The Zhitong Finance App learned that Zheshang Securities released a research report saying that with the increase in the penetration rate of online consumption, the growth rate of upstream e-commerce sales is slowing down, and the market is entering stock competition. Currently, the competitive landscape is not stable. Since 2023, “grain-producing regions” such as Yiwu have experienced fierce price competition. With the arrival of the peak season, industry prices have recovered somewhat. The bank expects healthy competition to continue, and as Jitu acquires Fengwang and goes public, industry concentration will accelerate in the future.

The bank believes that in 2023, due to the impact of industry price competition, market sentiment in the express delivery sector is relatively sluggish. The current sector's valuation generally fell to a low level corresponding to 2024. The valuation already basically reflects the long-term decline in the industry's growth rate and continued price competition. The overall expectations are relatively pessimistic, have a margin of safety, and are relatively cost-effective.

In terms of individual stocks, Direct Express is optimistic about SF Holdings (002352.SZ); joining Express recommends Zhongtong Express (02057), Yuantong Express (600233.SH), and suggests focusing on Shentong Express (002468.SZ) and Yunda shares (002120.SZ); benefiting from the rapid growth in overseas express delivery business and actively developing cross-border e-commerce business, Jitu Express (01519)'s revenue is expected to grow rapidly.

The main views of Zheshang Securities are as follows:

Upstream commercial flow and express delivery industry situation: the volume is expected to grow at a year-on-year rate of nearly 30% in December

Upstream commercial flow: From January to December 2023, the total volume of social zero was 47.15 trillion yuan, +7.2% year on year; of these, online retail sales of physical products totaled 13.02 trillion yuan, +8.8% year on year. In December, the total value of social zero was 4.36 trillion yuan, up 7.4% year on year; of these, we estimated that online retail sales of physical products were 125 million yuan, an increase of 8.0% year on year; the cumulative penetration rate of physical goods online shopping was about 27.6%.

Industry Overview: According to the State Post Office, China's express delivery development index in December 2023 was 400.7, up 22.5% year on year. Among them, the development scale index, service quality index, development capacity index and development trend index were 495.5, 561.9, 253.5, and 74.4, respectively, up 27.1%, 26.1%, 8.9%, and 11.9%, respectively.

Express delivery revenue: According to data released by the State Post Office, it is estimated that the total revenue from the express delivery business will reach 1.2 trillion yuan in 2023, an increase of 14.5% over the previous year; based on this, we estimate that the revenue from the express delivery business will reach 111.47 billion yuan in December, an increase of 11.8% over the previous year. According to the National Postal Administration Work Conference, the industry will continue to maintain a steady upward trend in 2024. The express delivery business revenue is expected to reach 1.3 trillion yuan, a growth rate of about 8%.

Express delivery industry volume: According to data released by the State Post Office, it is estimated that the total express delivery business volume will reach 132 billion units in 2023, an increase of 19.5% over the previous year; based on this, we estimate that the express delivery business volume will reach 13.18 billion units in December, an increase of 27.2% over the previous year. According to the forecast of the State Post Office, the express delivery business is expected to reach 142.5 billion units in 2024, or about +8% over the same period last year.

Unit price: According to the 2023 express revenue and business volume announced by the State Post Office, we estimate the price of a single express delivery ticket of 8.45 yuan/order in December, -7.1% month-on-month and -12.1% year-on-year; we estimate the revenue of express single tickets for the full year of 2023, or -4.9% year-on-year.

Express delivery volume: The year-on-year growth rate of shipments continued to increase significantly in December

Business volume: Yunda's component volume surpassed the industry average for the first time since 2023, and Shentong continues to lead the growth rate

1) Yuantong: The business volume in December was 2.142 billion units, +34.4% year-on-year; in January-December, it completed a total of 21.20 billion units, +21.3% year-on-year.

2) Yunda: The business volume in December was 1.95 billion units, +30.26% year-on-year; in January-December, it completed a total of 18.85 billion units, +7.1% year-on-year.

3) Shentong: The business volume in December was 1,709 billion units, +47.21% year-on-year; it completed a total of 17.51 billion units in January-December, +35.2% year-on-year.

4) SF Express: The business volume in December was 1,130 billion units, -2.25% (including Feng.com), +7.31% year-on-year (excluding Feng.com); in January-December, it completed a total of 11.9 billion units, +7.5% (including Feng.com).

Continuing the peak season in November and the impact of the low base in 2022, the volume growth rate of listed companies continued to increase significantly year-on-year in December, and Shentong continued to lead; Yunda's volume in December also surpassed the industry average for the first time since 2023. According to the company's announcement, with the arrival of the traditional peak season in the express delivery industry, the company gave full play to its service performance and digital capabilities to improve service levels and customer acquisition capabilities, leading to an increase in the company's business volume.

According to data from the State Post Office, in December, the express delivery market developed well, and the business volume once again exceeded 13 billion units. In the early days, the industry was running relatively smoothly, with an average daily business volume of around 400 million units. In the middle of the year, express delivery companies overcame the impact of low temperatures, rain and snow on some regions to effectively guarantee the smooth implementation of “Double 12” e-commerce promotions. Demand for delivery of down jackets, snow gear, seasonal agricultural products, etc. increased. The characteristics of double peaks were obvious. Among them, the market peaked on the 13th and 20th, with a daily business volume of about 490 million units and 480 million units, respectively. At the end of the year, the market size declined somewhat, and the average daily business volume remained around 420 million units.

