Shunfeng Splits The Same City Industry To Be Listed In Hong Kong: The "Troublemaker" Under The Shadow Of Instant Delivery Oligarchy

On the evening of June 23, SF Holdings (002352. SZ) announced that on the same day, the company received the administrative license application acceptance form (acceptance No.: 211508) issued by China Securities Regulatory Commission. China Securities Regulatory Commission has decided to accept the administrative license application for overseas IPO submitted by the same city industry. This means that the separation of the same city business and listing in Hong Kong will welcome further progress.

Logistics giant Shun Fung Holdings, in addition to the continuous increase in freight transport, its company's listing progress is not falling.

Hangzhou Shunfeng Tongcheng Industrial Co., Ltd. (hereinafter referred to as "Tongcheng industry") plans to land in the capital market this time.

According to the information disclosed a few days ago, SF holdings will spin off its own intra city industrial IPO in Hong Kong.

Since its establishment in 2019, Tongcheng industry has successively started relevant preparations. In particular, 17 new shareholders were added at the beginning of this year, and Shunfeng holdings realized almost absolute control of the same city industry by increasing capital in mid March, which were regarded as signs of accelerating the listing pace.

Although the market is gradually keen to be listed in the form of spin off, the market is not surprised by the move of the same city industry, but it still can not stop it from becoming a hot spot.

On the one hand, SF holdings, as the largest logistics giant with A-share volume, has a market value even surpassing the sum of other stocks in the industry.

On the other hand, SF REIT (02191. HK), which was not long ago spun off, has landed on the Hong Kong stock exchange, becoming the first logistics REIT in the Hong Kong real estate trust fund market, and the first to eat crabs for logistics express delivery enterprises.

It is worth mentioning that Shunfeng's actions are more than that. Earlier, it had disclosed that it intended to acquire part of Kerry Logistics (00636. HK).

With the promotion of the listing of the same city industry in Hong Kong, the capital and business map of SF holdings will be expanded again.

Logistics giant Shun Fung Holdings, in addition to the continuous increase in freight transport, its company's listing progress is not falling- Visual China

Increase business layout in the same city

After several rounds of subsidy war, the war of express delivery industry is also burning in the field of instant distribution.

The market scale of instant distribution service is growing continuously and has a bright future. For SF, this is an area that needs to be widened.

In 2019, SF established a new business entity Hangzhou Shunfeng intra city Industrial Co., Ltd.

By the end of 2020, the same city industry has formed a distribution system covering catering, supermarket, fresh food, clothing, medicine, 3C digital, office express, etc. The number of cooperative brands increased by more than 300% over the same period of last year, serving more than 300000 businesses and 100 million individual users, and the national network coverage has exceeded 500 cities.

As a result, the city's industrial business achieved 3.146 billion yuan of revenue excluding tax last year, up 61.17% year-on-year, higher than the growth rate of the industry.

However, the net profit of the same city industry is still weak.

By the end of 2020, the same city industry had a loss of 760 million yuan; Another 210 million yuan was lost in the first quarter of this year.

This also means a loss of nearly 1 billion yuan in 15 months.

Even so, SF's preference for the same city business has not been affected, instead, it has increased its layout.

The 21st century economic reporter noted that in order to speed up the implementation of the last kilometer strategy and strengthen competition barriers, SF holdings increased its capital in the same city through its wholly-owned subsidiary, Shenzhen Shunfeng Taisen Holdings (Group) Co., Ltd.

Referring to the pre investment valuation of round B financing completed by Tongcheng industry in December 2020, the pre investment valuation of Tyson holdings for this capital increase is also determined to be RMB 9 billion after negotiation between both parties and the consent of other shareholders of Tongcheng industry. Other shareholders of Tongcheng industry did not participate in the subscription of new shares.

After the capital increase of 409 million yuan, through the indirect holding of Tyson holdings, a wholly-owned subsidiary, Shunfeng holdings can control 66.76% of the shares of Tongcheng industry and become the controlling shareholder.

Shunfeng holdings disclosed that the intra city industry is an important strategic layout in the field of real-time logistics. This capital increase provides strategic capital support for the same city industry, which is in line with the company's strategic development.

At the same time, after the completion of capital increase, SF holdings increased its shareholding ratio in the same city industry, consolidating its control right. The company believes that this will help to obtain the long-term benefits brought about by the rapid growth and operational efficiency improvement of the industry in the same city in the future, and also leave room for capital operation such as financing of the subsequent intra city industry.

