ZTO Express Drops in Debut After Year’s Biggest U.S. IPO

ZTO Express Shares Fall After Largest U.S. IPO of 2016

ZTO Express Inc., the Chinese delivery service that gets most of its business from Alibaba Holding Group Ltd., fell in its trading debut after raising $1.4 billion in the biggest U.S. initial public offering this year.

ZTO shares dropped 9.4 percent to $17.66 at 1:18 p.m. in New York. The company priced 72.1 million American depositary shares at $19.50 apiece, according to a statement Thursday, after offering them for $16.50 to $18.50 each.

Alibaba, which uses ZTO to fulfill orders, accounted for 75 percent of ZTO’s parcel volume in the first half of this year. The company’s IPO comes days before Alibaba reports earnings and weeks before its Singles’ Day promotion, which is expected to surpass last year’s record $14.3 billion in sales.

The offering distinguishes the Shanghai-based company internationally from its domestic rivals. STO Express and YTO Express have unveiled plans to go public through reverse mergers, while the country’s biggest player, SF Express, received conditional approval to list in a similar way in Shenzhen.

“There’s really no comparable stock in the market,” said Henry Guo, an analyst at New York-based M Science LLC who has covered U.S.-listed Chinese stocks for a decade. “It’s different than FedEx, which is much more dominant in the U.S. than ZTO is in China. In China, there are so many players. It will take some time for the market to stabilize and determine this stock’s intrinsic value.”

Morgan Stanley and Goldman Sachs Group Inc. led the offering. The shares are trading on the New York Stock Exchange under the symbol ZTO.

Before it's here, it's on the Bloomberg Terminal.