ZTO Express (ZTO -6%) is lower after the company beat first quarter estimates but guided second quarter results below expectations.
ZTO provides express delivery service as well as other value-added logistics services in China. The ~$10 billion company operates a highly scalable network partner model, which the Company believes is best suited to support the significant growth of e-commerce in China. The Company leverages its network partners to provide pickup and last-mile delivery services, while controlling the mission-critical line-haul transportation and sorting network within the express delivery service value chain.
First quarter revenue rose 33.5% to RMB 2.6 billion ($380 million) vs. RMB 2.5-2.6 bln guidance. Growth was mainly driven by an increase in parcel volume as a result of overall market growth and an increase in the company's market share. Parcel volume increased 42% year-over-year to 1,175 million. The number of pickup/delivery outlets was around 27,000 at the end of the first quarter, while the number of network partners was over 9,200, which included over 3,600 direct network partners and over 5,600 indirect network partners.
Adjusted net income rose 49% to $RMB 0.70. Chief Financial Officer James Guo: "With our economies of scale and cost cutting measures beginning to bear more fruit, unit cost fell to RMB1.60 from RMB1.64 during the same period last year despite higher fuel prices."
Second quarter guidance called for revenue of RMB 2.95-3.05 billion, which was just shy of consensus. The stock is lower a result but it did bounce off support near the $13 level this morning.
ZTO also announced the appointment of Mr. Hongqun Hu as the Chief Operating Officer.