Author | Xiaoxin

Process Editor | Rookie

Cross-border failure, Shunfeng's entry and rapid rise make express rivers and lakes become choppy again.

I. the "iron triangle" of the express industry

In 2010, Qin Xinghua, who was born as a pilot, left Guangxi Airport Group to set up a regional logistics company, the predecessor of an Neng Logistics.

He was 39 years old.

Soon, Qin Xinghua's logistics company did a small scale. But at this time, he is also faced with a choice: do you want to be a little rich and continue to be a regional company? Or does financing expand across the country?

At this time, Qin Xinghua met Wang Yongjun, who was 3 years younger than him. Wang used to be the vice president of operations for the veteran less-than-truckload express giant Tiandi Huayu. In order to express his sincerity in inviting Wang Yongjun to join, Qin Xinghua specially offered the position of chairman, while he served as president.

Logistics is an asset-heavy industry, and Wang Yongjun, who has rich experience in the industry, has given Anneng a lot of help in terms of financing.

Compared with his predecessors in the previous two industries, Zhu Jianhui was only 31 years old when he joined Anneng.

Zhu once founded Qualcomm after the 2008 financial crisis to do less than a truckload of logistics. Later, due to the problem of capital chain, Quantong was acquired by BEST.N. Qin Xinghua actively invited Zhu Jianhui to join Anneng and offered him the position of executive vice president.

Wang Yongjun, Qin Xinghua and Zhu Jianhui are known as the "iron triangle" of the truckload express industry.

In 2012, Aneng created a freight partner platform model, that is, "central direct camp + network to join".

Before that, China's less-than-truckload logistics companies were basically in the direct mode.

The right person, coupled with the right strategy, has ushered in the fastest-growing period, and Anneng, which was unknown in 2013, has become a giant second only to 603056.SH in 2017.

In May this year, an Neng Logistics submitted a prospectus on the Hong Kong Stock Exchange and passed a hearing in September.

The Iron Triangle is also about to usher in an explosion of wealth.

And fortunately, although it has gone through as many as nine rounds of financing since its inception, the founder of the company still has actual control.

Eneng's current shareholder list also includes well-known institutional investors such as Carlyle (CG.O), Warburg, Ping An Insurance (601318.SHPower02318.HK), Goldman Sachs Group (GS.N) and so on.

Second, the secret of Anneng's success.

In Anneng's "central direct operation + network joining" mode, the hires and dispatches are operated by freight partners and agents, and Anneng directly controls the key distribution and trunk transportation links.

This enables the number of outlets to expand rapidly in the form of light assets.

Anneng's current county and town coverage rate is 96%, ranking high in comparison with its main competitors.

And as a "central direct operation" platform, an Neng's income comes directly from the B side, not from the C side.

B side is much easier to manage than C side.

The company has set up a reward and punishment system according to service and performance standards, and the elimination rate of Anneng's freight partners has been more than 40% in recent years. And the company made a net fine of 226 million last year, accounting for 21% of gross profit.

In the process of expanding its network, an Neng also earns revenue by providing financing assistance services to partners, which was 740000 last year, which is not much.

In terms of terminal pricing, Anneng allows freight partners to set flexible pricing within the set guidelines, so as to effectively deal with the competition in the local market.

External favors are combined to assist in expansion, while efforts are made to reduce costs internally.

The main cost of the less-than-truckload business comes from transportation links, including trunk transportation and distribution centers.

In order to reduce costs, an Neng began to use proprietary fleets in 2020, the size of which increased from 12 at the end of 2019 to 1500 at the end of last year and further to 2400 by the end of April this year.

In 2020, the company's unit trunk transportation cost dropped to 299 yuan / ton, the unit distribution center cost is relatively stable, the total unit cost is 591 yuan / ton, which is the lowest level in all express transportation networks.

In addition, due to the increase in the number of distribution centres, the average number of shipments per order decreased from 1.52 in 2018 to 1.38 last year.

Even so, Anneng's transportation sector does not make money: last year's gross margin was-368 million.

Only value-added services and delivery are profitable.

Distribution is not directly operated by an Neng, and the company gives a bonus on cost.

The most profitable are value-added services, while the most important value-added services are electronic waybill, insurance, SaaS and APP, as well as the reward and punishment income of previous partners-a logistics company ends up resembling a software company.

But I have to say that Anneng's model is very effective.

The gross profit margin of the company's less-than-truckload business last year was 14.8%, similar to that of Debang, which operates directly. On the other hand, Debang recognizes the freight paid by the C side as income, which shows that the price of an Neng is lower than that of Debang.

Anneng's income has been growing in the past three years, reaching 7.08 billion last year.

Debang, on the other hand, has declined for the third year in a row.

Third, the fast-changing express rivers and lakes

According to the weight of the goods and the nature of the receiving and dispatching parties, the road transportation can be divided into three markets: express delivery, less than a load of goods, and the whole vehicle.

Express industry we are familiar with the three links Yida, Shun Feng Holdings (002352.SZ), less than a load of an Neng, Debang, Best, the whole vehicle is SAIC Anji, long-term logistics (603569.SH).

