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Updated2024/11/25 13:13
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<Research Report>G Sachs Upgrades SINOTRANS (00598.HK) to Neutral, Prefers ZTO EXPRESS-W (02057.HK)
Goldman Sachs remarked in a research report that price competition in the Chinese logistics industry will intensify in 2023, and the decline in the average service price of express...
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<Research Report>G Sachs Upgrades SINOTRANS (00598.HK) to Neutral, Prefers ZTO EXPRESS-W (02057.HK)
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Goldman Sachs remarked in a research report that price competition in the Chinese logistics industry will intensify in 2023, and the decline in the average service price of express delivery will continue into early 2024. The Measures for the Administration for Express Delivery Market, which is expected to come into effect in March, will increase last-mile costs and help support the average service price.

However, given the industry's overcapacity and still fragmented market structure, the broker believed it was unlikely that courier service prices would continue to rise. On the positive side, the express parcel volume has been on a higher-than-expected trend year-to-date, with 29% YoY growth in the first two months, up from 27% YoY in 4Q23 and 19% YoY for full-year 2023.

Goldman currently forecasted that the average selling price of logistics companies operating mainly in the form of franchises will drop by 6%-9% this year in the face of sustained price competition, and revised upward the industry's parcel volume growth forecast from 10% to 14% this year. Assuming pricing pressures persist this year, the broker raised its forecasts for courier business by 1% to 22% for the logistics companies it covered from 2023 to 2025. It also lowered its revenue forecasts for 2024 and 2025 by 4%-11%, its net profit forecasts by 7%-31%, and its target prices by 7%-38%.

The broker remained bullish on ZTO EXPRESS-W (02057.HK)  -1.800 (-1.185%)    Short selling $46.05M; Ratio 41.855%   , which is the only express delivery company it has given a Buy rating. Meanwhile, SINOTRANS (00598.HK)  +0.030 (+0.912%)    Short selling $2.04M; Ratio 17.801%   is upgraded to Neutral from Sell, reflecting support from dividend yield and freight rate normalisation. The broker additionally maintained Neutral on KERRY LOG NET (00636.HK)  -0.040 (-0.605%)    Short selling $274.15K; Ratio 8.001%   .

Stock | Rating | Target Price (HKD)
ZTO EXPRESS-W (02057.HK)  -1.800 (-1.185%)    Short selling $46.05M; Ratio 41.855%   | Buy | $281 → $219
SINOTRANS (00598.HK)  +0.030 (+0.912%)    Short selling $2.04M; Ratio 17.801%   | Sell → Neutral | $3.1 → $3.9
KERRY LOG NET (00636.HK)  -0.040 (-0.605%)    Short selling $274.15K; Ratio 8.001%   | Neutral | $17.4 → $11.1

(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-11-25 12:25.)

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