Market share: Yunda's market share increased month-on-month in December

1) Yuantong: December market share 16.2%, month-on-month change +0.38pct

2) Yunda: December market share was 14.8%, month-on-month change +0.64pct

3) Shentong: December market share 13.0%, month-on-month change -0.25pct

4) SF Express: Market share in December was 8.6%, month-on-month change -0.04pct.

Core view: As the penetration rate of online consumption increases, the growth rate of upstream e-commerce sales is slowing down, and the market is entering stock competition. Currently, the competitive pattern has not stabilized. It is expected that healthy competition will continue, and Jitu will acquire Fengwang and go public, and industry concentration may further increase in the future. The volume of Yunda shipments in December exceeded the industry average for the first time since 2023. According to the company's announcement, the company made full use of its service fulfillment capabilities and digital capabilities to improve service levels and customer acquisition capabilities, leading to an increase in the company's business volume. As a result, Yunda's market share increased significantly in December.

Express delivery price: In December, the first express delivery price dropped compared to the November promotion

1) Yuantong: The unit price in December was 2.42 yuan, a year-on-year change of -11.84%, and -0.04 yuan month-on-month.

2) Yunda: Unit price in December was 2.24 yuan, year-on-year change -17.34%, month-on-month change -0.14 yuan.

3) Shentong: Unit price in December was 2.18 yuan, year-on-year change -17.11%, month-on-month change -0.02 yuan.

4) SF Express: The unit price in December was 16.0 yuan, a year-on-year change of -6.81% (excluding Feng.com, considering the year-on-year change of +0.76%), and a month-on-month change of +0.38 yuan.

Core view: Since 2023, “grain-producing regions” such as Yiwu have experienced fierce price competition, and franchisee operations have been under pressure. With the arrival of the peak season, the industry's single ticket revenue has now recovered. Prices have improved month-on-month during the Q4 peak season. In December, the decline was slightly higher. According to the company announcement, in December, the company actively optimized the package structure, increased the proportion of light and small packages, and increased the proportion of high-quality and valuable high-quality packages. We believe that the phased price competition strategy after the peak season still needs to be observed.

Courier service revenue: SF Express Logistics's revenue, excluding Feng.com, remained stable year-on-year in December

1) Yuantong: achieved express delivery service revenue of 5.177 billion yuan in December, +18.5% year-on-year;

2) Yunda: Achieved express delivery service revenue of 4.372 billion yuan in December, +7.7% year-on-year;

3) Shentong: Achieved express delivery service revenue of 3,727 billion yuan in December, +22.2% year-on-year

4) SF Express achieved express delivery service revenue of 18.075 billion yuan in December, -0.02% YoY (excluding Feng.com, SF Express logistics business revenue -1.54% YoY); supply chain and international business achieved revenue of 5.456 billion yuan, -13.22% YoY. According to the company's announcement, in the same period of 2022, SF Express benefited from highly stable and time-efficient network service capabilities under the company's direct management model, which effectively guaranteed the various delivery needs of enterprises and residents after production and life were restored. The revenue growth rate of the company's express logistics business was more than 2 times the industry's growth rate, so the base for the same period last year was relatively high. On this basis, in December 2023, Express Logistics's revenue, excluding Feng.com, remained stable year on year, and business volume increased 7.31% year on year; the year-on-year decline in supply chain and international business revenue was mainly affected by the year-on-year decline in international air and sea transportation demand and prices, but as freight rates gradually stabilized, revenue rebounded month-on-month, and the decline continued to narrow.

investment strategy

As the penetration rate of online consumption increases, the growth rate of upstream e-commerce sales is slowing down, and the market is entering stock competition. Currently, the competitive landscape has not stabilized. Since 2023, there has been fierce price competition in “grain-producing regions” such as Yiwu. With the arrival of the peak season, industry prices have recovered somewhat. We expect healthy competition to continue, and as Jitu acquires Fengwang and goes public, industry concentration will accelerate in the future.

Affected by industry price competition in 2023, market sentiment in the express delivery sector is relatively sluggish. The current sector's valuation generally fell to a low level corresponding to 2024. The valuation already basically reflects the long-term decline in the industry's growth rate and continued price competition. The overall expectations are relatively pessimistic, have a margin of safety, and are relatively cost-effective.

1) Direct Express: Optimistic about SF Holdings (the time-efficiency business is rising steadily, the profit increase in the bulky express business combined with the continuous improvement of the new business. The cost reduction of multi-network integration is expected to exceed expectations, and it is expected to benefit first in a pro-cyclical context).

2) Join Express: In the medium to long term, industry differentiation continues, and the market share of leading express delivery companies is expected to increase further, thus driving performance recovery (Zhongtong Express/Yuantong Express); it is recommended to focus on Shentong Express (speeding up production capacity investment, continuing to lead to leading peers in volume growth, which is expected to release profits under the scale effect) /Yunda Shares (volume growth has ushered in an inflection point to achieve positive growth. The headquarters empowers franchisees to drive marginal improvements in outlets).

3) Jitu Express: Benefiting from the rapid growth in overseas express delivery business volume and active development of cross-border e-commerce business, the company's revenue is expected to grow rapidly, the effects of superposition scale will be released, domestic operations will continue to improve, and profitability is expected to increase.

Risk warning:

There are downside risks to the economy, the industry's growth rate is lower than expected, and the express delivery price war is worsening.