A major Chinese logistics firm with a market value exceeding RMB 20 billion has been thrust into the spotlight due to a safety investigation. On August 4, the State Post Bureau issued a public notice, directly accusing Sto Express Co.,Ltd. of failing to manage production safety at its affiliated enterprises and not implementing unified safety and security management as required, leading to a formal investigation. This marks the second major courier company to face a similar probe by the national regulator this year, following an incident involving J&T Express in June. As a result of this investigation, Sto Express Co.,Ltd. plans to withdraw its previously submitted application for a RMB 3 billion convertible bond issuance. The company stated it will immediately rectify issues, fully cooperate with all investigations, strengthen integrated management of its directly-operated units, franchisees, and suppliers, and comprehensively enhance network-wide safety and compliance levels. Notably, due to steady progress in professional reforms, the company's performance has been growing consistently. In the first half of the year, it expects to report a net profit attributable to parent company shareholders of between RMB 950 million and RMB 1.06 billion, a year-on-year increase of 109.59% to 133.85%. However, behind this significant performance boost, Sto Express Co.,Ltd. has frequently faced regulatory scrutiny, indicating compliance gaps that still need to be addressed. As of the close on August 6, shares of Sto Express Co.,Ltd. were trading at RMB 13.92, giving it a total market capitalization of RMB 21.309 billion.

On August 4, the State Post Bureau announced the formal investigation into Sto Express Co.,Ltd. The notice stated that since the beginning of this year, enterprises operating courier services under the "Sto Express" trademark, brand name, and waybill system have experienced multiple production safety incidents, and safety hazards have been repeatedly discovered during inspections. The bureau pointed out that Sto Express Co.,Ltd. had failed in its management of production safety for related enterprises and did not provide unified safety and security management as stipulated, leading to the investigation. In response, Sto Express Co.,Ltd. quickly issued a statement, saying it fully accepts and resolutely complies with the decision. It acknowledged the extreme importance of safety for society, the industry, and the company's own development, recognized its shortcomings in unified management responsibilities, and appreciated the regulator's strict oversight. The company pledged to immediately rectify issues and fully cooperate with the investigation. Emphasizing that "safety is a non-negotiable bottom line and an insurmountable red line," it apologized to all stakeholders. The company revealed that its safety committee has launched a special rectification program, including a comprehensive review of safety systems, restructuring safety organizations, clarifying business safety responsibilities, implementing regional responsibilities, adding safety process assessments, and enforcing a "one-vote veto" for safety outcomes. This involves integrated management of directly-operated units, franchisees, and suppliers to enhance network-wide safety and compliance. Sto Express Co.,Ltd. also stated that its entire network is operating normally with stable services. It was noted that on August 4, Sto Express Co.,Ltd. announced that its wholly-owned subsidiary had received a notice of investigation from the industry regulator. As of the announcement date, the investigation is ongoing. After thorough communication and analysis with relevant parties, the company plans to apply to withdraw its application for issuing convertible bonds to unspecified objects. Previously disclosed materials showed the issuance aimed to raise up to RMB 3 billion, with RMB 2.137 billion allocated for a "Smart Logistics Equipment Upgrade Project" and RMB 863 million for a "Trunk Transport Network Improvement Project," requiring a total investment of RMB 4.751 billion. The Shenzhen Stock Exchange had previously conducted inquiries into the convertible bond issuance, with administrative penalties being a key focus. In its response on July 27, Sto Express Co.,Ltd. disclosed that from 2023 to 2025, the company and its key subsidiaries received a total of 52 administrative penalties with fines of RMB 10,000 or more, totaling over RMB 3.04 million. These included 19 postal-related penalties totaling RMB 575,600, 27 production safety-related penalties totaling RMB 493,800, and 6 other penalties totaling approximately RMB 1.9756 million. However, the number of penalties has been declining year by year, with 28 in 2023, 18 in 2024, and 6 in 2025.

