The Zhitong Finance App learned that GF Securities released a research report stating that China's express delivery industry presents a dualistic market structure with the middle and low end as the main and middle and high-end as a complement. In order to meet the extremely cost-effective delivery needs of e-commerce customers, the middle- and low-end racetracks are continuously refining the supply form of the franchise network, forming a moat between in-house asset investment and off-balance sheet network asset management. The assets in the table are at the end of the capital cycle, and the supply and demand pattern is reversed. It is estimated that it will take 4 years to rebalance supply and demand. Capacity utilization will peak in 2025, and the profit center of the industry is also expected to gradually move from fluctuation to stability. Off-balance sheet assets are in the middle of network optimization, and there is still room for a long time. It is expected to relay the trend of in-table automation and further open up the possibility of industrial cost reduction and product stratification.

China's express delivery industry: The binary market is dominated by the middle and low end, and joining the network creates the ultimate cost performance ratio. China's express delivery industry presents a dualistic market structure with the middle and low end as the main focus and the middle and high end as a complement. In order to meet the extremely cost-effective delivery needs of e-commerce customers, the middle- and low-end racetracks are continuously refining the supply form of the franchise network, forming a moat between in-house asset investment and off-balance sheet network asset management.

Assets in the table: End of the capital cycle, reversal of the supply and demand pattern. The direct assets in the list of participating express delivery companies are mainly land, plants, equipment, and fleets. The headquarters first started in 2017 for reinvestment and peaked in 2021. Leading express delivery companies have basically completed direct management and automated transformation, and the industry has entered a period of climbing capacity. Against the backdrop of strong demand growth, it is estimated that it will take 4 years to rebalance supply and demand. Capacity utilization will peak in 2025, and the profit center of the industry is also expected to gradually move from fluctuation to stability.

Off-balance sheet assets: Network optimization is in the middle, and there is still room for a long time. The off-balance sheet network assets of participating express delivery companies consist of thousands of first-level franchisees and tens of thousands of second-level outlets. Joining a network not only determines the quality of service and timeliness for the last 100 kilometers, but also affects the operating costs of the entire network. Leading companies, represented by Zhongtong, are strengthening the investment and management of network assets, and are exploring ways to reduce costs and increase efficiency, such as direct distribution (reducing the number of transfers and shortening delivery distances, and optimizing trunk line transportation routes) and direct distribution to outlets (reducing the workload of Xiaoge and improving terminal delivery efficiency). Off-table network optimization is expected to relay the trend of in-table automation and further open up the possibility of industrial cost reduction and product stratification.

Investment advice: Recommend strong players, Hengqiang leaders in the long term, and grasp marginal reversal of individual stocks in the short term. Looking backwards, the express delivery industry is in the phase of reverse development of the supply and demand pattern. The supply-side industry/enterprise capital expenditure has peaked, demand-side e-commerce platform changes are relaying the trend of small parts, and the industry's business volume growth is very resilient. The investment direction of the e-commerce express delivery industry is divided into long and short logic. In terms of long-term logic, with the reverse support of supply and demand, enterprises pay more attention to off-balance sheet asset construction, promote revenue side differentiation and enhance single ticket profitability. Long Logic recommends Zhongtong Express (02057.HK/ZTO.N) and Yuantong Express (600233.SH); in the short term, the price war is already a trend. Single ticket costs are falling rapidly due to network repairs. The profit of express delivery brands that continue to catch up has reversed marginally. Future performance restoration is worth paying attention to. Short logic recommends Yunda shares. (002120 .SZ), Shentong Express (002468.SZ).

Risk warning. Industry demand growth fell short of expectations, industry price competition worsened again, franchise network operations were unstable, policy impact was uncertain, and macroeconomic environment was under pressure.