Stock in Focus: ZTO Express (Cayman) Inc. (ZTO)

Company Profile:

ZTO Express (Cayman) Inc. provides express delivery and other value-added logistics services in the People’s Republic of China. The company offers delivery services for e-commerce and traditional merchants, and other express service users. As of December 31, 2017, it operated a fleet of approximately 3,600 self-owned trucks. ZTO Express (Cayman) Inc. was founded in 2009 and is headquartered in Shanghai, the People’s Republic of China.

Recent News:

For the second quarter ended June 30, 2018, the company reported revenues of RMB4,197.9 million (US$634.4 million), an increase of 41.3% from RMB2,971.4 million in the same period of 2017. Net income was RMB1,492.2 million (US$225.5 million), an increase of 108.1% from RMB716.9 million in the same period of 2017.

On June 5, 2018, the company made a strategic investment of approximately US$168 million for an approximately 15% stake in Cainiao Post, , in order to jointly ramp up last-mile service capabilities and provide diversified solutions that enhance efficiency and meet the growing demand from New Retail.

Fundamental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

ZTO’s strengths can be seen in its strong growth, strong profitability and robust solvency compared with its peers. Technical indicators signal the bullish signs, as there is a bullish crossover in MACD and Stochastic oscillator, RSI stands at 44.22 with positive bias. We rate ZTO Express (Cayman) Inc. (ZTO) a STRONG BUY.