3Q25 results slightly miss our expectations

YTO Express announced its 3Q25 results: Revenue rose 8.73% YoY to Rmb18.27bn; net profit attributable to shareholders grew 10.97% YoY to Rmb1.05bn; and recurring net profit rose 9.13% YoY to Rmb1.01bn, slightly missing our expectations, mainly due to lower-than-expected ASP in the industry in the first half of 3Q25.

Per-parcel data: In 3Q25, the firm's parcel volume grew 15% YoY to 7.72bn parcels, and its market share rose 0.2ppt YoY to 15.6%, implying per-parcel revenue of Rmb2.37 (-Rmb0.14 YoY and +Rmb0.04 QoQ). Cost per parcel was Rmb2.14 in 3Q25, down Rmb0.15 YoY and up Rmb0.02 QoQ. Net profit per parcel was Rmb0.14 (largely flat YoY), up Rmb0.02 QoQ.

Trends to watch

Industry: Price competition eased due to anti-involvement policies; parcel volume growth slowed; high-quality development remains the main theme. Data from the State Post Bureau shows that the ASP of the express delivery industry fell 5.3% (-Rmb0.13 QoQ), 7.2% (+Rmb0.01 QoQ) and 4.9% YoY (+Rmb0.18 QoQ) in July, August and September. We believe that the price hikes in the industry began to materialize in the second half of 3Q25. In 4Q25, we expect price competition to ease, and earnings per parcel of express delivery companies to continue to improve.

In 3Q25, parcel volume of the industry grew 13.4% YoY (vs. +19% YoY in 1H25). We believe rising express delivery prices may dampen the growth of demand for light and small parcels with low per-customer transactions. We suggest watching the stabilization of sector growth.

Company: We expect the firm’s per-parcel earnings to continue improving in 4Q25. We expect the firm to continue improving operating efficiency and service quality and gaining market share driven by investment in digitalization as well as increase in capex. In 3Q25, net profit per parcel rose Rmb0.02 QoQ to Rmb0.14, and we expect the firm’s earnings per parcel to continue improving in 4Q25, given potentially sustained price hikes in the industry. Looking ahead, the firm may leverage its AI technologies to promote digital transformation and strengthen its nationwide network. In 1– 3Q25, its capex increased YoY to more than Rmb6.3bn. We expect the firm to continue to reduce costs and improve its service capabilities in the long term, widening its gap with lowertier companies.

Financials and valuation

As per-parcel prices in the first half of 3Q25 were slightly lower than we expected, we lower our 2025 earnings forecast 13% to Rmb4.29bn and introduce our 2026 earnings forecast of Rmb4.999bn. The stock is trading at 13.6x 2025e and 11.7x 2026e P/E. We maintain an OUTPERFORM rating. Given the rising average sector valuation since the implementation of antiinvolution policy, we maintain our TP of Rmb21.5, implying 17x 2025e P/E and 15x 2026e P/E, offering 26% upside.

Risks

Parcel volume growth disappoints; competition intensifies; sharp rise in labor costs.