Zto Express (cayman), Inc. Class A · HKEX:2057
Zto Express (cayman), Inc. Class A — Q1 2020 Earnings Presentation
25 slides from Zto Express (cayman), Inc. Class A's earnings presentation, May 20, 2020
Slide 1: ZTO Express Q1 of Fiscal Year 2020 Investor Relations Presentation
ZTO Express Q1 of Fiscal Year 2020 May 21， 2020 Investor Relations Presentation
Slide 2: Safe Harbor Statement and Disclaimer
Safe Harbor Statement and Disclaimer This presentation contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act
Slide 3: Why ZTO
Why ZTO ⚫ Significant growth opportunity driven by strong growth of China e-commerce Market ⚫ Favorable government policies and industry regulations supporting growth Opportunity ⚫ Largest market share in terms of parcel volume of 18.9% by 1Q 2020 ⚫ A scaled platform with superior efficiency support
Slide 4: Our Competitive Advantages
Our Competitive Advantages Shared Success System ✓ Key regional managers are also shareholders of ZTO ✓ ZTO provides a well-established network partner entry and exit mechanism ✓ Accountability and high level of decentralization at sorting hubs Stable Network $ Early Built-out Infrastructure Superio
Slide 5: Huge Market Opportunities
Huge Market Opportunities Market Opportunities Express Delivery Industry Online Retail Sales (GMV) in China Express Delivery Parcel Volume in China Maintaining Robust Growth Benefiting from E-Commerce Growth (RMB in billions) (Parcels in billions) 13% 18% 37% CAGR 9,600 45% CAGR 8,524 75 CAGR CAGR 6
Slide 6: Our History and Key Milestones
我们的成长历程 Our History and Key Milestones 2020 2019 • Target to 2018 • ZTO was accelerate market 2017 • Received included in share expansion MSCI Global with a goal of • Zhongtongji 10% Standard Index reaching 25% by 2016 recognized as a strategic equity • Achieved 16.9 2022 • Achieved national High 20
Slide 7: Our Distinctive Network Partner Business Model (NPM)
Our Distinctive What We Do Network Partner Business Model (“NPM”) Fund flow Payment to Pickup Network Partner Payment to ZTO Express Payment to Delivery Network Partner • Line-haul transit fee Parcel flow • Full express service fee • Last-mile delivery fee • Waybill fee Fee in blue ZTO revenues • La
Slide 8: Network Partner Model Widely Adopted
Network Partner Model Widely Adopted • Explosive growth of e-commerce in China demands scalability and flexibility • Network partner players gaining market share from direct model players; • ZTO network partner model offers the most stability than peers Network Partner Model Best Suited to Network P
Slide 9: Our Experienced Management Team
Our Experienced Management Team Meisong Lai ⚫ 18 years of experience in express delivery industry Founder , Chairman ⚫ Deputy chairman of the China Express Delivery Association & Chief Executive Officer Jianfa Lai Co-founder, ⚫ 18 years of experience in express delivery industry Director and Vice ⚫
Slide 10: Our Superior Service Quality
Our Superior Service Quality Superior Service Quality Indicated by Consistent High Level of Cainiao Index Customer Satisfaction #1 Customer Satisfaction Score (2014 – 2019)2 Leading position in Cainiao Index1, a highly Highest Among Tongdas4 regarded set of metrics in express delivery industry Month
Slide 11: Scale and Nationwide Network Create High Entry Barriers and Strong Network Effects
Scale and Nationwide Network Create High Entry Barriers and Strong Network Effects 98%+ County-level city coverage 90 Sorting hubs¹ ~30,000 Service outlets ✓ Nationwide Coverage Network ✓ Critical Scale at Right Locations Leads to High Barriers to Entry ✓ Network Unit Costs Effect Reducing ✓ Standar
Slide 12: Our efficient, well-integrated management of network partners
Our efficient, well-integrated management of network partners ⚫ Integrated IT system to monitor each service outlet ⚫ Customized IT solutions to equip network partners Centralized IT and outlets with the best management practice System ⚫ Tailored mobile app to connect all delivery personnel ⚫ Compre
Slide 13: Sustainability Through Continuous ESG Practices
