ZTO Express (ZTO, Financial) shares rose nearly 3% in pre-market trading, reaching $20.58. The company's third-quarter revenue increased by 17.6% year-over-year to 10.675 billion yuan. Gross profit saw a 23.2% rise, reaching 3.3348 billion yuan, while net profit grew by 1.3% to 2.379 billion yuan. The parcel volume for the period was 8.723 billion, marking a 15.9% increase from the previous year.
Bank of America Securities reiterated its "buy" rating for ZTO Express, despite the company's recent stock price weakness. The firm attributes the slowdown in parcel volume growth to weaker performance in the fourth quarter, with October seeing approximately an 11% increase, which further dropped to about 5% in November. ZTO management acknowledged that their market share decline was larger than expected this year and plans to focus on regaining it.
Bank of America anticipates a potential price war in the express delivery industry by 2025, which could negatively impact the sector. However, they expect ZTO's unit profit to remain higher than its peers, providing some buffer amid intensified market competition.
