Preannounced 1H26 earnings up 69–86% YoYYTO Express preannounced its 1H26 results, estimating netprofit attributable to shareholders rose 69–86% YoY toRmb3.10–3.40bn, and recurring net profit rose 72–89% YoY toRmb3.04–3.34bn. We accordingly estimate its 2Q26 attributablenet profit grew 177–208% YoY to Rmb1.72–2.02bn, andrecurring net profit rose 174–205% YoY to Rmb1.70–2.00bn.

The firm’s preannounced results beat our expectations, mainlythanks to the recovery of end-market prices amid the ongoinganti-involution campaign in the express delivery industry.

Per-parcel data: The firm has announced parcel volume of2.73bn and 3.06bn in April and May. We estimate parcel volumegrowth at 0–13% in June, and attributable net profit per parcel atRmb0.20–0.24 in 2Q26, improving from Rmb0.18 in 1Q26.

Trends to watch

Industry level: Benefiting from “anti-involution” efforts, thesector sees stable volumes and rising prices, with pricingplaying a greater role in profit recovery; watch optimizationof industry landscape.

Data from the State Post Bureau shows that unit prices in theexpress delivery industry rose 3.0% YoY in April and 3.6% YoYin May (vs. up 1.0% YoY in 1Q26). We believe that since 2H25,price increases in the express delivery sector have beengradually implemented alongside the anti-involution campaign,and per-parcel profitability of express delivery companies islikely to continue improving.

Parcel volume growth slowed to 3.2% and 5.7% YoY in April andMay, but the industry’s customer mix may be improving. Whilevolume growth is moderating, price increases are playing agreater role in supporting profit recovery.

In the new competitive landscape, we believe e-commerceexpress delivery players that can secure customer stickiness 　　through service quality are well positioned to gain market share,while those with lower upfront pricing are likely to see a morepronounced recovery in per-parcel profit.

Company level: We expect per-parcel earnings to continueimproving in 2Q26, and the firm to continue improvingoperating efficiency and service quality amid AItransformation.

Thanks to anti-involution efforts, we expect the firm's per-parcelearnings to continue improving as end-market prices recover.

Looking ahead, we expect the firm to continue reducing costsand improving service quality in the long term, as it leverages AItechnologies to drive its transformation and strengthens itsnationwide network. We believe the firm is well positioned towiden the gap with lower-tier players.

Financials and valuation

We raise our 2026 and 2027 earnings forecasts 9% and 8% toRmb6.21bn and Rmb7.31bn, given the upside surprise in antiinvolutionefforts. The stock is trading at 8.7x 2026e and 7.4x2027e P/E. Maintain OUTPERFORM. Given the correction insector valuation, we maintain our TP at Rmb26.00, implying 14x2026e and 12x 2027e P/E with 65% upside.

Risks

Parcel volume growth disappoints; expected changes incompetitive landscape; sharp rises in labor costs.