Sustainability Through Continuous ESG Practices1 Green Packaging Green Transportation E-Waybills High-Capacity Trailer Trucks • Smaller size and two-sheet • Increase use of high ~50,000 tons of e-waybill uses over 70% capacity trailer trucks with ~40,000 tons less CO₂ paper saved less paper than the
Slide 14: Sustainability Through Continuous ESG Practices (Cont'd)
Sustainability Through Continuous ESG Practices1 (Cont’d) Supporting Social Responsibility Stringent Corporate Governance Strict internal control • Job Creation Create diverse and • Board of Directors has clear duties pertaining to corporate specialized employment governance related issues such as:
Slide 15: Sustainable R&D capabilities enabling end-to-end digitization
Sustainable R&D capabilities enabling end-to-end digitization of processes and user experience Connectivity & Visibility Automation & AI Solution • Real time data synchronized • Proprietary AI algorithm for at centralized data repository addresses recognition, codification and location- • Connecting
Slide 16: Our Strong Operational Efficiency and Cost Leadership
Our Strong Operational Efficiency and Cost Leadership Continued Operational Improvements Significant Cost Productivity Unit cost (1)(2) (RMB per parcel) Self-owned Line-haul Fleet • Approximately 6,800 self-owned vehicles with approximately 5,000 high capacity 15-17 meter trailer trucks • Increase i
Slide 17: 1Q 2020 Key Highlights
1Q 2020 Key Highlights Stable Operations Continuous Profitability Significant Scale 2,374m parcel volume RMB371m net income, +4.9% higher than 7,700+ industry growth of 3.2%1 -45.6% , Line-haul Vehicles2 with net margin rate of 18.9% market share 9.5% RMB3,916m RMB635m Adjusted net income, revenue,
Slide 18: Achieved Volume Growth despite Pandemic
Achieved Volume Growth despite Pandemic Parcel Volume Total Revenue (Parcel volume in millions) (RMB million) 42% 26% YoY 35% YoY 37% Growth 12,121 YoY Growth 22,110 Growth YoY Growth 8,524 17,604 6,219 13,060 2017 2018 2019 2017 2018 2019 Quarterly Parcel Volume Quarterly Revenue (Parcel volume in
Slide 19: Stable Profitability and Healthy Margins
Stable Profitability and Healthy Margins Income from Operations and Margin Net Income and Margin (RMB million) (RMB million) Year-over-Year Growth Year-over-Year Growth 6% 29% 16% 10% 9% 26% 28% 34% -51% 11% 108% 48% 5% 22% -9% 23% 81% -46% 35.5% 33.8% 28.3% 27.5% 26.4% 25.8% 26.6% 2,317 24.0% 25.0%
Slide 20: Cost Efficiencies and Productivity
Cost Efficiencies and Productivity Cost of Revenues - Breakdown Gross Profit and Margin (RMB million) (RMB million) 316 34.7% 31.3% 32.6% 726 29.1% 27.5% 27.5% 30.3% 29.2% 385 20.9% 345 265 130 543 283 1,996 504 504 288 1,769 288 282 158 427 1,286 1,597 284 388 156 138 472 1,457 1,550 270 352 1043 1
Slide 21: Abundant Cash Reserves and Continued Investment in Capacity Expansion
Abundant Cash Reserves and Continued Investment in Capacity Expansion Operating Cash Flow Capital Expenditure Cash and Cash Equivalent2 (RMB million) (RMB million) (RMB million) 43% 31% 10% Growth Growth Decline 13% Decline 6,304 18,223 5,226 17,380 16,391 591 15,1593 3,981 4,404 88% 657 Growth 72%
Slide 22: Per Parcel Unit Economics
Per Parcel Unit Economics Non GAAP Operating Profit (RMB/Unit) ASP1 (RMB/Unit) 0.56 0.57 0.6 0.52 0.50 2.40 0.47 0.49 2.03 1.88 1.93 1.89 0.46 0.46 1.84 1.77 1.63 1.63 1.52 1.80 0.4 0.27 1.20 0.2 0.60 0 0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2018 2018 2018 2019 2019 2019 201
Slide 23: Reconciliation of GAAP to Adjusted / Non-GAAP Measures
Reconciliation of GAAP to Adjusted / Non-GAAP Measures For the Three Months Ended Mar 31, 2019 Mar 31, 2020 Adjusted EBITDA RMB million RMB million Net Income 682 371 Add: Depreciation 271 393 Add: Amortization 11 16 Add: Interest Expenses - 0.3 Add: Income Tax Expenses 192 130 EBITDA 1,156 909 Add:
Slide 24: Reconciliation of GAAP to Adjusted / Non-GAAP Measures
Reconciliation of GAAP to Adjusted / Non-GAAP Measures Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar31, 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 Adjusted EBITDA RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘00
Slide 25: NYSE Ticker: ZTO Website Email
NYSE Ticker: ZTO Website: www.zto.com Email: ir@zto.com 25