For a long time, the boundaries of the three markets are 10kg and 3 tons, and the well water does not invade the river water.

However, with the rise of e-commerce and the vigorous development of the logistics industry, people are used to door-to-door delivery of large goods, the giants of the express delivery industry began to covet heavy parcels and small tickets, and the bosses of the truckload market began to deliver across the border.

According to iResearch, the CAGR of the less-than-truckload market from 2015 to 2020 was 5.6%, while that of express delivery was as high as 27.5%.

Mr. Fengyun, who has lived in rivers and lakes for a long time, knows very well that it is never easy to cross the border.

In 2016, Anneng Logistics, a rising star in the less-than-truckload industry, surpassed Big Brother Debang in terms of the number of outlets and the volume of goods.

In July, after getting $150 million from CDH Investments in round E, an Neng began to enter express delivery.

However, the competition in the express delivery market at that time was already very fierce. Shunfeng, "three links and one reach" and Best occupied more than 60% of the market share.

After two years of development, although Anneng Express has a small scale, it is a drag on the company as a whole.

In 2019, the company withdrew from the express delivery business and broke its arms to survive.

By the time Anneng turns around, great changes have taken place in the less-than-truckload market: with the dual brands of SF Express and Shunxin Jetta, the revenue of SF Express has surpassed Aneng and Debang to become the new king of the LTL industry.

In the past three years, the CAGR of SF Express was as high as 51.6%, compared with 18.52 billion last year.

In terms of zero load, an Neng Logistics still holds the first place with 10.25 million tons, only 100000 tons higher than SF.

If you fail to cross the line, there will be a fire in the backyard.

Fourth, Shunfeng beat the low with high.

In SF's logistics business layout, 5-20kg e-commerce parcels are delivered to SF Express to improve timeliness.

The rest of the truckload business is handled by its two brands: SF Express and Shunxin Jetta.

The directly operated SF Express was officially launched in 2015, and its revenue exceeded 10 billion in 2019, close to the level of Debang.

Compared with the traditional truckload express enterprises, Shunfeng Express can provide door-to-door truckload express service with higher timeliness and convenience.

Shunxin Jetta brand launched by Shunfeng in 2018 belongs to the franchise system, with low operating costs, fast network deployment and focus on the mid-range express market.

The daily peak volume of SF Express and Shunxin Jetta reached 45000 tons and 24000 tons respectively last year, an increase of 96% and 118% respectively over the same period last year.

Shunxin Jetta ranked sixth in the platform model express network in 2019 and 2020, with a 7.7 per cent market share in freight volume last year.

Shunfeng's blooming tactics at both ends forced an Neng to make a change.

Anneng extends the express service to the less-than-truckload business and launches accurate less-than-truckload express for B2B to provide timely, low-cost door-to-door distribution services for e-commerce, small and medium-sized enterprises and other customers.

In addition, the company also offers Pruda to raw material suppliers and manufacturers to provide cost-effective direct services.

This year, Aneng raised the maximum transport weight of the two businesses to 10 tons, breaking through the traditional boundary of less than a load.

Precision truckload express and Pruda have also become the main drivers of the company's freight volume growth, with CAGR reaching 20.1% and 95.5% respectively from 2018 to 2020.

In order to ensure the quality of the delivery service, since July last year, an Neng has recorded the full amount of the delivery fee as income and directly borne the losses related to the delivery.

5. The fight is still going on.

The battle in the express industry continues.

In the first half of the year, JD Logistics, Inc. (02618.HK), a giant, landed in Hong Kong stocks, and Full Truck Alliance Co. Ltd. Group (YMM.N) landed on the New York Stock Exchange.(the market capitalization of the two companies has been studied in depth, and the market capitalization can be obtained by searching the relevant company names on APP.)

Rishun and Fuyou truck also submitted prospectuses to gem and NASDAQ respectively.

Aneng chose to go public at this point in time, perhaps because it wanted to compete with SF with the help of the strength of the capital market.

After intensive financing, a new round of price war may be inevitable.

However, Eneng has been profitable in the last two years, with an adjusted net profit margin of 8.9% last year.(note: excluding changes in fair value, etc.)。

In 2020, the substantial expansion of proprietary fleets increased capital expenditure to 657 million yuan and free cash flow to 70 million, a positive figure for two consecutive years.

In the past three years, the company's debt financing has decreased, while a large number of convertible bonds and convertible redeemable preferred shares have been issued. It is obvious that the opportunity to go public should be used to reduce debt.

Even if the price war comes, with good profitability and debt optimization, it is easier for an Neng to survive in it.

Conclusion

But how can Castle Peak block the river? the vast river finally flows eastward. Count flirtatious people, but also look at the present. The ups and downs of the less-than-truckload express not only affect the fate of each of them, but also related to the daily consumption expenses of the common people.

The mode innovation of Anneng Logistics "central direct operation + network joining" and the management wisdom of Iron Triangle have helped the company to rise rapidly to become a giant with less than a load of load.

However, the failure of cross-border express delivery, the rapid rise of SF Express and the rapid rise of SF Express make the express become choppy again.

With its own good financial data and the blessing of capital, where can Anneng Logistics go?

This may be the answer that needs to go through wind and rain.