Zto Express (cayman), Inc. Class A · HKEX:2057
Zto Express (cayman), Inc. Class A — Q2 2020 Earnings Presentation
26 slides from Zto Express (cayman), Inc. Class A's earnings presentation, Aug 12, 2020
Slide 1: ZTO Express Q2 of Fiscal Year 2020 Investor Relations Presentation
ZTO Express Q2 of Fiscal Year 2020 Aug 13, 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 21.5% by 2Q 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 Early Built-out Stable Infrastructure Superior Service
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) 14% 23% 35% CAGR 9,755 43% CAGR 78 8,524 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 inducted into share expansion MSCI Global with a goal of •Zhongtongji US$1.38 Standard Index reaching 25% by 2016 recognized as a billion strategic • Achieved 16.9 2022 • Achieved national H
Slide 7: We Do Network Partner Business Model (NPM)
What Our We Do Network Partner Business Model (“NPM”) Distinctive Fund flow Payment to Pickup Network Partner Payment to ZTO Express Payment to Delivery Network Partner • Full express service fee • Line-haul transit fee • Last-mile delivery fee Parcel flow • 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 ⚫ 18 years of experience in express delivery industry Co-founder, 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 Leading position in Cainiao Index1, Highest (2014 – 2020Q2)2 Among Tongdas4 a highly regarded set of metrics in express Monthly average deliv
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 99%+ 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 Centralized IT ⚫ Customized IT solutions to equip network partners System and outlets with the best management practice ⚫ Tailored mobile app to connect all delivery personnel ⚫ Compre
Slide 13: Sustainability Through Continuous ESG Practices
Sustainability Through Continuous ESG Practices1 Green Packaging Green Development E-waybills Green Transportation A single-sheet e-waybill ⚫ ZTO has been promoting ⚫ Increase use of high capacity CO₂ emission reduced ~ can save 45% e-waybills throughout the whole network since 2014. trailer trucks
Slide 14: Sustainability Through Continuous ESG Practices (Cont'd)
Sustainability Through Continuous ESG Practices1 (Cont’d) Green Objectives Stringent Corporate Governance ⚫ ZTO takes an active role and has set up the overall green Strict Internal Control development objective for 2020 based on the requirements of State Post Bureau. ⚫ Board of Directors has clear
Slide 15: Sustainability Through Continuous ESG Practices (Cont'd)
Sustainability Through Continuous ESG Practices1 (Cont’d) Fighting Against COVID-19 Safeguarding Labor Rights ⚫ Equality & Diversity By referring to the conventions of the International Labour Organization (ILO), ZTO’s employee policy promotes: — Gender equality — Equal pay for equal work — Freedom
Slide 16: 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 at centralized data repository for addresses recognition, ⚫ Connecting all users codification and
Slide 17: Our Strong Operational Efficiency and Cost Leadership
Our Strong Operational Efficiency and Cost Leadership Continued Operational Improvements Significant Cost Productivity (1)(2) Unit cost (RMB per parcel) Self-owned Line-haul Fleet ⚫ Around 9,050 self-owned vehicles with over 7,100 high capacity 15-17 meter trailer trucks ⚫ Increase in the use of cos
Slide 18: 2Q 2020 Key Highlights
2Q 2020 Key Highlights Stable Operations Continuous Profitability Significant Scale 4,595m parcel volume RMB1,454m net income, +47.9% higher than 9,900+ industry growth of 36.7%1 +6.5% , Line-haul Vehicles2 with net margin rate of 21.5% market share 22.7% RMB1,454m RMB6,402m Adjusted net income, ~30
Slide 19: Robust Recovery in 2Q2020 to Achieve All-Time High Quarterly Parcel Volume
Robust Recovery in 2Q2020 to Achieve All-Time High Quarterly Parcel Volume Parcel Volume Total Revenue (Parcel volume in millions) (RMB million) 42% 26% 37% YoY Growth 12,121 35% YoY Growth YoY YoY 22,110 Growth Growth 8,524 17,604 6,219 13,060 2017 2018 2019 2017 2018 2019 Quarterly Parcel Volume Q
Slide 20: Profitability and Margins Back on Track
Profitability and Margins Back on Track 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% 10% 11% 108% 48% 5% 22% -9% 23% 81% -46% 6% 33.8% 35.5% 28.3% 27.5% 26.4% 25.7% 2,317 25.8% 26.6%
Slide 21: Cost Efficiencies and Productivity
Cost Efficiencies and Productivity Cost of Revenues - Breakdown Gross Profit and Margin (RMB million) (RMB million) 316 417 726 385 853 130 34.7% 32.6% 345 265 29.1% 31.3% 30.3% 29.2% 543 112 27.5% 27.5% 27.6% 158 283 504 504 1,286 20.9% 427 138 288 282 156 1,996 288 120 472 1,254 1,769 1,769 284 38
Slide 22: 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) 31% 43% 5% Growth Growth Decline 8% 6,304 18,223 Decline 5,226 17,337 16,374 591 15,091 4,404 3,981 177% 7,112 657 Growth
Slide 23: 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 0.49 2.03 1.84 1.88 1.93 1.89 0.46 0.47 0.46 1.77 1.63 1.63 1.52 0.36 1.80 0.4 1.29 0.27 1.20 0.2 0.60 0 0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2018 2018 2018 2018 20
Slide 24: Reconciliation of GAAP to Adjusted / Non-GAAP Measures
Reconciliation of GAAP to Adjusted / Non-GAAP Measures For the Three Months Ended Jun 30, 2019 Jun 30, 2020 Adjusted EBITDA RMB million RMB million Net Income 1,365 1,454 Add: Depreciation 283 408 Add: Amortization 15 18 Add: Interest Expenses - 9 Add: Income Tax Expenses 289 298 EBITDA 1,952 2,187
Slide 25: Reconciliation of GAAP to Adjusted / Non-GAAP Measures
Reconciliation of GAAP to Adjusted / Non-GAAP Measures Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 Adjusted EBITDA RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘000 RMB ‘0
Slide 26: NYSE Ticker: ZTO Website Email
NYSE Ticker: ZTO Website: www.zto.com Email: ir@zto.com 26