ZTO Express (NYSE:ZTO) Q1 2020 Earnings Conference Call - Final Transcript

May 20, 2020 • 09:00 pm ET


ZTO Express (NYSE:ZTO) Q1 2020 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript

Q & A

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Baoying Zhai from Citi. Please go ahead.

Baoying Zhai

[Foreign Speech] So my first question is to Mr. Lai. Given such strong rebound of e-commerce growth in China which lead to very strong growth of express delivery volume as well, maybe we don't need actual pricing competition strategies anymore. We can still achieve very good volume growth. Will this change our previous competition strategy? And my second question is to Ms. Yan. It's mainly regarding on the guidance. The volume guidance is actually quite good. But in terms of the full year non-GAAP profit guidance, it seems a little bit conservative given the high end is at 10% year-over-year growth. Previously, we've seen 10% year-on-year non-GAAP growth could be a base case. What's the considerations behind? Is it because of the ASP pressure or we see totally charged, heightened expectations by two months? Thanks.

Meisong Lai

[Foreign Speech] First, let me translate for the Chairman, and then I'll answer your second question. The first part is, yes, we have observed a healthy recovery in the marketplace since the recovery in the second quarter. The price competition has appeared to be intensified as we look at the ground performances. I think the growth is there for volume, but it's not easily had simply because of the increase in the total net volume. We do have a responsibility and also an intention to first secure our existing volume and then, secondly, focusing on our core strategy to gain more incremental value, which will include gaining volume from other players and other peers. But our focus still is on all three aspects of our business improvement, volume, quality of services and productivity. Price is, indeed, to be closely watched throughout the rest of the year.

And hence, that leads me to the second question -- the answer to the second question. As we further focus on quality of services, especially since the pandemic, we realized that our customer loyalty comes from not only existing ways of delivering products and services, but also, it's important for us to differentiate, to come up with differentiated product to further aggregate the volume in the marketplace to build our vertical capabilities. So the guidance for the volume is reasonably based on the overall economic outlook, including those statistics published by the central post bureau. But we are also looking at a gap to fill for the first quarter. And in order to reclaim the whole year, we did put forth a reasonably achievable and also sound earnings guideline.

And second aspect to the second question is, as Chairman mentioned, the first quarter is behind us, and we've noticed the market competition is intensifying. So with that uncertainty in place, we want to be able to leave room for us to respond quickly. Again, our focus is to accelerate our market share growth and expand the lead distance to further accelerate our market share increase. Volume is of the