Why ZTO Express (Cayman) (ZTO) is in focus now
ZTO Express (Cayman) (ZTO) recently issued 2025 earnings guidance that combines projected revenue growth with a lower gross profit range, while also completing a US$1.5b convertible bond offering maturing in 2031.
The earnings guidance and US$1.5b convertible bond come after a strong run in the share price, with a 30-day share price return of 10.48% and a 90-day share price return of 30.75%. The 1-year total shareholder return of 27.01% contrasts with a 5-year total shareholder return of negative 25.47%, suggesting recent momentum is improving after a weaker longer term experience.
If this shift in sentiment around parcel growth and funding gets you thinking more broadly about opportunities, it could be worth scanning 23 top founder-led companies as a fresh source of ideas.
With the shares up strongly over 3 months and management guiding to higher revenues but lower gross profit, you have to ask: is ZTO still trading at a discount, or is the market already pricing in that future growth?
Most Popular Narrative: 3.3% Overvalued
The most followed narrative currently puts ZTO Express (Cayman)’s fair value at $23.87, which sits a little below the latest close of $24.66, and that gap comes down to some very specific assumptions about earnings resilience and capital returns.
Ongoing mix improvement, reflected in over 50% year on year growth in retail parcel volume and a higher share of differentiated/premium services, supports higher per parcel unit revenues and gross profits (e.g., CN¥0.17/unit lift in revenue and CN¥0.02/unit in gross profit), buffering the business against commoditization and enhancing medium term earnings.
Curious what keeps that fair value just below today’s price even after a strong share price run? The narrative leans heavily on steady revenue compounding, firm margins and a future earnings multiple that stays below what many logistics peers trade on. Want to see exactly how those earnings and margin forecasts stack up over the next few years, and how sensitive the fair value is to even small tweaks in growth?
Result: Fair Value of $23.87 (OVERVALUED)
However, you still need to weigh the risk that pricing pressure and slowing parcel growth could keep margins and earnings below what this narrative is banking on.
Another View: Multiples Paint a Different Picture
While the most popular narrative pegs ZTO Express (Cayman) as 3.3% overvalued at $24.66 versus a $23.87 fair value, the current 14.8x P/E looks cheaper than the global logistics industry at 17x, the peer average at 24.3x, and even the 18.1x fair ratio. Is the market being too cautious here?