ZTO Express: 1Q26 results in-line; potential stake sale by BABA a near-term headwind

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ZTO Express: 1Q26 results in-line; potential stake sale by BABA a near-term headwind

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ZTO Express

1Q26 results in-line; potential stake sale

by BABA a near-term headwind

Reiterate Rating: NEUTRAL | PO: 27.00 USD | Price: 23.55 USD

Reiterate Neutral; near-term headwinds may cap re-rating 20 May 2026

ZTO Express (ZTO) reported 1Q26 adjusted net profit of RMB2.34bn (+6% YoY), in line Equity

with our estimate but likely only meeting the low end of buyside expectations (Please

Fan Tso, CFA >>

refer to Exhibit 1 for 1Q26 results comparisons vs BofAe). We see the better-than- Research Analyst

expected unit cost reduction (driven by automation and improved loading standards) as a Merrill Lynch (Hong Kong) +852 3508 2875

key positive, which should support UE improvement going forward. However, this is fan.tso@bofa.com

offset by weaker profitability in reverse logistics parcels and potential tighter Karl Choi, CFA >>

enforcement of social security contributions for couriers in 2H26. In addition, investor Research Analyst Merrill Lynch (Hong Kong)

concerns over a potential stake sale by Alibaba (c.9% stake in ZTO) could remain a near- +852 3508 3108

term overhang. We reiterate our Neutral rating, given undemanding valuation, and expect karl.choi@bofa.com

share buybacks to help buffer downside.

Better unit cost offset by lower reverse logistics profit Stock Data

ZTO’s 1Q ASP for core express delivery increased by RMB0.11 (+8.2% YoY), supported

Price 23.55 USD

by an RMB0.18 uplift from higher KA volume, partly offset by RMB0.15 KA cost increase.

Price Objective 27.00 USD

Unit transport and sorting costs were RMB0.37 and RMB0.25, down RMB0.04 and

Date Established 18-Mar-2026

RMB0.02 YoY, respectively. Ex-non-operating items, adjusted operating profit grew 22%