The price war that reignited this year is intensifying its impact on express delivery companies.
On November 17th, ZTO. N (2057. HK) announced its unaudited financial performance for the third quarter of 2023. In the third quarter, it achieved revenue of 9.076 billion yuan, a year-on-year increase of 1.5%; The net profit attributable to the parent company was 2.345 billion yuan, a year-on-year increase of 21.19%. The adjusted net profit was 2.34 billion yuan, a year-on-year increase of 25%; The gross profit margin has increased from 27.3% in the same period last year to 29.8%.
In the first three quarters, it achieved revenue of 27.799 billion yuan, a year-on-year increase of 8.99%; The net profit attributable to the parent company was 6.557 billion yuan, a year-on-year increase of 41.13%.
Specifically, in the third quarter, the core express delivery service revenue of Zhongtong accounted for 91.9%, reaching 8.342 billion yuan, a year-on-year increase of 2.2%, mainly due to the comprehensive impact of an 18.1% increase in package volume and a 13.5% decrease in single ticket prices. Among them, the revenue from directly serving corporate customers (including dispatch fees) decreased by 51.3%. On the one hand, network partners undertook some of the business, and on the other hand, due to the company's continuous optimization of loss making businesses.
In addition, the revenue from freight forwarding services accounted for 2.39%, reaching 239 million yuan, a year-on-year decrease of 19.8%, mainly due to the weak demand for cross-border e-commerce and a decrease in prices. The sales revenue of materials mainly includes the sales revenue of thermal sensitive paper required for printing electronic bills, an increase of 32.3%, which is consistent with the increase in package volume.
Performance of various business segments of Zhongtong
As of the close of the Hong Kong stock market on the 17th, Zhongtong Express fell 4.28% to close at HKD 179.
The industry's single ticket revenue continues to decline, and the annual market share target of Zhongtong is affected
According to the financial report, the volume of Zhongtong packages in the third quarter increased by 18.1% year-on-year to 7.5 billion pieces, and the market share expanded to 22.4%. According to previous calculations by reporters, the market shares of Yuantong, Yunda, Shentong, and SF Express in the third quarter of this year were 15.59%, 14.48%, 13.68%, and 8.35%, respectively. Among them, only Shentong Express achieved an increase in its share in the third quarter, with a year-on-year increase of 1 percentage point.
The current Chinese express delivery industry market is trending towards integration. According to data from the National Postal Administration, the express delivery business volume (excluding postal group parcel business) in the first three quarters has completed a total of 93.12 billion items, a year-on-year increase of 16.4%. The express delivery business volume in the third quarter of this year was 33.6 billion pieces.
As of last year, the market share of the top six express delivery companies reached 86.3%. Among them, the share of the four express delivery systems of "Three Links and One Delivery" has reached 65.5%. But as the growth rate of package volume slows down, the exchange of price for volume in the express delivery industry has once again intensified since the beginning of this year.
Multiple courier companies' market share last year
Since the fourth quarter of last year, Zhongtong's single ticket revenue has continued to decline. The single ticket revenue of the core express delivery business in the third quarter was 1.17 yuan, a year-on-year decrease of 13.97% (or 0.19 yuan), and a month on month decrease of 5.65%.
Single ticket revenue in the past three years
According to the previous analysis by a reporter from Pengpai News, in terms of other express delivery companies, SF Express's single ticket revenue increased by nearly 6% in the third quarter, while Tongda Series Yuantong, Shentong, and Yunda's single ticket revenue all decreased in the third quarter, with Shentong and Yunda showing a double-digit year-on-year decline.
The vicious price war in the express delivery industry can be traced back to 2017. With the intervention of regulatory authorities and the transformation of express delivery companies towards high-quality services, the price war almost came to an end in the second half of 2021. Since the beginning of this year, some regions have once again engaged in "war", and the competitive situation has further strengthened.
The decline in single ticket revenue of China Unicom's core express delivery business is basically consistent with industry trends. "Yan Huiping, the CFO of China Unicom, stated in a conference call that compared to the industry, China Unicom 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 maintain market share and the decrease in package weight are also one of the main reasons for the decrease in unit price.
It is understood that the statistical criteria for revenue and single ticket revenue of express delivery enterprises are different. Among the main express delivery enterprises, SF Express adopts a direct sales model, with revenue including the entire network express delivery revenue; Franchise express delivery companies only calculate headquarters revenue, among which A-share Yuantong Express, Shentong Express, Yunda Group's revenue and single ticket revenue include delivery fees; The revenue and single ticket revenue of Zhongtong Express do not include delivery fees, and the incentives for the outlets have been deducted.
The competition of exchanging price for quantity is clearly intensifying, and China Communications will work alongside its network partners to jointly maintain market share. "Lai Meisong, founder, chairman, and CEO of China Communications, pointed out in the financial report conference call that in the face of competition, China Communications adheres to its consistent strategic goal of increasing market share and grasping the bottom line of not making losses while maintaining high-quality service levels and achieving established profit targets, Emphasize the stability of one's own network and the construction of long-term competitiveness.
It is worth noting that the irrational competition of exchanging price for quantity once again poses a threat to the overall profitability level of the industry. According to the financial report, given Zhongtong's strategy of gaining profitable business growth in extreme market price competition, the company's original annual growth target of 1.5 percentage points in market share is no longer reasonable or feasible. In its third quarter report, Zhongtong still maintained the guidance of reaching a business volume of 29.27 billion to 30.24 billion units in 2023, with a year-on-year increase of 20% to 24%.
Plan to increase the proportion of loose parts and pay attention to the reverse logistics market
The achievement of long-term goals will drive further differentiation of the industry, and China Communications will continue to maintain its leading competitive position. "Lai Meisong stated in a conference call that China Communications' current focus is on forging long-term competitive advantages, including diversified products and services, first-class operational efficiency, maximum industry profit contribution, the most stable and profitable franchise network, and top priority, The highest brand awareness and customer satisfaction.
The overall profit in the e-commerce component field in the past three quarters has been challenging. If the proportion of loose parts or the share of reverse logistics increases, the corresponding revenue of each site and salesperson will increase, which is more conducive to the stability and sustainability of China Communications Network. "Lai Meisong revealed in a conference call that there are currently many reverse logistics packages on several major platforms, with about ten million starting. Zhongtong Express has seen the market for reverse logistics and is continuously improving its service quality, emphasizing two hours of door-to-door collection.
Lai Meisong further pointed out that Zhongtong's order volume and proportion in the reverse logistics market are continuously increasing, and at the same time, it is also accelerating the promotion of terminal construction. Standardized terminal post station services add commercial and community functions, and Tuxi now has over 100000 stores, which will increase again this year, exceeding the opening target at the beginning of the year.
In terms of capital expenditure, Zhongtong has always attached great importance to capacity building, and in the past few years, its own land and factories have been basically laid out in major node cities across the country. According to Lai Meisong during a conference call, Zhongtong has a very high proportion of independently owned factories and equipment vehicles in the industry. Compared to last year, capital expenditure has decreased this year, at around 7 billion yuan, and next year it will be around 6 billion yuan.
The express delivery industry has formed a clear evolutionary trend in terms of concentration and differentiation in terms of quantity. In the future, the competitive landscape of the express delivery industry will tend to stabilize, but at the same time, differentiation will also become more obvious. Regarding the fourth quarter and subsequent prospects, Lai Meisong said that in the future, express delivery companies will have cost advantages, scale advantages, and a network with good service quality, and market share will definitely increase. Zhongtong hopes to truly move from high quantity to high quality, provide more diversified and personalized services in future strategies, and further increase the proportion of loose parts.