"Worry" Behind The 100 Billion Revenue Of SF: How To Balance The Scale And The Benefits?

Based on the outstanding performance of the past year, SF holdings, a leading domestic express company, has officially announced its entry into the 100 billion revenue era.

The annual report shows that the company achieved operating income of 112 billion 193 million yuan in 2019, an increase of 23.37% over the same period last year, and realized a net profit of 5 billion 797 million yuan attributable to shareholders of listed companies, an increase of 27.23% over the same period last year. The double growth of revenue and net profit indicates that SF Holdings has temporarily bid farewell to the declining trend of profit decline in 2018.

However, this 100 billion annual report also revealed some "troubles" of SF holdings. The cost of recapture market share and the slowdown of some new business growth have also brought some pressure on the company.

Stabilize market share

For express companies, market share is an important indicator of business development. Although the direct operation mode of SF holdings and the market positioning of the top high-end business pieces in the early years, the company and the "Express Department" express company that relied on the electricity supplier "fortune" did not dominate the market share directly, but it reflected the change of the express business scale of SF holdings.

The annual report shows that in 2019, SF holdings completed 4 billion 831 million business volume, an increase of 25.84% over the same period last year. Referring to the 2019 express industry volume released by the State Post Office, the market share of SF holdings was 7.61%, a slight increase of 0.04 percentage points compared with 2018.

However, this growth rate is far behind the "Tongda" express company. In twenty-first Century, the economic report reporters found that in 2019, the market share of China Tong, Yun Da, Tantong, Shentong and Baishi were 19.1%, 15.8%, 14.3%, 11.9% and 11.6%, respectively, which were 1 to 2 percentage points higher than that in 2018.

Judging from its market share changes, SF holdings almost fell into a sustained decline in 2019.

In the first half of last year, the volume of business completed by SF holdings was 2 billion 17 million, with a market share of 7.43%, down 0.14 percentage points from 2018. The year-end market share increased slightly, thanks to a significant increase in the volume of business in the second half of the year.

In May 2019, SF holdings adjusted its product strategy in order to increase its volume of business, and launched special deals with new products for the market and customers of the electricity suppliers. A courier analyst told the twenty-first Century economic news reporter that the purpose of SF holdings's launch of such products is to cut into the electricity supplier express market and directly compete with the "access Department" to cope with the declining market share.

As far as the result is concerned, the success of SF holdings is undoubtedly achieved. Thanks to the promotion of ex gratia products, the company completed 2 billion 814 million business volume in the second half of 2019, accounting for 7.73% of the total market share in the same period, which filled the market share lost in the first half.

Behind the electric power express market of SF holdings, the high-end aging business is in the bottleneck of growth.

In the annual report, SF holdings will divide the express sector business into timeliness plates and economic sectors. Among them, the aging plate corresponds to the company's high-end business piece market, while the economic sector business corresponds to the electricity supplier express market. In 2019, the two sectors of SF holdings realized business income (excluding tax) of 56 billion 521 million yuan and 26 billion 919 million yuan respectively, representing an increase of 5.93% and 31.96% respectively over the same period. Among them, compared with 2018, the growth rate of the business volume of SF holdings is slowing down to a single digit.

However, entering the field of electricity supplier means that Shun Feng holdings must face the price competition from the "Express Department" express company, so the company needs to pay the cost side.

The analysts told the twenty-first Century business news reporter that the competition in the field of e-commerce delivery was intense due to homogenization, and the "price war" was the main means for companies to expand their share. Under the price competition, the heavy asset characteristics of the direct investment mode of SF holdings will make the cost side of the company face greater pressure. In this regard, Anxin securities also predicted that "SF holdings will continue to increase investment in electronic components resources, capital expenditure will bring depreciation and increase in operating costs."

It is worth mentioning that, with the express industry price "wind vane" called Zhejiang Yiwu recently revealed a new round of "price war" signs. According to media reports, some of the express outlets in Yiwu hit the lowest price of "80 Fen nationwide" and triggered a follow-up.

As a matter of fact, after the general decline in the volume of business caused by the epidemic, especially the "access Department" companies, these enterprises are more likely to regain market share on the basis of price competitive advantage.

But since this year, SF Holdings has gained a lot of business by relying on the advantages of early resumption and resumption of production, but when the "price war" is officially coming, the company's economic sector will be under great pressure.

Some new businesses stall

The transformation of integrated logistics service enterprises is the consensus of domestic express companies in the development of formats. Under the diversified layout, SF Holdings has established new business such as express transportation, cold transportation and medicine, urgent delivery in the same city, international and supply chain, and so on, becoming a new driving force for the company's performance growth.

Due to the large investment in new business capital expenditure, Shun Feng holdings in 2018 once saw a decline in profits. At the same time, the company's new business capacity is in the breeding stage, and its profitability has not yet been released. In 2018, the net profit of SF holdings increased by 4 billion 556 million yuan, down 4.57% compared with the same period last year.

However, even if profits decline, the new business of SF holdings in 2018 has been upgraded rapidly. Performance data show that in 2018, the company's express transportation, cold transportation, international and urban distribution (urban emergency delivery) realized business income (excluding tax) 80.5 yuan, 4 billion 240 million yuan, 2 billion 630 million yuan, and 1 billion yuan respectively, representing an increase of 83%, 84.9%, 28.7% and 172.2% respectively.

In the new business of SF holdings, express, cold transportation and international business revenues are relatively large, which is the main driving force for the company's new business growth. However, according to the 2019 annual report, some new businesses of SF holdings have seen a slowdown in growth.

The annual report shows that the company's express, cold transportation, medicine and international business in 2019 achieved operating income (excluding tax) of 12 billion 659 million yuan, 5 billion 94 million yuan and 2 billion 839 million yuan respectively, representing an increase of 57.16%, 32.54% and 7.98% respectively, representing a slower growth rate than in 2018.

Among them, express transportation business is a new business focused by SF holdings, and its revenue share increased to 11.28% in 2019, which is the third largest product of the company.

Different from the highly concentrated express industry, the trillion scale express industry has become a major expansion business in the early stage of scale and industry integration. In March 2018, SF holdings established the "Shun Xin Jetta" brand through the acquisition of Guangdong Xin Bang logistics integration, laying the foundation for the company's rapid expansion of the express business layout. Then in July 2019, the SF Express brand was officially released, and the "Shun Chi Jetta" formed a dual brand of express transportation, complementing the operation mode and product positioning, thereby realizing the "outbreak" of express business.

However, because the domestic express transportation market is still in the stage of "horse race enclosure", the fierce competition pattern of the express transportation enterprise, such as the Debon shares and the "Tongda" express company, has created a fierce competition pattern, which means that the future of SF holdings will still be faced with the cost pressure due to the expansion of the scale of the express transportation network. Anxin Securities said that although it favors the brand advantage of Shun Feng in the field of express transportation, at the same time, taking into account the impact of the epidemic on the demand for express transportation (superimposed high base), it is expected that the growth rate of express revenue in 2020 will be slowed down.

In fact, the rapid growth of new businesses such as express transportation has also sacrificed the profitability of SF holdings to a certain extent. The company said in its annual report that due to the expansion of the network coverage along with the expansion of the market such as economic products, express transportation, and city, the scale efficiency will enter a new round of climbing period, thus affecting the overall gross profit margin of the company in 2019.

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