ZTO Express reports Q3 adjusted EPS 39c, consensus 38c

Reports Q3 revenue $1.24B, consensus $1.36B. CEO Meisong Lai commented, “While the recovery of overall economy was below expectations, China’s express delivery industry showed relative resilience and grew 16.7% in volume for the quarter…Our digitization and lean management initiatives continued to drive cost productivities in transit and sortation. Keeping our leadership in end-to-end timeliness and customer satisfaction, ZTO increased its market share to 22.4% and achieved 25% adjusted net income growth for Q3…Achievement of these goals will drive further bifurcation in the industry dynamics where ZTO would shine at the top.” CFO Huiping Yan commented, “Core express ASP decreased 13.5% in line with the industry. What is unique for ZTO is the more pronounced mix impact from KA volume decrease as we continued to recalibrate that part of the revenue…we stayed focused on improving quality of service, fending off irrationally low-price poaching and achieved profitable volume growth with 25% increases in adjusted net income. We can no longer justify the 1.5 points annual market share gain given the senseless low-price trade-off that is eroding the industry earnings. We remain on track to achieve 29.27-30.24 billion parcels for the year representing a volume growth in the range of 20% to 24% year over year.”