ZTO Express: China Delivery Adds Drones
11/01/2017 5:00 am EST
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ZTO Express Inc. (ZTO) is a leading express delivery company in China, and one of the largest express delivery companies globally, in terms of total parcel volume. Its shares outstanding have been reduced by 15.052% in the last 12 months.
The company has 75 sorting hubs and a fleet of more than 4,200 trucks to serve its network that covers more than 96% of China’s cities and counties.
In China, an average of more than 70 million packages was delivered every day in the first half of 2016. The express delivery industry has enabled a boom in e-commerce in China.
In September, ZTO Express opened a new sorting hub in Western China that will allow it to sort more than 5 million parcels per day.
This launch was part of the company’s prep work for a large surge in orders expected to happen during the 11/11 shopping festival in November – the most important day in China’s e-commerce market.
ZTO began offering fresh produce delivery services in 2016, and recently expanded it by adding two high-speed rail links, which extends their current network to eight high-speed rail links.
Second quarter results were (expressed in U.S. dollars): revenues $438.3 million, an increase of 30% from the same period of 2016; gross profit $165.8 million, an increase of 36%; net income $105.8 million, an increase of 68%; and basic and diluted earnings per ADS $0.15, an increase of 66%. Parcel volume in the quarter increased 37%.
The company also completed their first trial delivery using a drone in July, which the CEO said demonstrated they can shave 60% of traditional delivery time.
The drone eliminated traffic conditions, gate checks and wait times for elevators, and got the package there in 20 minutes instead of 50. He sees a big future for drones in rural areas.