FAST NEWS: ZTO Express posts big profit growth, raises full-year delivery guidance

The latest: Logistics provider ZTO Express (Cayman) Inc. (ZTO.US; 2057.HK) announced Thursday its first-quarter revenue rose 13.7% year-over-year to 8.98 billion yuan ($1.34 billion), while its net profit jumped 90.2% to 1.66 billion yuan.

Looking up: In light of China’s post-Covid economic recovery, the company raised its annual parcel volume forecast to a range of 29.27 billion to 30.24 billion, up 20% to 24% year-over-year. It added it is confident of boosting its market share by package volume by at least 1.5 percentage points this year.

Take Note: The average selling price for the company’s core express delivery fell 3.7% year-on-year in terms of revenue per ticket, partly due to the effects of lower weight per ticket.

Digging Deeper: ZTO is one of the most profitable companies in China’s ultra-competitive parcel delivery business. Its gross margin last year was as high as 25.6%, much more than industry leader S.F. Holding’s (002352.SZ) 12.5%, and more than the 11% and 4.38% for YTO Express (600233.SH) and STO Express (002468.SZ), respectively. The firm came under attack in March by short seller Grizzly Research, which accused ZTO of financial fraud. Despite that, the company’s shares actually rose after the report came out, as it questioned the report’s lack of basic understanding of its business model and financial reporting structure.

Market Reaction: ZTO’s Hong Kong-listed shares jumped on Thursday, closing up 6% at HK$232.20 by the midday break. It now trades near the upper end of its 52-week range.

Translation by Jony Ho

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