Is the price war heading towards a "relegation war" or a "life and death game"? China Communications Q3 City Share 22.4% Lowered Annual Target
雨的旋律
发表于 2023-11-18 09:23:33
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In the third quarter, it is difficult to achieve both "revenue increase" and "profit increase", and Zhongtong, which firmly holds the top spot in the express delivery market, has not been spared. However, the two-way positive growth of revenue and net profit still reveals the "thick" of Zhongtong.
On November 17th, Zhongtong Express (HK02057, stock price of HKD 179, market value of HKD 145905 million) announced its unaudited financial results for the third quarter of 2023. The financial report shows that the adjusted net profit increased by 25.0% year-on-year to 2.3 billion yuan (RMB, the same below). In terms of revenue, the revenue of Zhongtong Express in the third quarter was 9.076 billion yuan, a year-on-year increase of only 1.5%.
However, compared to the top express delivery companies in the market, it is not easy for Zhongtong to achieve two-way positive growth in its performance in the third quarter. The third quarter is the traditional off-season for express delivery companies, and their performance generally shows a lack of motivation. The Daily Economic News reporter noticed that, especially in terms of quarterly revenue, SF Express and Yunda both declined year-on-year, while Yuantong only slightly increased by 0.01%.
More importantly, before the peak season at the end of the year, the "price war" of express delivery seems to be on the rise. In the third quarter, the single ticket revenue of Zhongtong's core express delivery business decreased by 13.5%. The year-on-year decrease in single ticket revenue in the second quarter was 7.8%, while in the first quarter it was a year-on-year decrease of 3.7%. In the third quarter, the single ticket prices of Yunda and Shentong also decreased by more than 10%.
Faced with intensified price competition, Zhongtong focuses on gaining profitable business growth. At the same time, it maintains market share and provides support for peak season production capacity deployment, "said Lai Meisong, founder, chairman, and CEO of Zhongtong.
The ability to compete in the market without sacrificing profits excessively undoubtedly benefits from the business foundation of Zhongtong. But from a historical perspective, such a "balance" can only work to a certain extent in the short term. However, the peak season at the end of the year is approaching, and the effect of price as a "winner" will soon be apparent.
As of the closing of Hong Kong stocks on November 17th, the stock price of China Express Express fell 4.28% to HKD 179 per share on the previous trading day, with a total market value of HKD 145.905 billion. On November 16th, Eastern Time, the US stock market closed, and the stock price of Zhongtong Express fell 1.11% to $24.04 per share.
Q3 package volume increased by 18.1% year-on-year, and market share expanded to 22.4%
The express delivery business volume of Zhongtong in the third quarter, which is improving along with profits. Unlike other industries, business volume is one of the most core indicators of competition in the express delivery market. In the third quarter, the business volume of Zhongtong increased by 18.1% year-on-year to 7.5 billion pieces, surpassing the industry average of 16.7% year-on-year growth in express delivery business volume in the third quarter.
In the third quarter, Zhongtong's market share expanded to 22.4%. However, Zhongtong lowered its target for a 1.5 percentage point increase in market share for the entire year this year.
Given the erosion of the overall profitability level of the industry by the irrational competition of exchanging price for quantity, our market share target of increasing by 1.5 percentage points for the entire year is no longer reasonable. We still maintain the guidance of reaching a range of 29.27 billion to 30.24 billion pieces of business for the entire year, with a year-on-year growth of 20% to 24%. "said Yan Huiping, Chief Financial Officer of Zhongtong.
In response to the decline in single ticket revenue of the core express delivery business in the third quarter, Zhongtong also explained in its financial report that compared to the industry, Zhongtong has made greater efforts to optimize the proportion of direct customer business, which has also had a significant impact on the decline in single ticket revenue. In addition, the incremental subsidies provided to ensure market share and the decrease in packaging weight are also one of the main reasons for the decrease in unit price.
Lai Meisong pointed out that the strategy of balancing and increasing service quality, business scale, and profitability has not changed. Diversified products and services, operational efficiency, and industry profit contribution, as well as a stable and profitable franchise network, are the long-term goals pursued by Zhongtong.
From the perspective of business data, as of September 30, 2023, Zhongtong has 97 sorting centers, over 31000 pickup/delivery points, approximately 6000 direct network partners, approximately 3800 trunk transportation routes between sorting centers, and approximately 10000 self owned trunk vehicles. Among them, over 9300 self owned vehicles are high capacity vehicles with a length of 15 to 17 meters.
Express delivery in the third quarter "lacks power" and looks forward to the peak season "turning against the wind"
The peak season is approaching, and the return of price war has also shown a lack of momentum throughout the third quarter of express delivery. At present, exchanging price for quantity remains the most direct competitive weapon in the Red Sea express delivery market. Especially the latecomer, Jitu Express, landed in the capital market with a market value of HKD 100 billion, adding to the already tense market atmosphere.
Regarding the situation of price war during the peak season of express delivery, Shanghai Securities Research Report believes that in terms of single ticket revenue, except for Yuantong, the single ticket revenue of other major express delivery companies in September showed a month on month improvement trend. After entering the peak season, the scale effect of core express delivery companies combined with their cost control ability continues to improve, which may create more profit space for express delivery enterprises.
That's exactly what Zhongtong did in the third quarter. Although the single ticket revenue has decreased, on the cost side, Zhongtong has been vigorously controlling in the third quarter, with the word "stable" at the forefront. According to Zhongtong's financial report, in the third quarter, the cost of sorting and transportation for single tickets decreased by 11%, exceeding expectations. The proportion of sales and management expenses in revenue remains stable at around 5%. The operating cash flow was 2.9 billion yuan, and the capital expenditure was 1.3 billion yuan.
The peak season is approaching, and everyone is yearning for an opportunity to "turn the tables against the wind". Cost control is undoubtedly an important measure for stable operation, but the supply of business increment is the first and foremost requirement for maintaining market position.
According to monitoring data from the National Postal Administration, from November 1 to 11, 2023, postal and express delivery enterprises across the country received a total of 5.264 billion express packages, a year-on-year increase of 23.22%, and the daily average business volume was 1.4 times the daily business volume. On November 11th, a total of 639 million express packages were collected, 1.87 times the daily business volume, a year-on-year increase of 15.76%.
At the end of the year express delivery peak season, the Double 11 promotion is the first and most important rush period. From this year's Double 11 situation, it can be seen that the increment of express delivery business is still continuing to recover. During the peak season of the "Double 11" this year, China Unicom's entire network orders continuously exceeded 100 million, with a peak daily business volume exceeding 140 million.
However, this still does not change the situation of "more wolves and less meat". The express delivery market, like the e-commerce market, is difficult to find incremental growth. Express logistics expert Zhao Xiaomin stated in an interview with the Daily Economic News that in the future, express delivery companies need to pay attention to the accuracy of services and the stickiness of customers and users.
In terms of competition among express delivery companies, "maintaining the year-end and Double 11 rankings is crucial for each company, especially the ones with the most intense competition. To some extent, year-end competition is a 'classification war', which is equally important for next year's development," he added.
More importantly, after the capitalization action of the express delivery company is completed, the starting point for a new round of mergers and acquisitions integration will also come, which is not only a "classification war" but also a "life and death situation".
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声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
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