According to the Futu Securities App, Huatai Securities released a research report stating that in June, the national express delivery volume increased by 17.7% year-on-year, with a slower growth rate, while the cumulative growth rate in 1H24 was 23.1%, and the volume increased significantly year-on-year; in June, the national social consumption retail sales/online retail sales of physical goods(e-commerce GMV) increased by +2.0%/-1.4% year-on-year, respectively, and cumulatively in 1H24 increased by +3.7%/+8.8% year-on-year, and the e-commerce GMV maintained steady growth in the first half of the year. In June, the average price per piece in the express delivery industry decreased by 7.7% year-on-year, and in 1H24, the average price per piece decreased by 6.5% year-on-year. Looking ahead to July, although it is entering the traditional off-season, e-commerce platform promotions continue, and it is expected to support the growth rate of pieces, and the growth rate of pieces is expected to recover to around 20%; prices may remain in a downward trend, and the competition intensity may fluctuate in some regions.

In terms of targets: ZTO Express Group (02057, ZTO.US) leads in terms of share, cost, and service, and it is recommended to chase after Shentong Express (002468.SZ) which is growing quickly. Yuantong Express (600233.SH) is steadily making progress, while Yunda Holding (002120.SZ) has seen an increase in piece growth rate.

Here are the main points of HuaTai Securities:

In the first half of 2024, the e-commerce GMV increased steadily year-on-year, and the penetration rate of e-commerce increased year-on-year.

In June, the national social consumption retail sales increased by +2.0% year-on-year (May: +3.7%), 2Q24 accumulatively increased by +2.7% year-on-year (1Q24: +4.7%), and 1H24 accumulatively increased by +3.7% year-on-year; in June, the online retail sales of physical goods (e-commerce GMV) decreased by -1.4% year-on-year (May: +12.9%), 2Q24 accumulatively increased by +6.4% year-on-year (1Q24: +11.6%), and 1H24 accumulatively increased by +8.8% year-on-year. The main reason for the slowdown in year-on-year growth in June is due to the early promotion of e-commerce this year, with some volumes appearing in May and the year-on-year growth rate falling on a high base; the growth rate in the second quarter slowed down compared to the first quarter, consistent with the trend of e-commerce GMV. The penetration rate of e-commerce continues to increase. In June, e-commerce GMV accounted for 27.8% of the total social retail sales (May: 27.9%), a year-on-year/horizontal ratio of -0.9/-0.1pct, with a 2Q24 cumulative penetration rate of 27.3%, a year-on-year increase of +1pct, and a 1H24 cumulative rate of 25.3%, a year-on-year increase of +1.2pct.

In terms of pieces, the national express delivery volume increased by 17.7% year-on-year in June (May: +23.8%), with a cumulative increase of 21.3% year-on-year (1Q24: +25.2%) in 2Q24, and a cumulative increase of 23.1% year-on-year in 1H24. Benefiting from strong demand from e-commerce, the volume increased significantly year-on-year in 1H24. In terms of prices, the average price per piece in the express delivery industry in June decreased by 7.7% year-on-year/horizontal ratio by 1.4% to 7.95 yuan, the average price per piece in 2Q24 decreased by 6.8%/5.6% year-on-year/horizontal quarter to 7.93 yuan, and the average price per piece in 1H24 decreased by 6.5% year-on-year. The second-quarter year-on-year price decline slightly expanded (1Q24: -6.2%), and competition intensified. As of July 14th, the daily average collection/delivery volume of the national postal and express delivery industry cumulatively increased by +26.7%/+26.6% year-on-year (June: +24.5%/+24.0%). (Note: Due to slight differences in the calibers of the Ministry of Transport and the Post Bureau, the latter is about 3pct lower than the former).

In terms of pieces, the national express delivery volume increased by 17.7% year-on-year in June (May: +23.8%), with a cumulative increase of 21.3% year-on-year (1Q24: +25.2%) in 2Q24, and a cumulative increase of 23.1% year-on-year in 1H24. Benefiting from strong demand from e-commerce, the volume increased significantly year-on-year in 1H24. In terms of prices, the average price per piece in the express delivery industry in June decreased by 7.7% year-on-year/horizontal ratio by 1.4% to 7.95 yuan, the average price per piece in 2Q24 decreased by 6.8%/5.6% year-on-year/horizontal quarter to 7.93 yuan, and the average price per piece in 1H24 decreased by 6.5% year-on-year. The second-quarter year-on-year price decline slightly expanded (1Q24: -6.2%), and competition intensified.

Head enterprises have seen high growth in pieces, while prices continue to decline year-on-year.

Among the Tongda system, Shentong, Yunda, Yuantong, and Shunfeng's piece volume increased by 32.5%, 30.0%, 24.8%, and 6.5% respectively; the average price per piece was 2.09, 2.10, 2.34, and 15.93 yuan, respectively, representing a year-on-year decrease of 11.1%, 15.8%, 4.4%, and 1.1%; among them, the piece volume in 2Q24 increased by 29.2%, 30.8%, 24.8%, and 9.7% respectively (June: 29.0%, 28.0%, 22.9%, and 9.0%), and the average price per piece decreased by 10.2%, 15.6%, 3.9%, and 0.7% respectively year-on-year (June: 9.1%, 13.8%, 4.9%, and 4.0%)

In the Tongda system, Shentong and Yunda exchange price for volume, and their volume increased by more than 30% year-on-year; Yuantong relies on high-quality services, maintains a balance between volume and price, and records the highest revenue growth rate (19.4%). Shunfeng's market share is stable, and prices are resilient.

Investment strategy: The piece volume growth rate is expected to rebound in July, and the profit center of long-term leading enterprises is expected to move up.

In June, due to the cancellation of pre-sales during the 24-year e-commerce promotion, some volumes were dispersed to May. The year-on-year growth rate of the industry's volume was lower than 20% for the first time this year, and the competition intensity also increased in some local areas. Looking ahead to July, although it is entering the off-season, the e-commerce promotion activities continue to be relayed, and it is expected to support the growth rate of volumes to return to around 20%, but the competition intensity has not weakened, and prices may still face downward pressure. In the long-term, the leading express delivery companies are expected to continuously increase their market share, deepen the application of digital tools, play the role of economies of scale to achieve cost reduction and efficiency enhancement, consolidate their industry position with cash flow and high-quality assets, mitigate the impact of declining prices, and be bullish on leading enterprises gradually moving the profit center up.

Risk warning: industry growth rate is lower than expected; impact of social security costs; deterioration of price competition.