Dongxing Express August data review: single ticket revenue decline narrows, price war expected to ease in the second half of the year.

Dongxing released a research report stating that the intensity of express delivery price competition this year has slightly exceeded expectations, but does not change the expectation that the price war will see moderation in the second half of the year. Particularly after the industry enters the peak season in the fourth quarter, the demand to exchange price for volume will weaken due to capacity constraints, which may lead to a moderation in the price war. It is recommended to focus on industry leaders Zhongtong (02057) and YTO Express (600233.SH). Event: In August, the total business volume of express service companies nationwide reached 14.383 billion pieces, an increase of 19.4% year-on-year, with the growth rate decreasing compared to August's 22.2%. In terms of type, the business volume of local pieces in August increased by 13.9%, and the business volume of long-distance pieces increased by 19.7%. Key points from Dongxing: Slight decrease in business volume growth rate, YTO Express leads growth: In August, the industry was still in the off-season, with a slight increase in express business volume compared to July, but the year-on-year growth rate of business volume fell below 20%. Among the three listed companies in the Tongda system, YTO Express, which had previously maintained a growth rate near the industry average, saw a significant increase in business volume growth in August, surpassing Shentong and Yunda. Market share increased by 1.2pct from the same period last year; Shentong and Yunda's share increased by 0.9pct and 0.2pct respectively. Price competition has eased, the Postal Bureau explicitly opposes internal competition: In terms of price, price competition in the industry moderated in August. The average price per ticket increased by 0.16 RMB to 7.93 RMB/ticket month-on-month, with a year-on-year decrease of 10.8%. In late August, the State Post Bureau held a special meeting to regulate market order, requiring express delivery companies to resolutely prevent "internalizing" vicious competition. The meeting has a positive effect on easing the industry's price war. In terms of listed companies, Shentong, Yunda, and YTO Express saw year-on-year decreases in average revenue per ticket of 4.8%, 8.3%, and 7.3% respectively in August, while compared to the previous month, Shentong's average revenue per ticket remained the same, Yunda's increased by 0.5%, and YTO Express's decreased by 3.1%. YTO Express increased its efforts to compete for market share: The significant change in operating data in August was seen in YTO Express. While the business volume growth rates of other companies declined month-on-month, YTO Express's business volume growth rate increased against the trend, demonstrating a strong demand for market share. Correspondingly, the month-on-month decrease in average revenue per ticket for YTO Express was also noticeable. In order to increase market share, YTO Express intensified its efforts to compete for low-end e-commerce pieces, and the increase in low-priced incremental business brought down the average revenue per ticket. The bottom line of price competition is gradually becoming clear: In August, it is worth noting that despite YTO Express intensifying its efforts to gain market share, the average revenue per ticket for Shentong and Yunda did not continue to decrease. The industry as a whole showed a moderation in price competition, with the narrowing of the decrease in average revenue per ticket. This reflects that the bottom line of price competition in the industry is gradually becoming clear, and the possibility of continued decline in average revenue per ticket is not high. Based on this, it is more foreseeable that price competition in the industry will moderate in the fourth quarter. Risk reminders: Escalation of industry price wars; Increase in labor costs; Changes in policy, etc.