Welcome to Extreme Investor Network, where we bring you exclusive insights and analysis on the hottest trends in finance and investment. Today, we’re diving into the world of Chinese logistics companies and how they are becoming a favorite among analysts as a way to play the online shopping trend.
As China gears up for its biggest shopping festival of the year, analysts are taking note of the booming package volume being handled by Chinese logistics companies. Despite fluctuations in consumer spending, express parcel volume has been consistently growing, outpacing online gross merchandise value (GMV) growth since 2019. This trend is driven by a drop in ticket size amid a consumption downgrade, according to JPMorgan analysts.
One key player in this space is ZTO Express, China’s largest express parcel player with over 20% market share. Listed in both the U.S. and Hong Kong, ZTO is not only leading in market share but also in profitability compared to competitors like YTO Express Group, STO Express Co., Yunda Holding Co., and J & T Global Express Ltd. JPMorgan has set a price target of $30 on ZTO’s U.S. shares, showing bullish sentiment on the stock.
The e-commerce giants Alibaba and JD.com have already started their annual Singles Day shopping promotions, a massive event in China akin to Black Friday in the U.S. The rapid growth of China’s online shopping landscape has led to a huge express delivery market, where logistics companies that leverage technology can benefit from economies of scale. In fact, Morgan Stanley analysts ranked ZTO as their top pick in China’s logistics industry, citing its advanced infrastructure and tech innovation.
Looking beyond China, opportunities for logistics players with Chinese ties to expand globally are also emerging. With PDD’s Temu and ByteDance’s TikTok entering international markets, companies like J & T Global Express are well-positioned to capitalize on this trend. Founded by Jet Li in Southeast Asia, J & T holds a strong market share in the region and is poised for net profit growth, according to Nomura analysts.
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