Source: Securities Times

Author: Zhuo Yong

According to the official website of the Hong Kong Stock Exchange, “SF Holdings Co., Ltd. (“SF Holdings” for short, $S.F. Holding Co Ltd (810528.HK)$ ) Passed a listing hearing a few days ago and is preparing to go public in Hong Kong. SF Express, which has already been listed on the Shenzhen Stock Exchange, will continue after listing in Hong Kong$MIDEA GROUP (00300.HK)$Afterwards, another large A-share company listed on the Hong Kong stock market. After the successful listing, SF Express Holdings will become the first company in the express delivery industry to list “A+H” shares at the same time.

Up to now, leading domestic logistics and express delivery companies, such as $YTO INTL EXP (06123.HK)$ , $ZTO EXPRESS-W (02057.HK)$ , $J&T EXPRESS-W (01519.HK)$ ,$SF INTRA-CITY (09699.HK)$etc., they have all gathered in the Hong Kong stock market. Many logistics companies are piling up to go public on the Hong Kong stock market, causing the Hong Kong stock logistics circuit to surge. Industry insiders analyzed that this not only reflects the intense competition in the logistics industry, but also reflects the company's strategic layout for future development. In the context of globalization, Hong Kong stocks, as one of the international financial centers, have provided a good financing environment and international popularity for logistics companies, attracting many logistics giants to rush to the beach.

Profit increased by more than 30% in the third quarter, and 40% of the profit for the first half of the year will be used for dividends

SF Holdings is a comprehensive logistics service provider, committed to providing customers with comprehensive logistics services, covering various fields such as express delivery, express delivery, cold transportation, real-time delivery within the same city, supply chain solutions, and international logistics services. Specifically, according to the Frost & Sullivan report, in terms of 2023 revenue, SF Holdings is in a leading position in the market share in each of these sub-industries. Among them, time-sensitive express delivery is its flagship product, with a market share of 63.9% in China in 2023.

According to the prospectus, based on 2023 revenue, SF Holdings is the largest integrated logistics service provider in China and Asia, and the fourth largest integrated logistics service provider in the world. As of June 30, 2024, SF Holdings has a huge global distribution network covering 202 countries and regions, and operates 99 aircraft and more than 0.186 million vehicles, making up the largest air and land transport fleets in Asia, respectively. On the customer side, as of June 30, 2024, SF Holdings had about 2.2 million active monthly settlement customers and about 0.699 billion loose bill customers. Both figures rank first among all logistics service providers in Asia.

According to the 2024 third quarter report released by SF Holdings, revenue for the first three quarters of this year reached 206.861 billion yuan, and net profit was 7.617 billion yuan. Among them, SF Express achieved strong growth in the third quarter, with revenue reaching 72.451 billion yuan, up 12.07% year on year; net profit to mother was 2.81 billion yuan, up 34.59% year on year.

It is worth mentioning that at a time when the Hong Kong stock listing is imminent, SF Holdings has made frequent moves recently. First, a number of company rules and regulations were revised, including the 2024 mid-term dividend plan, the articles of association (applicable after the listing of H shares), and the rules of procedure of the Board of Directors Remuneration and Assessment Committee.

In terms of mid-term dividends, SF Holdings plans to increase the frequency of cash dividends and launch a 2024 mid-term dividend plan, with a cash dividend of RMB 4 (tax included) for every 10 shares. The total interim dividend is estimated to be about 1.92 billion yuan, accounting for about 40% of SF Holdings' net profit to mother in the first half of 2024. Furthermore, it is proposed to implement a one-time special cash dividend to all shareholders (that is, A-share shareholders) before this issuance and listing. According to preliminary estimates, the total amount of special dividends returned to shareholders is estimated at about 4.8 billion yuan. This means that the cumulative dividend of SF Holdings can reach 6.72 billion yuan.

Currently, SF Holdings already has$KERRY LOG NET (00636.HK)$, $SF INTRA-CITY (09699.HK)$ ,$SF REIT (02191.HK)$3 Hong Kong stock listed companies, if filed in August of this year $HIVE BOX HOLDINGS LIMITED (810637.HK)$ To be successfully listed, Wang Wei, founder of SF Express, will own 5 Hong Kong stock listed companies.

Why are express delivery giants piling up Hong Kong stocks?

Looking at the Hong Kong Stock Exchange, a number of logistics unicorns have already gathered here. Listed on the NYSE in 2020$ZTO Express (ZTO.US)$A second listing was achieved on the Hong Kong Stock Exchange; in May 2021,$JD LOGISTICS (02618.HK)$Officially listed on the Hong Kong Stock Exchange; in November of the same year,$ANE (09956.HK)$Listed in Hong Kong stocks; 2023, $J&T EXPRESS-W (01519.HK)$ Listed in Hong Kong stocks. Including Cainiao, a subsidiary of Ali, previously also intended to do an IPO on Hong Kong stocks.

Why are so many express delivery companies piling up Hong Kong stocks? Based on analysis from industry insiders, the reporter sorted out the following three main reasons:

First, with the rapid development of the national economy, logistics demand continues to increase, and logistics enterprises continue to expand and upgrade. Especially in recent years, with the rise of e-commerce, the express logistics industry has ushered in explosive growth. The data shows that in the first three quarters of 2024, the business volume of express delivery service companies across the country was 123.77 billion units, an increase of 22% over the previous year. During the “Double 11" period, express delivery business even peaked. Surveillance data showed that on October 22, the city's major brand express delivery companies collected 23 million express deliveries and delivered 8.48 million express deliveries, up 154.9% and 32.4% respectively over the same period last year, which is about 2.5 times the daily processing volume. This means that all express delivery companies need strong financial support to continue expanding the market.

Second, as the express delivery price war gradually came to an end, industry competition entered a reshuffle period where quality was won and timeliness and service were used to gain greater market share. Whether it is the introduction and upgrading of logistics technology or the further expansion of logistics infrastructure, it is necessary to reserve a large amount of competitive capital. Some companies are unquestionably able to obtain more financing opportunities by going public for the second time or entering the capital market in an “A+H” manner.

Finally, the Hong Kong capital market has become a strong support for express logistics companies to enter the international market. Today, whether it is Jitu, which started overseas, Cainiao, or SF Express, they are showing decision-making trends starting from overseas markets. Take SF Express as an example. Wang Wei, the founder of SF Express, has stated many times that the main goal of SF Express's listing in Hong Kong is to achieve internationalization, hoping to enter the global capital sector and expand rapidly in the future.

In recent years, SF Express has once again accelerated its overseas layout. In particular, after Ezhou Huahu International Airport and SF Express's hub transit center at the airport were officially put into operation, it not only accelerated the increase in the number of SF Airlines' international routes, but also enhanced SF Express's international competitiveness.

In fact, after the domestic business development of several leading domestic express delivery companies entered a stable period, the international business has always been a battleground for various companies to compete, and it is also regarded by various companies as the second growth curve. Frost & Sullivan's report predicts that by 2027, China's cross-border logistics market will reach 171.4 billion US dollars, with a compound growth rate of 5.6% from 2023 to 2027. For domestic express delivery companies, which are already extremely competitive, the international market is still a vast blue ocean, and its growth rate and scale are worth looking forward to.

Edit/Rocky