On September 2nd, Futubull Holdings Limited (referred to as "Futubull") formally submitted its prospectus to the Hong Kong Stock Exchange, intending to list on the main board, with Huatai International as the exclusive sponsor.

The prospectus shows that Fengchao, which has been continuously losing money for three years from 2021 to 2023, achieved a net profit for the first time in the first five months of this year.

As of May 31, 2024, Fengchao's intelligent express cabinet network consists of 330.2 thousand sets of intelligent cabinets, with approximately 29.9 million compartments. The service coverage extends to about 209.0 thousand communities in 31 provinces in China, and has provided services to a total of 36.78 million consumers and 3.5 million couriers.

Zhao Xiaomin, express logistics expert and CEO of Guanshuo Capital, told the reporter of Science and Technology Innovation Board Daily that Fengchao's profitability demonstrates the feasibility of its model. As the leader in the express cabinet market, it currently has only 0.33 million sets of cabinets, indicating that there is still a huge room for growth. The challenges for Fengchao lie in fundraising capabilities, expansion efforts, and capital market expectations for its future. From the growth path, Fengchao needs to strengthen capital operations and business expansion.

The company achieved a net profit for the first time in the first five months of this year.

The prospectus shows that from 2021 to 2023, the revenue of Fengchao was 2.526 billion yuan, 2.891 billion yuan, and 3.812 billion yuan, while the net losses were 2.071 billion yuan, 1.166 billion yuan, and 0.541 billion yuan respectively. However, in the first five months of this year, Fengchao's revenue reached 1.904 billion yuan, achieving a net profit of 71.6 million yuan.

Regarding the improvement in profitability, Fengchao explained in the prospectus that it was mainly due to the significant growth in the profitability of last-mile delivery services, the rapid growth of consumer intelligent delivery services and value-added services, and the improvement of operational efficiency.

Specific to the source of income, Hive Box is mainly composed of three parts: express end delivery services, consumer asia vets delivery services, value-added services, and other.

Among them, express end delivery services are the pillar business of Hive Box's revenue. Data disclosed in the prospectus shows that from 2021 to 2023, the revenue of this business was 1.46 billion yuan, 1.69 billion yuan, and 1.84 billion yuan respectively. Although the revenue has grown, its proportion of total revenue has shrunk. The prospectus shows that this business decreased from 57.6% in 2021 to 48.2% in 2023, and by May 31, 2024, the share of revenue from end delivery services dropped to 40.8%.

It is worth noting that this business faces significant external environmental challenges. The main scenario of express end delivery services is where couriers deliver parcels to Hive Box smart lockers, and then consumers collect their parcels from these smart lockers. However, on March 1st of this year, the "Express Market Management Measures" were officially implemented, stating that using smart express lockers, express service stations, or other means to deliver parcels without the user's consent may result in fines ranging from 0.01 million to 0.03 million yuan for severe cases.

This means that merely charging express storage fees to couriers, express companies, and users makes it difficult for Hive Box to see growth opportunities in future operation.

However, with the booming development of online live streaming sales and the increase in return rates in recent years, the revenue contribution of consumer asia vets delivery services in total revenue is increasing. The scenario of this business involves consumers depositing parcels in Hive Box smart lockers for couriers to pick up for delivery, mainly providing integrated services for e-commerce returns and exchanges as well as individual single-piece shipment services.

Financial reports show that in 2021, 2022, 2023, and the first 5 months up to May 31, 2024, the revenue of this service was 0.149 billion yuan, 0.31 billion yuan, 1.02 billion yuan, and 0.692 billion yuan respectively, accounting for 5.9%, 10.7%, 26.8%, and 36.3% of total revenue in the same period.

As for value-added services, they mainly include advertising revenue, as well as home services such as laundry, cleaning, home appliance maintenance, and repair. Financial reports show that in 2021, 2022, 2023, and the first 5 months up to May 31, 2024, the revenue from this service was 0.922 billion yuan, 0.896 billion yuan, 0.956 billion yuan, and 0.435 billion yuan respectively, accounting for 36.5%, 31%, 25%, and 22.9% of total revenue in the same period.

ZTO Express, STO Express, and Yunda Express combined earnings exceed 1.4 billion yuan

According to the prospectus, Fengchao has received multiple rounds of financing since its establishment.

