ZTO shares dip pre-market as logistics firm cuts annual growth forecast

Investing.com -- Shares of ZTO Express (NYSE:ZTO) fell over 3% in pre-market trading after the company revised its annual guidance. 

ZTO cited challenges in the operating environment, including weaker-than-expected consumer spending and shifts in parcel mix, which impacted its ability to achieve previously forecasted growth.

“We estimate ASP to grow at about 2.4% YoY, similar to the trend in 3Q24. Cost per parcel is expected to achieve efficiencies on YoY basis. In 2024, we expect full-year non-GAAP earnings to reach RMB10.2bn,” said analysts at Jefferies in a note.

The Chinese logistics firm, which had earlier projected robust growth in parcel volume, adjusted its 2024 volume expectations to 33.7-33.9 billion parcels, reflecting a year-over-year increase of 11.6%-12.3%. 

This marks a reduction from its earlier targets. In a statement, ZTO said that the rising proportion of low-value e-commerce packages has posed new hurdles for maintaining its growth trajectory. 

The management noted that resource allocation adjustments and pricing strategy changes are underway to address these challenges.

Despite the setback, ZTO's third-quarter results reported steady operational performance, with parcel volume increasing by 15.9% year-over-year and adjusted net income growing by 2%. 

“The increasing proportion of low-value ecommerce packages presented new challenges to the execution of our overall strategy to achieve continuous and simultaneous growth or improvements in quality of services, volume market share and profit,” said ZTO’s chief financial officer, Huiping Yan.