Huafu Securities: The express delivery industry is gradually entering its peak season, continue to be bullish on the franchise express delivery industry, with marginal recovery expected by 2024.

Huafu Securities released a research report stating that the total demand in the express delivery industry in 2024 exceeded expectations. In August, the cumulative volume of parcels exceeded one billion, and the industry is gradually entering the peak season. The year-on-year decrease in ASP is gradually narrowing, and the industry's expectation of price increases is rising. The long-term trend is to see a contraction in capital expenditure on the supply side, with regulators taking a firm stance on curbing vicious price wars. It is recommended to continue to be optimistic about franchise express delivery in 2024. Key recommendations include: ZTO Express (02057): Adjusted net profit in Q2 2024 was 28.1 billion yuan, with a strategic shift to high-quality parcels, maintaining a good scale and continuing to increase profits. Yunda Holding (002120.SZ): Net profit attributable to the parent company in Q2 2024 increased by 23.2% year-on-year, with profits continuing to recover as the network improves. YTO Express Group (600233.SH): A leading enterprise in the express delivery industry, focusing on the core business of express delivery, continuously fulfilling comprehensive service capability and product pricing capability. Focus on STO Express Co., Ltd. (002468.SZ) and others. Event: The State Post Bureau disclosed the operating data of the industry in August 2024, and A-share express delivery companies disclosed their operating data for August 2024. Key points from Huafu Securities are as follows: Commercial flow: The year-on-year growth of social and retail sales is continuing, with online retail sales almost flat year-on-year. In August 2024, the total retail sales of consumer goods in China reached 3.9 trillion yuan, a year-on-year increase of 2.1%; the retail sales of physical goods online reached 1.0 trillion yuan, a year-on-year increase of 0.9%; the penetration rate of online shopping for physical goods was 26.0%, a year-on-year decrease of 0.3 percentage points, and a month-on-month decrease of 1.8 percentage points. Volume: The total volume of express parcels in January to August 2024 reached 108.8 billion, surpassing one billion parcels. In August 2024, the express delivery volume reached 14.38 billion parcels, a year-on-year increase of 19.5% (new calculation method). From January to August 2024, the total volume of express parcels reached 108.8 billion, a year-on-year increase of 22.5%, with the growth rate of express parcel volume still maintaining a moderate pace. In terms of types, the year-on-year increase in cross-regional parcels was 30.5%; in terms of regions, the year-on-year increase in express delivery in the eastern region was 23.7%. Price: The year-on-year decrease in ASP in August, with a narrowing decline in the industry-wide ASP. In August 2024, the average price of express delivery services in China was 7.93 yuan, a year-on-year decrease of 0.96 yuan (10.8%). In August 2024, the average prices of express delivery services in the eastern, central, and western regions were 8.23 yuan, 6.43 yuan, and 8.64 yuan respectively, with year-on-year decreases of 9.0%, 12.1%, and 21.1% respectively. Competitive landscape: Shunfeng and YTO's market share is increasing. In August 2024, Shunfeng, Yunda, Shentong, and YTO achieved express delivery volumes of 1.04 billion, 1.97 billion, 1.94 billion, and 2.26 billion respectively, with year-on-year increases of 8.6%, 11.4%, 21.5%, and 20.7% respectively. The market shares of Shunfeng, Yunda, Shentong, and YTO in terms of express parcel volume were 7.3%, 13.7%, 13.5%, and 15.7% respectively. In August 2024, the average revenue per ticket for Shunfeng, Yunda, Shentong, and YTO was 15.67 yuan, 1.99 yuan, 2.00 yuan, and 2.14 yuan respectively, with year-on-year decreases of 5.3%, 8.3%, 4.8%, and 7.1% respectively. Risk warning: Macro-economic downturn; risk of express delivery volume growth falling short of expectations; intensified industry competition.