ZTO Express Cayman : 4Q23 Financial Details For Earnings Call (443 KB)

ZTO Express (Cayman) Inc.

4Q23 and FY2023 Financial Details for Earnings Call

Mar 20, 2024

Financial Performance

	2023	2022	V%	Comments
Parcel package volume （in Billion）	30.20	24.39	23.8%	4.5pts above industry avg.; 22.9% market share (↑0.8pts, 22.1% @2022)
(￥RMB in Million)
Revenues	38,419	35,377	8.6%	¥37.51bn from core express delivery business, increased 9.8%
				1) ¥3.05bn from KA customers, decreased 37.3% on 40.1% KA volume decrease
				¥0.91bn freight fwarding revenues decreased 25.2%
COGS	-26,756	-26,338	1.6%	¥25.90bn from core express delivery business, increased 2.8%
				1) Line haul transportation costs increased 8.9% to ¥13.59bn
				2) Sorting hub operation costs increased 5.2% to ¥8.25bn
				3) ¥1.62bn KA costs decreased 35.8%
				¥0.85bn freight fwarding costs decreased 24.9%
Gross profit	11,663	9,039	29.0%	¥11.61bn from core business, increased 29.5%
Gross profit %	30.4%	25.6%	4.8pts	31.0% for core express delivery business (26.2% @2022)
SG&A	-2,425	-2,077	16.7%	SG&A excluding SBC was 5.6% of revenues (5.4% @ 2022)
Other operating income/(loss), net	771	775		1) ¥397.0mn gov't subsidies and tax rebates (¥346.1mn @2022)
				2) ¥277.4mn VAT super deduction (¥273.4mn @2022),
				3) ¥53.0mn ADR fee rebate (¥59.9mn @2022)
Income from operations	10,008	7,736	29.4%
Operating profit %	26.0%	21.9%	4.2pts
Income from operations excluding SBC (Non GAAP)	10,263	7,915	29.7%
Operating profit % excluding SBC（Non GAAP）	26.7%	22.4%	4.3pts
Interest income (net)	417	313	33.2%
Fair value changes of financial instruments	165	46		Included ¥100mn write off of Zhongrong trust products
Currency exchange gain/(loss)	94	147
Income before income tax and equity pickup	10,689	8,286	29.0%
Income tax expenses	-1,939	-1,633		2023 included 1) ¥207.1mn "Key Software Enterpirse" tax credit for 2022; 2) Approx. ¥0.2bn
				accrued withholding tax on '23 annual dividend payable
				Adjusted ETR 17.6% (19.1%@2022)
Equity pickup	4	6
Net income	8,754	6,659	31.5%
Net income%	22.8%	18.8%	4.0pts
Adjusted net income (Non GAAP)	9,006	6,806	32.3%
Adjusted net income (Non GAAP)%	23.4%	19.2%	4.2pts
EBITDA	13,858	11,153	24.2%
Adjusted EBITDA (Non GAAP)	14,107	11,289	25.0%
Adjusted Basic EPS (Non GAAP) (￥RMB in Yuan)	11.14	8.59	29.7%

* may contain rounding differences

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ZTO Express (Cayman) Inc.

4Q23 and FY2023 Financial Details for Earnings Call

Mar 20, 2024

Unit Economics (RMB per parcel)

GAAP	2023	2022	Impact (+/-)	Comments (+positive/-negative impact)
ASP (excluding COE)	1.24	1.40	-16 cents	Core express delivery ASP decreased 11.3% (decrease in proportion of KA volume -7 cents,
					volume incentives -5 cents, lower avg. parcel weight -4 cents)
Cost of Revenue (excluding COE)	0.86	1.03	+17 cents	Core express delivery unit cost decreased 17.0%, among which unit KA cost decreased 5 cents
-	transportation cost per parcel	0.45	0.51	+6 cents	1)	Better economies of scale (+)
					2)	Improved load rate (+)
					3)	Real-time data monitoring and analytics to optimize route planning (+)
					4)	Diesel price declined, decreased ~1 cents (+)
-	sorting hub cost per parcel	0.27	0.32	+5 cents	1)	Better economies of scale (+)
					2)	Improved standardization in operating procedures with improved labor productivity (+)
					3)	Increased automation, 464 sets of auto. sorting equipment in use (458 sets @2022) (+)
	SG&A excluding SBC (Non GAAP)	0.07	0.08	+1 cent	Efficient corporate cost structure & positive leverage
	Adjusted income from operations (Non GAAP)	0.34	0.32	+2 cents
Cash and Capex (RMB in Million)
		2023	2022	Diff	Comments
Operating cash flow	13,361	11,479	1,882
CapEx	6,670	7,234	-564	Approx. ¥4,890mn land use rights acquisition and sorting hub construction
						¥1,720mn automation equipment
Cash and Cash Equivalents	20,475	18,342	2,133	Excluding ¥7.32bn cash on deposits maturing in one year or longer