In June 2015, Fengchao received 500 million yuan in funding from S.F. Investment, Shentong, Zhongtong, Shanghai Yunyun, and Suzhou Prolose. After this round of financing, S.F. Investment holds 35% of the shares, Shentong, Zhongtong, and Yunyun hold 20% each, and Suzhou Prolose holds 5%. In April 2016, these investors continued to support Fengchao with another 500 million yuan.

In January 2017, under the support of S.F. Investment, Shentong, Zhongtong, Prolose, Dinghui Investment, Changshi Capital, Yiyao Investment, Zhongding Capital, and Wang Wei-controlled Mingde Holdings, Fengchao obtained 2.5 billion yuan in B1 financing.

However, in June 2018, Shentong, Zhongtong, and Yunyun, which had been running alongside Fengchao for three years, chose to transfer all their shares in Fengchao to Weirong Development. This also means that Shentong, Zhongtong, and Yunyun have withdrawn their shares from Fengchao. At that time, both Yunyun and Shentong stated in their announcements that this was to optimize the asset allocation structure and achieve reasonable investment returns.

From the initial investment to collective exit, Zhongtong, Shentong, and Yunyun earned approximately 500 million yuan, 389 million yuan, and 545 million yuan respectively.

Fengchao's most recent financing occurred in January 2021. According to the announcement from S.F. Holding, Fengchao's pre-investment valuation for this round was 3 billion US dollars. This round will complete a strategic financing of 400 million US dollars, and the post-investment valuation is approximately 3.4 billion US dollars, equivalent to over 24 billion yuan.

In terms of shareholders, according to the prospectus, before going public, Wang Wei, the founder of S.F. Holding, held approximately 36.54% of the shares.

In addition, China Post Group holds 17.01% of the shares through Rarlon Inc; Sichuan Development Lomon holds 6.05% of the shares through Cayman Santai Group Limited; Prolose Group holds 5.52% of the shares through Hidden Hill SPV I; Trustbridge Partners holds 5.46% of the shares through Trustbridge Partners VII L.P.; Dinghui related entities Dinghui Fuhong, Dinghui Fuhan, Dinghui New Trend, and Changxing respectively hold 3.34%, 0.96%, 0.84%, and 0.47% of the shares; Shen Nanpeng holds 1.06% of the shares through HSG Growth VI 2020-F L.P.

Expanding into overseas markets.

According to Zhaoshi consulting data, as of May 31, 2024, Fengchao's intelligent express cabinet network consists of 0.33 million Fengchao intelligent cabinets, with a total of approximately 29.9 million compartments, covering approximately 0.209 million communities in 31 provinces (autonomous regions and municipalities).

However, East China and South China are the main markets for Fengchao. The prospectus shows that out of the 0.33 million Fengchao smart cabinets, East China accounts for 0.1449 million, accounting for 43.9% of the entire smart cabinet network. South China has 0.0759 million, accounting for 23%. North China, South China, and Southwest China each have 0.0093 million, 0.0092 million, and 8.2 thousand, accounting for 9.3%, 9.3%, and 8.3% respectively. Northeast China and Northwest China each have 0.0112 million and 8.8 thousand, accounting for 3.5% and 2.7% respectively.

It is worth mentioning that in addition to community parcel services, Fengchao is also actively expanding its business boundaries. According to the plan, Fengchao will strengthen the deployment of storage lockers in transportation hubs, tourist areas, large shopping centers, and other passenger distribution centers. The goal is to exceed 100+ storage lockers in the entire city of Hangzhou by the end of 2024. In addition, Fengchao has also partnered with Shanghai Metro and Wuxi Metro to pilot luggage storage services.

Furthermore, Fengchao has already strategically positioned itself in the global market. According to the prospectus, Fengchao expanded its smart cabinet network to Thailand in 2022. As of May 31, 2024, it has deployed 200 sets of smart cabinets in Thailand, accounting for 0.1% of the entire Fengchao smart cabinet network.

HiveBox (Thailand) Company, as an affiliated subsidiary of Fengchao, generated revenue of 6.4 million yuan and 400,000 yuan from the purchase of smart cabinets and services from Fengchao in 2023 and up to May 31, 2024, respectively. It is estimated that in the fiscal years 2024, 2025, and 2026, the revenue generated from this service will be 7 million yuan, 20 million yuan, and 27 million yuan.

Huang Lichong, President of Huisheng International Capital, told Science and Technology Innovation Board Daily reporters that Fengchao's choice to expand internationally is based on a global strategic vision and insight into future market trends. International expansion also helps Fengchao diversify risks in a single market and achieve diversified and sustainable development.