The latest: Logistics service provider ZTO Express (Cayman) Inc. (ZTO.US; 2057.HK) reported On Tuesday, the company’s second-quarter net profit rose 3.3 percent from the same period last year to 2.6 billion yuan ($366 million), while non-GAAP net profit rose 10.9 percent to 2.8 billion yuan.

Look up: The company’s parcel volume rose 10.1 percent to 8.54 billion units in the second quarter compared to the same period last year. For the full year, the company expects an increase of 15 to 18 percent to 34.73 to 35.64 billion units.

Please note: Due to intense competition, the company’s market share fell by 2 percentage points to 19.6% in the quarter compared to the same period last year.

Dig deeper: ZTO is one of the most profitable companies in China’s highly competitive parcel delivery business. The company’s gross margin was 30.4 percent last year, which has led to accusations of exaggeration as it is far higher than that of its biggest competitors, including SF Holding (002352.SZ), YTO Express (600233.SH) and STO Express (002468.SZ). The company was accused of financial fraud by short-seller Grizzly Research last year, but later said the allegations were unfounded after its own internal investigation. In the first half of this year, gross margin rose even further to 32%, up 0.9 percentage points from the same period last year.

Market reaction: ZTO’s Hong Kong-listed shares rose on Wednesday, closing up 2.6 percent at HK$162.8 by midday. The stock is now trading near the lower end of its 52-week range.

Translation by A. Au

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