(Bloomberg) -- ZTO Express (Cayman) Inc. (2057.HK) shares fell 3.3% in Hong Kong after the company reported first-quarter adjusted earnings that missed analyst estimates, overshadowing strong revenue and parcel volume growth.
"During the first quarter of 2026, ZTO maintained focus on quality of services and customer satisfaction," Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, said. "Our parcel volume reached 9.7 billion, which grew 13.2%, or 7.4 points above industry average."
The logistics giant reported total revenues of RMB 13.28 billion for the three months ended March 31, a 22% increase from the same period in 2025. However, adjusted diluted earnings per American depositary share came in at RMB 2.95 (US$0.43), missing the consensus estimate of RMB 3.07. Net income rose 5.7% to RMB 2.16 billion.
The market's negative reaction suggests investors are focused on profitability pressures, including what analysts at CLSA called "reduced government subsidies and tax rebates." The core express delivery business saw its unit price increase by 8.2%, but other costs surged 80.2%, mainly due to higher expenses for serving key account customers.
Despite the profit miss, ZTO's management projected confidence, reaffirming its full-year parcel volume growth guidance of 10% to 13%. This target implies a total volume of 42.37 billion to 43.52 billion parcels for 2026.
To boost shareholder returns, the board approved a new share repurchase program, authorizing the buyback of up to US$1.5 billion of its shares over the next two years. The company also announced the resignation of non-executive director Di Xu, which coincided with the termination of an investor rights agreement with an Alibaba Group subsidiary.
The reaffirmed guidance and significant buyback program indicate management's confidence in navigating a competitive landscape. Investors will watch the second-quarter results to see if the company can improve profitability while maintaining its market share growth.
This article is for informational purposes only and does not constitute investment advice.
