Zheshang Securities has upgraded ZTO Express-W (02057) to a "Buy" rating, citing robust Q3 performance with volume and price growth amid an "anti-involution" industry backdrop. As a market leader, ZTO is expected to focus on network stability, strengthen competitive advantages, and transition from high volume to high quality. The firm forecasts 2025–2027 net profits attributable to shareholders at RMB 9.62 billion, RMB 11.02 billion, and RMB 12.08 billion, respectively, with corresponding P/E ratios of 12.0x, 10.4x, and 9.4x.

Key highlights from the report: - **Q3 2025 adjusted net profit rose 2.0% YoY** to RMB 2.51 billion. Revenue grew 11.1% YoY to RMB 11.86 billion, with gross profit at RMB 2.96 billion. - **Express delivery revenue increased 11.6% YoY** to RMB 11.02 billion, driven by a 9.8% rise in parcel volume and a 1.7% increase in unit price. Direct customer revenue surged 141.2%, supported by higher e-commerce return volumes. - **Market share expanded to 19.4%**, with Q3 parcel volume up 9.8% YoY to 9.57 billion. Scattered parcel business grew nearly 50% YoY, contributing positively to profits. - **Full-year 2025 parcel volume guidance was revised** to 38.2–38.7 billion (up 12.3%–13.8% YoY). - **Network strength**: Over 31,000 pickup/delivery outlets, ~6,000 direct partners, ~10,000 self-owned trucks, 3,900 trunk routes, and 95 sorting centers (91 self-operated). - **Core unit revenue improved** to RMB 1.22 (+RMB 0.02 YoY), with cost efficiency gains reducing sorting/transport costs by RMB 0.05 per parcel. Adjusted Q3 unit profit was RMB 0.26 (vs. RMB 0.27 in Q3 2024).

With the first round of price hikes covering 90%+ regions and a second round post-National Day, the peak season is expected to sustain pricing support. Zheshang anticipates further profit recovery in Q4 e-commerce logistics.

**Risks**: Economic slowdown, below-expectation industry growth, and intensified price wars.