Plans to use the net proceeds for infrastructure and capacity development
ZTO Express has announced the launch of its Hong Kong public offering which forms part of the global offering of 45,000,000 new Class A ordinary shares and listing of its Class A ordinary shares on the Main Board of The Stock Exchange of Hong Kong Limited. The Company’s American depositary shares will continue to be listed and traded on the NYSE. Investors in the Offering will only be able to purchase Class A ordinary shares and will not be able to take delivery of ADSs. Upon listing in Hong Kong, the Class A ordinary shares listed on the Hong Kong Stock Exchange will be fully fungible with the ADSs listed on the NYSE.
The successful listing on HKEX is a key milestone for ZTO. Since its founding in 2002, motivated by a ‘shared-success’ philosophy, ZTO has built an efficient operating platform and a stable partner network.
ZTO Express is China’s leading express delivery service provider based on total parcel volume, with a 19.1% market share in 2019. The Company is the youngest among the scaled express delivery companies in China and the largest in scale and the most profitable among the Tongda Operators, who are the express delivery service providers utilising the ‘network partner model’ in China, namely the Company, YUNDA Holding Co., Ltd., YTO Express Group Co., Ltd., BEST Inc. and STO Express Co., Ltd. The Company has developed one of the most extensive and reliable delivery networks in China. As of 30 June 2020, the Company’s network covers over 99.2% of cities and counties in China. The Company has achieved rapid growth while maintaining superior profitability and high customer satisfactions. The Company’s total parcel volume increased from 6.2 billion in 2017 to 12.1 billion in 2019, and from 5.4 billion in the six months ended 30 June 2019 to 7.0 billion for the six months ended 30 June 2020. The Company’s net income increased from RMB3.2 billion in 2017, to RMB5.7 billion in 2019.
The Offering initially comprises 2,250,000 new Offer Shares under the Hong Kong Public Offering and 42,750,000 new Offer Shares for the international offering (the International Offering), representing approximately 5.0% and 95.0% of the total number of Offer Shares in the Offering, respectively, subject to re-allocation and over-allotment. Subject to the level of oversubscription in the Hong Kong Public Offering and pursuant to the claw back mechanism, the total number of Class A ordinary shares available under the Hong Kong Public Offering could be adjusted to up to a maximum of 9,000,000, representing approximately 20.0% of the Offer Shares initially available under the Offering. In addition, the Company expects to grant the international underwriters an over-allotment option to require it to issue up to an additional 6,750,000 new Class A ordinary shares in the International Offering, representing not more than 15.0% of the Offer Shares initially available under the Offering.
The offer price for the Hong Kong Public Offering will be no more than HK$268 per Class A ordinary share. The offer price for the International Offering tranche of the Offering may be set higher than the Maximum Offer Price. The Company is expected to set the International Offer Price on or about 22 September 2020 Hong Kong time by taking into consideration, among other factors, the closing price of the ADSs on the NYSE on the last trading day on or before 22 September 2020 and investor demand during the marketing process. The final Hong Kong Offer Price will be set at the lower of the final International Offer Price and the Maximum Offer Price of HK$268 per Class A ordinary share. Class A ordinary shares will be traded in board lots of 50 Class A ordinary shares.
The Company plans to use the net proceeds from the Offering for infrastructure and capacity development, empowering network partners and strengthening the network stability, investments in logistics ecosystem and for general corporate purposes.