CMSC has released a research report stating that the profitability of major express delivery companies saw widespread significant improvement in Q1 2026, driven by price recovery, cost optimization, and volume growth.
Overall valuations in the express sector remain relatively low. The report expresses optimism regarding orderly competition and gradual structural optimization within the industry, anticipating new catalysts for valuation.
In the integrated logistics sector, China's cross-border air freight has seen simultaneous increases in both volume and price. China's foreign trade transportation achieved comprehensive growth in the volume of its main businesses during the first quarter.
Supported by the gradual realization of earlier strategic investments by Chinese companies, the continuous expansion of regional business scale, and enhanced cost control capabilities, overseas express delivery is still expected to maintain rapid growth in 2026.
Express Sector Review for First Half 2026
Efforts to counter excessive competition have driven significant price recovery, leading to substantial profit growth for the sector.
First, while business volume continues to grow, the growth rate of express delivery volume has declined significantly compared to 2025, impacted by a general slowdown in demand-side growth, a reduction in low-price parcels due to anti-fragmentation efforts, and competition from instant retail.
From January to May 2026, the national cumulative express delivery volume reached 82.87 billion pieces, a year-on-year increase of 5.2%. Cumulative express delivery revenue amounted to 635.37 billion yuan, up 7.2% year-on-year.
Second, benefiting from the structural optimization following anti-fragmentation measures and the reduction of low-price parcels, industry prices have rebounded year-on-year.
The industry's average revenue per piece from January to May 2026 was approximately 7.67 yuan, representing a year-on-year increase of about 1.9%.
Third, from a company perspective, ZTO Express rapidly increased its market share in Q1.
In Q1 2026, the market shares for ZTO Express, Yunda, YTO Express, STO Express, J&T Express, and SF Express were 20.5%, 12.0%, 16.0%, 13.9%, 12.0%, and 7.8% respectively.
These figures represent year-on-year fluctuations of +1.3 percentage points, -1.5 percentage points, +1.0 percentage points, +1.1 percentage points, +1.1 percentage points, and -0.1 percentage points.
In Q1 2026, the profitability of major express delivery companies generally improved significantly, with price recovery, cost optimization, and volume growth jointly driving profit increases.
Express Sector Investment Strategy
Overall sector valuations are at relatively low levels. The outlook is positive for orderly competition and gradual structural optimization within the industry, awaiting new valuation catalysts.
On the demand side, the sector is expected to continue benefiting from the development of the e-commerce market. In the second half of the year, as the base effect diminishes, the growth rate of express demand is expected to stabilize.
Full-year business volume and revenue are anticipated to maintain mid-to-high single-digit growth.
On the cost side, benefiting from economies of scale, the application of new technologies and equipment, and improved management efficiency, there remains room for optimization in the industry's end-to-end costs.
From the perspective of market competition and structure, influenced by regulatory support and industry competition, the industry structure is expected to continue optimizing, with price levels trending towards stability.
Leading companies in the industry possess advantages such as high operational certainty, stable cash flow, and low debt-to-asset ratios.
Their market share and profit advantages are expected to continue expanding, giving them quasi-dividend stock characteristics.
Mid-to-small-sized enterprises, if they improve their operations and management, have the potential to release significant earnings elasticity from a low-profit base.
Key investment targets include: ZTO Express, YTO Express, STO Express, and Yunda.
Integrated Logistics Sector Investment Strategy
First, in cross-border air freight, benefiting from sustained export demand growth and U.S.-Iran tensions exacerbating global supply chain tightness, China's cross-border air freight has seen simultaneous increases in both volume and price.
According to Civil Aviation Administration data, the cumulative international air cargo turnover from January to May 2026 reached 14.55 billion ton-kilometers, a year-on-year increase of 16.9%.
The average Shanghai outbound air freight price index for January-May 2026 was 5103 points, up 16.3% year-on-year.
Benefiting from strong export growth trends, demand is expected to continue growing rapidly in 2026.
Simultaneously, due to supply tightening caused by geopolitical conflicts and factors like fuel surcharges, prices are expected to maintain a high growth trend.
Second, in freight forwarding, benefiting from export demand growth and supply chain tensions exacerbated by U.S.-Iran conflicts, Sinotrans' main business volumes achieved comprehensive growth in Q1.
Railway agency volume reached 217,000 TEUs, a substantial year-on-year increase of 115%.
Benefiting from demand growth and rising international freight rates, the profitability of agency business under price-lock models is expected to increase significantly.
Third, in express delivery expansion overseas, benefiting from the vigorous development of e-commerce in Southeast Asia and emerging markets, as well as the empowerment of Chinese experience, the volume of overseas express delivery business is growing rapidly.
In 2025, J&T Express's market share in Southeast Asia and new markets reached 34.4% and 7.5% respectively, representing year-on-year increases of 5.8 and 1.3 percentage points.
In Q1 2026, J&T Express's business volume in new markets and Southeast Asia grew by 100.5% and 79.9% year-on-year respectively, significantly higher than its 8.4% growth rate in the domestic market.
Supported by the gradual realization of earlier strategic investments by Chinese companies, continuous expansion of regional business scale, and enhanced cost control capabilities, overseas express delivery is still expected to maintain rapid growth in 2026.
Fourth, in contract logistics, the demand side remains under pressure. Sinotrans' contract logistics business volume in Q1 2026 decreased by 9.5% year-on-year.
Influenced by the macroeconomic environment and companies reducing logistics costs, demand-side performance remains relatively weak.
It is expected that companies will mitigate the adverse impact of demand-side factors on profitability by optimizing resource allocation and improving operational efficiency.
In the future, as the base effect diminishes and the economy bottoms out, demand is expected to stabilize, and coupled with business optimization by enterprises, profitability is anticipated to gradually recover.
Key investment targets include: Sinotrans (A-shares), Eastern Air Logistics, SF Holding, and J&T Express.
Risk factors include: intensification of price wars, instability of franchisee outlets, significant slowdown in macroeconomic growth, substantial increase in costs, and major changes in international trade policies.
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