Futu Securities learned from smart financial app that, according to a research report by Guotai Junan Securities, in the third quarter of 2024, the total business volume of the express delivery industry reached 43.609 billion pieces, an increase of +20.1% year-on-year, showing a slight slowdown of 1.2 percentage points compared with the second quarter, mainly due to base effects. The leading express delivery companies have higher growth rates than the industry average, with overall stable profitability per shipment. It is estimated that the business volume growth rate of the express delivery industry in 2024 will be around 20%, and top companies may achieve excess growth. With the peak season approaching, the profitability per shipment is expected to increase steadily, and the profit of leading companies is still expected to maintain a considerable growth rate.

Cinda Securities' main points are as follows:

Event: YTO Express Group, Yunda Holding, and STO Express Co.,Ltd. released their third quarter reports for 2024, achieving a net income attributable to shareholders of 0.943, 0.367, and 0.215 billion yuan respectively, with year-on-year growth rates of +18.1%, +24.2%, and +7760.9%.

In the third quarter, the industry's volume remained high, with the leading companies' growth rates surpassing the industry average.

In the third quarter of 2024, the total business volume of the express delivery industry reached 43.609 billion pieces, an increase of +20.1% year-on-year, showing a slight slowdown of 1.2 percentage points compared with the second quarter, mainly due to base effects. The daily average volume in the third quarter was 0.474 billion pieces, up 0.2% from the second quarter. Among the branches, YTO Express Group's Q3 2024 express business volume was 6.711 billion pieces, an increase of +28.1% year-on-year; Yunda Holding's Q3 2024 express business volume was 6.019 billion pieces, an increase of +23.7% year-on-year; STO Express Co.,Ltd.'s Q3 2024 express business volume was 5.883 billion pieces, an increase of +27.9% year-on-year.

In the third quarter, the leading companies maintained stable profitability per shipment.

Cinda Securities believes that on one hand, as the cost of express delivery for top-tier companies continues to be further optimized, based on the downward trend of the cost per ticket, top-tier express delivery companies will have more flexible pricing adjustment capabilities. On the other hand, benefiting from the industry's anti-internal competition promotion, price competition is easing, and the single-ticket profitability of companies is expected to remain stable or increase.

Branch offices view: In 24Q3, YTO Express had an express delivery single ticket revenue of 2.20 yuan, -5.8% year-on-year, -2.8% quarter-on-quarter in Q2, with a comprehensive single ticket net income of 0.14 yuan, -7.9% year-on-year; Yunda Holding had a 24Q3 express delivery single ticket revenue of 1.99 yuan, -10.4% year-on-year, -1.6% quarter-on-quarter in Q2, with a single ticket net income of 0.06 yuan, +0.4% year-on-year; Sto Express Co., Ltd. had a 24Q3 express delivery single ticket revenue of 2.01 yuan, -5.2% year-on-year, -0.6% quarter-on-quarter in Q2, with a single ticket net income of 0.04 yuan, +6043.8% year-on-year.

Maintaining relatively high growth in parcel volume, stable single-ticket profitability, optimistic about the continued increase in peak season prices, expecting express delivery companies to maintain relatively substantial profit growth in Q4.

In terms of parcel volume: the scale expansion of e-commerce express delivery is still ongoing, under the further rise of live streaming e-commerce, on one hand, the penetration rate of online shopping consumption continues to increase, while on the other hand, the downscaling and fragmentation of online shopping consumption behavior drive the downward trend of real goods online shopping transactions of single express parcels, the express delivery industry still has excessive growth compared to upstream e-commerce.

Regarding single-ticket profitability: the cost side of a single ticket is expected to be further optimized under the driving forces of economies of scale, asset replacement, management improvement, and the potential penetration rate increase of end unmanned fulfillment, on the price side of a single ticket, considering factors such as policy regulation support, tight supply of leading capacity, emphasis on quality development, and strategic focus shift of new entrants, even if companies pass on some of the cost decline on the cost side of a single ticket to the front end, it is expected to bring stable growth in single-ticket profitability.

It is expected that the business volume growth rate of the express delivery industry in 2024 will be around 20%, with the top companies potentially experiencing excess growth, coupled with the approaching peak season leading to stable improvement in single-ticket profitability. The profitability of top companies is still expected to maintain a substantial growth rate. Bullish on the valuation recovery of leading companies, recommending ZTO Express (02057), Yunda Holding (002120.SZ), YTO Express Group (600233.SH), and keeping an eye on Sto Express Co., Ltd. (002468.SZ).

Risk factors: lower-than-expected demand for physical goods online shopping; deteriorating price competition in e-commerce express delivery; declining stability of end-point franchisees.