Stock under pressure: ZTO Express (Cayman) Inc (NYSE: ZTO)

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ZTO Express (Cayman) Inc (NYSE: ZTO) stock fell 1.87% on 16th March, 2020 and continued its bearish momentum even in the pre-market session of 17th March, 2020 (Source: Google finance) even though the company posted better than expected results for the fourth quarter of FY 19. During FY 19, there is 42.2% rise in the parcel volume to 12.1 billion, which exceeded the average industry growth rate by about 17 percentage points. The parcel volume market share had increased by 2.3 points from last year to reach 19.1%. The company has reported the adjusted net income of RMB1,631.5 million (US$234.4 million) for the fourth quarter of FY 19, compared to RMB1,289.7 million during the same period last year. The company’s Adjusted EBITDA has increased to RMB2,343.9 million (US$336.7 million) in Q4 2019, from RMB1,766.0 million in the same period last year. The company has generated Net cash provided by operating activities of RMB 2,260.4million (US$ 324.7 million) in the fourth quarter, compared with RMB1,802.3 million in the same period last year.

ZTO in the fourth quarter of FY 19 has reported the adjusted earnings per share of 30 cents, beating the analysts’ estimates for the adjusted earnings per share of 29 cents, according to Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 21.7 percent to $983.4 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $957.14 million.

Moreover, the line-haul transportation cost per parcel had fallen 9.7% to RMB0.65. The use of more of self-owned fleet with increasing number of higher-capacity trailer trucks, improved line-haul route planning and load rate has increased the cost efficiency in transportation.

Additionally, ZTO has declared a special dividend of US$0.30 per ADS for 2019, which is expected to be paid on April 20, 2020 to shareholders of record as of the close of business on April 8, 2020. The Company had announced in November 2018 a new share repurchase program in which ZTO was will repurchase its own Class A ordinary shares in the form of ADSs at an aggregate value of up to US$500 million during an 18-month period thereafter. Now the company has extended the current share repurchase program to June 30, 2021.

After considering the impact of the coronavirus and particularly the volume performance in March till now, ZTO’s parcel volume for the first quarter of 2020 is expected to exceed that of the first quarter of 2019. Therefore, the company projects to grow its 2020 annual parcel volume by about 15 percentage points, over and above the industry average.

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