The Zhitong Finance app learned that Huatai Securities published a research report saying that in November, the upstream e-commerce consumer demand performance in the express delivery industry was weak, and the volume and price of the industry were under pressure. The compound growth rate of the e-commerce GMV/express delivery industry has declined over 2 years. The peak season brought about a month-on-month increase in prices, but the year-on-year decline further expanded. The bank believes that the demand side of the industry is in the bottom zone. At the same time, due to sufficient production capacity and supply of express delivery companies, industry competition continues, prices may continue to decline year on year, and short-term corporate single ticket profits are under pressure. In the medium to long term, leading players are expected to increase their share in competition. Increased economies of scale reduce the cost of a single ticket, which is expected to hedge against downward pressure on prices and increase single ticket profit.

The main views of Huatai Securities are as follows:

The compound growth rate of zero social market/e-commerce GMV is weak, and the medium- to long-term upward trend in online shopping penetration has not changed

In November, retail sales of consumer goods nationwide were +10.1% year-on-year (September/October: +5.5%/+7.6%), and online retail sales of physical goods (e-commerce GMV) were +7.6% year-on-year (September/October: +4.6%/+4.9%). Total social net sales and e-commerce GMV continued to rise year on year, mainly due to the low base last year combined with the peak e-commerce season. Excluding the influence of the base figure, the 2-year CAGR of zero total value in November and e-commerce GMV was +1.8%/+4.6% (October: +3.5%/+9.3%), and the compound growth rate declined significantly. In terms of e-commerce penetration rate, e-commerce GMV accounted for 34.6% of the total amount of social zero, a year-on-year decline of 0.8 pct, an increase of 1.9 pct compared to '21. The year-on-year decline in the penetration rate was mainly due to the high demand for online shopping brought about by the epidemic in the same period last year, but compared to 21, which achieved significant growth, the bank believes that the medium- to long-term upward trend in e-commerce penetration will not change. (Data source: National Bureau of Statistics)

The compound growth rate of express delivery volume declined, and the year-on-year decline in prices increased

In November, in terms of volume, the national express delivery volume was +31.9% year over year (September/October: +20.0%/+22.2% year on year), November 22-23 CAGR was +9.7% (September/October: +11.1%/+10.1%), during the peak e-commerce promotion season in November, the year-on-year growth rate of goods under the low base rose again, but the compound growth rate declined, mainly due to the decline in C-side demand; in terms of price, the average price of domestic (same city+offsite) goods was -6.4% /4.0% y/y (to 5.0% y/y) September/October: -4.7% YoY /- 5.3%), the month-on-month increase was mainly driven by the peak season, and the increase in the year-on-year decline highlighted the continuation of price competition. As of December 17, the average daily collection and delivery volume of the national postal express industry is estimated to be +19.3%/+20.2% year-on-year (November: +31.7%/+32.6%), corresponding to a 2-year CAGR of +11.5%/+9.8% (November: +8.5%/+8.2%). (Data source: State Post Office, Ministry of Transport)

Investment strategy: stock competition continues, optimistic about dominant leaders

The volume and price performance of the express delivery industry during the peak season of the “Double Eleven” e-commerce promotion was lackluster. The two-year compound growth rate for the entire month volume was slightly less than 10%, and the year-on-year price decline widened further. As the industry enters a low season, there are no signs of significant improvement in the stock competition of express delivery companies, and prices may continue to decline year on year. In the short term, industry demand is in the bottom zone and is expected to improve marginally, but the signs of a bottoming out and rebound are still unclear. In the medium to long term, leading express delivery companies focus on increasing their shares. The cost side is expected to be optimized at the same time as price competition. The bank is optimistic about the economies of scale and efficiency of leading advantages to hedge against downward pressure on prices, and the profit center is still expected to shift upward.