Huatai Securities: peak season, "anti-involution" support express price recovery
In short
Huatai Securities said in a research report that the peak season and "anti-involution" support a recovery in express delivery prices, and recommended watching e-commerce express companies. It said September parcel volume growth slowed to 2.1% while average price per parcel rose 3.4% year on year.
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Huatai Securities said in a research report that the peak season and "anti-involution" support a recovery in express delivery prices, and recommended watching e-commerce express companies. Yicai, 36Kr and Jiemian all published the report's findings on 22 October. [ 1 , 2 , 3 ]
According to the report, September total retail sales of consumer goods, goods retail sales and online retail sales of physical goods rose 1.1%, 1.0% and 2.9% year on year respectively, a slight pickup in upstream consumption growth. Parcel volume growth in the express industry nevertheless continued to slow, to 2.1%. Average price per parcel was up 3.4% year on year and up about 0.15 yuan from the previous month, and prices continued to recover. [ 1 , 2 , 3 ]
Looking at the fourth quarter, the report said the peak season and "anti-involution" are expected to jointly support better profit per parcel, and recommended watching price rises during the peak season. [ 2 , 3 ]
Yicai's text gave further detail. It said a new round of price rises is being pushed in several places, and that price adjustments in key areas such as Yiwu are proceeding alongside higher policy costs at company headquarters, which could support peak-season prices and a recovery in profit per parcel. As of 19 October, the SW express delivery sector's price-to-earnings ratio (TTM) was at the 0.2% percentile of the past 10 years, and the report said concerns about slowing demand and the enforcement of "anti-involution" were already largely reflected. It named the next catalysts as peak-season price rises taking effect, prices feeding through to profit, and results, and said it would keep watching how price rises are carried out and whether profit at franchise networks improves. [ 1 ]
Why it matters
The reports are a brokerage's view of the express delivery sector. They point to slowing parcel volume growth alongside recovering prices, and say the outlook depends on whether announced price rises are carried out.
Key facts
- Huatai Securities said in a research report that the peak season and "anti-involution" support express delivery price recovery, and recommended watching e-commerce express companies. [ 1 , 2 , 3 ]
- In September, total retail sales of consumer goods, goods retail sales and online retail sales of physical goods rose 1.1%, 1.0% and 2.9% year on year respectively. [ 1 , 2 , 3 ]
- Express industry parcel volume growth continued to slow, to 2.1%. [ 1 , 2 , 3 ]
- Average price per parcel was up 3.4% year on year and up about 0.15 yuan from the previous month, so prices continued to recover. [ 1 , 2 , 3 ]
- For the fourth quarter, the report said the peak season and "anti-involution" are expected to jointly support improved profit per parcel. [ 2 , 3 ]
- As of 19 October, the SW express delivery sector's price-to-earnings ratio (TTM) stood at the 0.2% percentile of the past 10 years, according to the report as relayed by Yicai. [ 1 ]
Confirmed by several sources
- Huatai Securities' report puts September parcel volume growth at 2.1%, average price per parcel up 3.4% year on year and about 0.15 yuan higher than the previous month. [ 1 , 2 , 3 ]
- The report cites September year-on-year growth of 1.1% in total retail sales of consumer goods, 1.0% in goods retail sales and 2.9% in online retail sales of physical goods. [ 1 , 2 , 3 ]
Still unclear
- Whether the new round of price rises will be carried out and feed through to profit. Only Yicai's text says several places are pushing a new round of price rises and that the next catalysts are the rises taking effect, passing through to profit and results; this is Huatai's expectation, not a confirmed outcome.
- How far concerns about slowing demand and the enforcement of "anti-involution" are already reflected in valuations. This is Huatai's assessment as relayed by Yicai only; the other two outlets do not carry it.