Established in November 2001 and listed on the Shenzhen Stock Exchange main board in 2016 via a backdoor listing, Sto Express Co.,Ltd. was once the market leader by share before 2014. It later lost significant ground, with the top market share position held by ZTO Express for many years. According to its 2025 annual report, the company completed 26.139 billion parcels last year, a 15% year-on-year increase, capturing a 13.14% market share and returning to the top three in the industry. This positive change is largely attributed to the professional reforms initiated by the company. In November last year, Vice President Qin Lei stated that the professional reform, fully launched in 2021, had resulted in a V-shaped turnaround. He noted that in terms of volume, the company had returned to the top three in nominal terms by mid-year. Quality metrics, including platform indices, timeliness, and postal complaints, had become leading in the franchise system and even the entire industry. Significant improvements were also seen in safety, costs, labor efficiency, and pricing. Despite intense market competition, franchise outlets remained relatively stable, and business sentiment improved against the trend. The reform's effectiveness is evident in the financial data. In 2022, revenue surpassed the RMB 30 billion mark for the first time, reaching RMB 33.671 billion, a 33.32% increase year-on-year. Net profit attributable to parent company shareholders turned profitable at RMB 288 million. In subsequent years, performance has grown steadily. In 2025, full-year revenue reached RMB 55.586 billion, with a net profit attributable to parent company shareholders of RMB 1.369 billion, the best post-pandemic level. Entering 2026, the company reported a strong first quarter, with revenue of RMB 15.686 billion, up 30.74% year-on-year, and net profit attributable to parent company shareholders of RMB 459 million, a 94.29% increase. In mid-July, the company issued a half-year performance forecast, expecting net profit attributable to parent company shareholders between RMB 950 million and RMB 1.06 billion, a year-on-year increase of 109.59% to 133.85%. The company attributed this profit surge to the continued implementation of anti-internal competition policies in the industry, rational price recovery, proactive adjustments in business strategy, improved dual-network coordination, protection of terminal rights, and a focus on digital transformation to enhance core competitiveness.

Despite rapid performance growth, Sto Express Co.,Ltd. has frequently faced regulatory challenges. At the start of its reforms, the industry was mired in price wars, leading to issues in some regions such as suspended deliveries, franchisee defaults, and parcel backlogs. Local postal authorities in various regions intervened, urging the headquarters to handle the backlog, with penalties mostly targeting subsidiaries and franchise outlets, ranging from thousands to tens of thousands of RMB. In 2024, a fatal accident occurred at a sorting center in Heilongjiang province when a telescopic conveyor collapsed, resulting in the death of an employee. In September of that year, the State Post Bureau's Market Supervision Department held an administrative interview with Sto Express Co.,Ltd. The interview pointed out that the accident exposed weak safety development concepts, inadequate implementation of production safety responsibilities and unified management responsibilities, improper installation and use of equipment like telescopic conveyors, lack of standardized safety management, insufficient rectification of "four no's" issues in processing sites, lack of safety training for employees, and prominent issues with illegal operations and non-compliance. According to the company's disclosures, of the 52 administrative penalties with fines of RMB 10,000 or more from 2023 to 2025, production safety-related penalties numbered 27, the highest category. Entering 2026, postal authorities at various levels have conducted intensive interviews. In January, for repeated illegal cross-regional operations by a licensed entity in Shanghai operating in Wujiang, the Suzhou Postal Administration jointly interviewed the headquarters and Shanghai regional management. The Wujiang center reported persistent violations and regulatory evasion, with three confirmed violations in 2025, two for cross-regional operations. The entity's staff continued illegal parcel collection in Wujiang using more covert methods, severely disrupting the local market order and evading source safety supervision, posing significant risks. The Suzhou authority noted that the entity had five violation records in Suzhou since 2023, four for cross-regional operations, with repeated violations indicating management responsibility on the brand headquarters. On March 3, the Beijing Postal Administration interviewed Sto Express Co.,Ltd.'s Beijing company, pointing out non-standard operations, arbitrary adjustment of operating rules, unstable network operations, poor service quality, and inadequate protection of couriers' rights. In late March, the Shaanxi Provincial Postal Administration conducted administrative interviews with the provincial headquarters of five franchise courier companies, including ZTO, YTO, STO, Yunda, and J&T, requiring them to effectively fulfill unified management responsibilities. Simultaneously, the Guangxi authority also held collective interviews with the national headquarters of ZTO, YTO, STO, Yunda, and J&T, requiring brands to strictly implement service area disclosures and services, optimize delivery method and completion standard inquiries, and improve user complaint handling and responsibility determination. On July 1, the Hunan Provincial Postal Administration announced interviews with the provincial headquarters of the five brands regarding service network stability risks in some areas of Hunan, demanding they fulfill their unified management responsibilities. Following actions by various provincial postal administrations, the State Post Bureau has now directly initiated an investigation into Sto Express Co.,Ltd. The key question remains whether the company can fill its compliance gaps while maintaining sustainable performance growth.