amid slowing growth prospects.

The bank believes that the two main pressure factors facing ZTO Express's valuation, including irrational price competition and loss of market share, will gradually ease this year, potentially supporting its profit growth momentum and further driving its valuation recovery.

The bank expects the company's fourth-quarter revenue to increase by 16% year-on-year to RMB 14.9 billion, while its market share is expected to expand by 0.8 percentage points year-on-year to 19.6%, and its average selling price is expected to rise by 5.5% year-on-year to RMB 1.39. The bank has raised its earnings forecast for the company last year by 1%, and for this year and next year by approximately 4% each, increasing the target price for ZTO Express (ZTO.US) in the US stock market from $26 to $30, and the target price for its H shares from HKD 200 to HKD 230, maintaining its rating as "Buy."