On February 12, the MSCI index (MSCI) announced that ZTO would be included in the emerging market index. The MSCI index is the most widely used benchmark index for global portfolio managers. It is used by investment professionals around the world, including portfolio managers, broker-dealers, exchanges, investment advisors, academics and financial media. Simply put, inclusion in the MSCI index means that ZTO may be favored by more international and domestic capital, which is conducive to the rise of the stock price.
Double One believes that the main significance of ZTO being included in the MSCI index is as follows:
The development of the domestic express delivery industry has been recognized by international capital
In terms of target selection, MSIC includes 10 economic sectors, 23 industry groups, 59 industries and 123 sub-sectors, including energy, materials, Industrial products, major consumer goods, optional consumer goods, health care, finance, information technology, telecommunication services, and public utilities. industry to choose.
The MSCI index announced that 12 Chinese companies will be included in the index system. Among them, China Aluminum, Fulian, Guanghui Energy, Huaxi Securities, and China Investment Capital were added to A shares; Meituan Dianping and Xiaomi were added to Hong Kong stocks; Added Bilibili, iQiyi, Pinduoduo, Tencent Music, and ZTO Express. Among them, Zhongtong is a franchise express company selected by domestic logistics express companies into the MSCI index.
It can be seen from the above chart that the domestic express delivery industry has maintained rapid growth for many years. In recent years, due to the large base of express delivery business, the growth rate of the industry has slowed down, but the annual incremental business is as high as about 10 billion pieces, becoming one of the few domestic express delivery companies. More industries that continue to maintain medium and high-speed growth.
With the rapid development of the express delivery industry, the property of express delivery is becoming more and more important for people’s livelihood projects; the express delivery industry has become an important channel supporting manufacturing and consumption; the express delivery industry is a bridge between the online retail industry and consumers. The express delivery industry plays an increasingly important role in domestic consumption and national economic development. Jin Renqun, vice president of ZTO Express, pointed out at the 2018 China Post Industry Development High-level Forum hosted by the Development Research Center of the State Post Bureau: “When we say to the central government departments that we contribute to the development of the industry, we cannot only mention our own output value, which accounts for a large percentage of GDP. A small piece, but we should talk about the proportion of online physical retail sales to GDP that we support. This proportion is predicted to reach 12% by 2020, and this part is entirely part of the incremental GDP, not the part of the stock. “
Different from express logistics companies such as Fedex and UPS, many domestic private express companies represented by ZTO and YTO adopt the franchise system. Double One believes that Zhongtong, as a stock in the express industry selected by the MSCI index in China, is a domestic franchise express logistics enterprise that has been recognized by international capital. It means that the domestic express delivery industry will enter more into the field of international and domestic capital investment options, which is conducive to the financing convenience of the domestic express delivery industry and is of great significance to the development of the domestic express delivery industry.
Zhongtong’s domestic leading position has been recognized by international capital
It can be clearly seen from the stock price trend of Zhongtong since its listing on October 28, 2016 that after more than two years of development, the share price of Zhongtong is basically the same as the listing price. It should be pointed out that the annual business volume of Zhongtong in 2016 was 4.5 billion According to Lai Meisong, chairman of ZTO Express in his congratulatory message, ZTO completed over 8.5 billion pieces of express delivery in 2018, continuing to rank at the forefront of the domestic express delivery industry. Although there is no full-year revenue and profit statistics of ZTO for the time being, the operating income of ZTO in the third quarter of 3.69 billion yuan will far exceed the 2016 revenue level. Based on this, Double One believes that domestic express delivery service companies represented by ZTO have been undervalued by the capital market during the rapid development in the past few years.
Coincidentally, Lai Meisong, chairman of ZTO Express, said in an exclusive interview with State Post New Media in Shanghai in 2016: China’s express delivery companies have been undervalued by the capital market for a long time, and it is necessary and responsible for couriers to change this status quo. After more than two years of development, the inclusion of ZTO in the MSCI index is the recognition of ZTO by the international capital market, and it is hoped that ZTO will perform better in the capital market.
Similar to ZTO, there are other Tongda express companies. Since the listing, the business volume, operating income and profit level have increased significantly, but it has not been reflected in the company’s stock price. It is hoped that ZTO will be included in the MSCI index. In the beginning, it is hoped that the value of domestic express delivery companies can be further recognized, helping companies to finance and boost their development.
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