2Q26 results in line with our expectations YTO Express announced its 1H26 results: Revenue rose 8% YoY to Rmb38.89bn. Attributable net profit rose 73% YoY to Rmb3.18bn. Attributable net profit of the express delivery business rose 69% YoY to Rmb3.36bn. Recurring attributable net profit rose 77% YoY to Rmb3.12bn.

In 2Q26, revenue rose 7% YoY and 7% QoQ to Rmb20.13bn. Attributable net profit rose 85% YoY and 30% QoQ to Rmb1.80bn. Attributable net profit of the express delivery business rose 84% YoY and 32% QoQ to Rmb1.91bn. Recurring net profit rose 86% YoY and 32% QoQ to Rmb1.78bn, in line with our expectations.

Per-parcel data: In 2Q26, parcel volume rose 7% YoY and 13% QoQ to 8.64bn units, with market share at 16.4% (up 0.4ppt YoY and 0.4ppt QoQ). Revenue per parcel was Rmb2.33, flat YoY and down Rmb0.13 QoQ. Per-parcel cost was Rmb2.03, down Rmb0.10 YoY and down 0.15 QoQ, with core cost per parcel falling Rmb0.01 YoY to Rmb0.58. Net profit per parcel was Rmb0.21, up Rmb0.09 YoY and Rmb0.03 QoQ.

Trends to watch

Industry: Industry-wide parcel volume growth slowed in 2Q26, but ASP continued to recover amid “anti-involution” campaign. According to the State Post Bureau, parcel volume and ASP rose 4.2% and 3.4% YoY in 2Q26. In July, parcel volume and ASP rose 4.1% and 4.0% YoY, implying continued recovery in prices. On the demand side, we believe the industry may grow faster in 2H26 than in 1H26, as the impact of a high base gradually subsides. In terms of prices, we believe the industry has attached great importance to “anti-involution” from top to bottom since 2H25, and price improvement is likely to continue.

Company: The firm's profit per parcel improved YoY and QoQ in 2Q26. We expect the deployment of AI applications along the entire business chain and process to continue driving improvements in operating efficiency and service quality. We expect the firm's per-parcel earnings to continue improving thanks to the “anti-involution” campaign. Looking ahead, we believe that as the firm leverages AI technologies to promote digital transformation and upgrade its nationwide network, it will likely continue to reduce costs and improve its service capabilities in the long term, thereby widening the gap with laggards.

Financials and valuation

We largely maintain our 2026 and 2027 earnings forecasts and Rmb6.18bn and Rmb6.95bn. The stock is trading at 9.7x 2026e and 8.3x 2027e P/E. We maintain an OUTPERFORM rating. We maintain our target price at Rmb26.00, implying 14x 2026e and 12x 2027e P/E, and offering 48.6% upside.

Risks

Parcel volume growth misses expectations; changes in competitive landscape; sharp rise in labor costs.