- Lawsuit was filed by retirement plan for Birmingham, Alabama
- City says ZTO inflated margins by omitting some business
ZTO Express Inc., the Chinese delivery service that had the biggest U.S. initial public offering in 2016, was sued by an investor for allegedly inflating profit margins to exceed industry peers and lure investors.
The Shanghai-based company, which gets most of its business from Alibaba Holding Group Ltd., uses a system of “network partners” to handle lower-margin pickup and delivery services, keeping less-profitable business off its books, according to a class-action filed in Alabama state court by the city of Birmingham’s pension fund. The arrangement omits the “crucial realities” of the industry, it said.
“By keeping the ‘network partners’ businesses off its own books, the company was able to exaggerate its profit margins to investors,” the retirement plan said in the complaint.
The suit also names Morgan Stanley and…