UBS raises ZTO Express profit forecast, target price increased to $26

UBS research report indicates that ZTO Express (02057.HK) adjusted net profit in the third quarter of this year increased by 5% year-on-year, exceeding market expectations. Due to the impact of regulatory agencies' anti-competition actions, ZTO's recent price increase has led to a significant slowdown in industry sales, prompting the company to further lower its full-year sales growth forecast from an expected growth of 14% to 18% down to a growth of 12.3% to 13.8%.

Based on the assumption that there is no significant deterioration in industry prices, the bank has raised its earnings per share forecast for ZTO from 2025 to 2027 by 11% to 37%, and the average revenue per package (ASP) forecast has been raised by 2% to 5%.

For 2026, UBS's new model predicts that ZTO's business volume will grow by 10%, with stable average revenue per package, and a 3% improvement in core costs per package, thereby driving adjusted net profit growth of 12% to RMB 10.7 billion. The bank has raised its target price for ZTO (ZTO.US) on the US stock market from $22.9 to $26; rating "Buy."