* may contain rounding differences

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Financial Performance

Parcel package volume （in Billion）

(￥RMB in Million)

Revenues

COGS

Gross profit

Gross profit %

SG&A

Other operating income/(loss), net

Income from operations

Operating profit %

Income from operations excluding SBC (Non GAAP) Operating profit % excluding SBC（Non GAAP）

Interest income (net)

Fair value changes of financial instruments Currency exchange gain/(loss)

Income before income tax and equity pickup Income tax expenses

Equity pickup

Net income

Net income%

Adjusted net income (Non GAAP)

Adjusted net income (Non GAAP)%

EBITDA

Adjusted EBITDA (Non GAAP)

Adjusted Basic EPS (Non GAAP) (￥RMB in Yuan)

ZTO Express (Cayman) Inc.

4Q23 and FY2023 Financial Details for Earnings Call

Mar 20, 2024

4Q23	4Q22	V%	Comments
8.70	6.59	32.0% 4.8 pts above industry avg.; 22.4% market share (21.6% @4Q22)
10,619	9,871	7.6%	¥10.38bn from core express delivery business, increased 8.0%
			1)¥684.5mn from KA customers, decreased 47.0% on 51.2% KA volume decrease
			¥236.6mn freight forwarding revenues, decreased 6.9%
-7,491	-7,099	5.5%	¥7.26bn from core express delivery business, increased 5.9%
			1)	¥3.96bn line haul transportation costs, increased 16.8%
			2)	¥2.26bn sorting hub operation costs, increased 5.5%
			3)	¥391.8mn KA costs, decreased 41.1%

¥227.5mn freight forwarding costs, decreased 4.6%

3,128	2,773	12.8%	¥3.12bn from core express delivery business, increased 13.1%
29.5%	28.1%	1.4pts	30.0% for core express delivery business (28.7% @4Q22)
-700	-561	24.9%	Included ¥85.6mn provision of losses from a credit loan to an equipment supplier
			SG&A excl. such provision was 5.8% of revenues (5.7% @4Q22)
327	248		1) ¥191.2mn gov't subsidies and tax rebates ( ¥38.9mn @4Q22)
			2) ¥71.8mn VAT super deduction ( ¥100.3mn @4Q22)
			3) ¥53.0mn ADR fee rebate ( ¥9.9mn @4Q22)
2,755	2,460	12.0%
25.9%	24.9%	1.0pts
2,755	2,460	12.0%
25.9%	24.9%	1.0pts
140	36	291.8%
-51	84		Included ¥100mn write off of Zhongrong trust products
18	9
2,857	2,597	10.0%
-637	-501		Included approx. ¥0.2bn accrued withholding tax on '23 annual dividend payable
			Adjusted ETR 15.3% (19.5% @4Q22)
-10	33
2,210	2,129	3.8%
20.8%	21.6%	-0.8pts
2,214	2,120	4.4%
20.9%	21.5%	-0.6pts
3,647	3,407	7.1%
3,652	3,397	7.5%
2.73	2.66	2.6%

* may contain rounding differences

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Unit Economics (RMB per parcel)

GAAP

ASP (excluding COE)

Cost of Revenue (excluding COE)

• transportation cost per parcel
• sorting hub cost per parcel

SG&A excluding SBC (Non GAAP)

Adjusted income from operations (Non GAAP)

Cash and Capex (RMB in Million)

Operating cash flow

CapEx

Cash and Cash Equivalents

ZTO Express (Cayman) Inc.

4Q23 and FY2023 Financial Details for Earnings Call

Mar 20, 2024

4Q23	4Q22	Impact (+/-) Comments (+positive/-negative impact)
1.19	1.46	-27 cents	Core express delivery ASP decreased 18.2% ( volume incentives -13 cents, decrease in proportion
			of KA volume -9 cents, lower avg. parcel weight -5 cents)
0.83	1.04	+21 cents	Core express delivery unit cost decreased 16.3%, among which unit KA cost decreased 5 cents
0.46	0.51	+5 cents	1)	Better economies of scale (+)
			2)	Improved load rate (+)
			3)	Real-time data monitoring and analytics to optimize route planning (+)
0.26	0.32	+6 cents	1)	Better economies of scale (+)
			2)	Improved standardization in operating procedures with improved labor productivity (+)
			3)	Increased automation, 464 sets of auto. sorting equipment in use (458 sets @4Q22) (+)
0.08	0.09	+1 cents	Efficient corporate cost structure & positive leverage
0.32	0.37	-5 cents
4Q23	4Q22	Diff	Comments
3,923	11,479	-7,556
895	1,842	-947	Approx. ¥540mn land use rights and sorting hub construction
				¥350mn automation equipment
20,475	18,342	2,133	Excluding ¥12.17bn cash on deposits maturing in one year or longer

* may contain rounding differences

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