(Yicai Global) July 29 -- STO Express’ stock price climbed after the Chinese logistics firm announced a CNY3.5 billion (USD542 million) private placement plan in part to fund an upgrade of automation equipment.

STO Express [SHE:002468] closed 3.6 percent higher today at CNY6.68 (USD1.03), after its shares jumping as much as 6.8 percent in the morning.

STO will issue up to 30 percent of its total equity to 35 investors, the Shanghai-based courier said yesterday. The issue size and share price have not been decided yet and the placement is subject to regulatory approval, it added.

About half of the funds raised will be used to upgrade automation and sorting equipment in shipment centers, boosting efficiency and cutting labor costs, STO said. The rest will go to build express delivery network hubs, improve land transport capacity and replenish working capital.

Founded in 1993, STO Express went public on the Shenzhen Stock Exchange in 2016 via a backdoor listing. In its last earning forecast, the company predicted a first-half loss of between CNY140 million to CNY160 million (USD21.6 million to USD24.7 million) because of less-than-expected business volume. It had a CNY70.7 million net profit in the same period last year.

Business volume at Chinese couriers has soared 21 times over the past decade due to the fast development of the e-commerce sector. It reached 83.4 billion parcels last year and is expected to top 164.4 billion by 2025, STO said. Mainstream domestic couriers are investing in science and technology to enhance automation and reduce labor costs, it added.

Editor: Futura Costaglione