This capital increase is also regarded by the outside world as the further bedding of the city's industry to rush into the capital market.

Three months later, market speculation was confirmed.

According to the official announcement of SF holdings, the company intends to spin off its holding subsidiary and go to the main board of the Hong Kong stock exchange for listing, in order to expand the company's diversified financing channels and build an international capital operation platform for the same city industry.

It said that after the spin off and listing, Tongcheng industrial is still a holding subsidiary of SF, which will not have a material adverse impact on the continuous operation of other business sectors and will not affect the independent listing status of the company.

The industry is in a duopoly situation

Compared with the overall large plate of SF holdings, the business volume of the same city industry is currently very small. However, SF still takes this as one of the strategic directions for layout.

Some analysis in the annual report of SF holdings also proves the importance attached to this business sector.

The company's management believes that real time logistics, as the core infrastructure of local life, continues to expand business boundaries and maintain high-speed growth, which has huge market space in the future.

The 21st century economic report reporter noted that the Southwest Securities research team has also analyzed that the demand side of real-time distribution logistics includes four scenarios: takeout service, B2C retail, agent purchase and delivery, and landing distribution related to e-commerce.

According to Southwest Securities Research Report, it is estimated that the total logistics orders of China's real-time distribution industry will reach 93.1 billion yuan in 2025. At that time, the transaction volume of the takeout market will reach 2.2 trillion yuan, the order volume of takeout will reach 46.7 billion units, and the number of ready to use orders generated by fresh e-commerce will reach 37 billion, which will account for about 90% of the demand for instant delivery in the future.

The same city industry of the track has been determined, and it is accelerating the development of sinking market in the past two years.

At present, its network coverage in the country has exceeded 500 cities, and it is also continuing to extend to the last kilometer distribution, urban supply chain and other logistics links. It hopes to realize the balanced distribution of orders in the whole period, the whole distance and the whole category, so as to promote the efficiency of distribution.

It is worth mentioning that the same city industry is still struggling to develop the network, and the preconceived giants have built a high market share wall.

Southwest Securities research paper pointed out that the real-time distribution industry is in the pattern of oligopoly, although these oligarchs occupy a high share, but the profit level is low.

"The real-time distribution industry presents a duopoly pattern of meituan distribution and Alibaba's point I DA and hummingbird. The market share of meituan distribution market was 47.2%, that of hummingbird + spot market was 20.7%, and that of duopoly was 67.9%

It is worth noting that among the last players, dada's market share is about 4.1%, and that of the same city's industrial market is about 1.2%.

Great Wall Securities also believes that the demand of instant distribution market originates from catering delivery, and the takeout leaders quickly seize the market with the outbreak of demand, and it is difficult for the latecomers to expand.

"At present, the market is in an oligopolistic situation, with the main competitors of hummingbird distribution, meituan distribution and dada, with CR3 exceeding 70%, while the same city industry only tries to break through with less than 5% of the market share." Great Wall Securities research paper said.

On the one hand, there is a considerable market prospect, on the other hand, the market share is quite low. The industry in the same city still has a long way to go.

The reporter of the 21st century economic report noted that the Southwest Securities Research Journal pointed out that its industrial chain is more important, and it is also the place where capital must contend. For the e-commerce platform, intra city business is a super flow entrance for individual customers. For the third-party logistics service providers, the same city business has the function of accumulating consumption data for b-end customers.

"For SF, a third-party logistics with complete integrated logistics modules, the city wide distribution business can help SF to complete the accumulation of terminal consumption data without intervening in business flow, so as to gather big data systems that can serve b-end customers, or become a new growth pole of future revenue." According to Southwest Securities research paper, this is an indispensable part of the third-party logistics technology service provider.

SF's poor performance in the first quarter

The capital operation of SF Holdings has attracted market attention. In addition to IPO in Hong Kong, there are also factors of semi annual performance expectation.

It is worth mentioning that in the first quarter of this year, the performance of SF holdings was astonishing. The operating revenue reached 42.62 billion yuan, with a year-on-year increase of 27%; In the same period of last year, the net profit exceeded 900 million yuan, while this year, it suffered a substantial loss of 989 million yuan.

As soon as the financial report was disclosed, the stock price dropped to a limit, and funds scrambled to flee.

Such performance is far from the market impression of the annual performance of last year.

In 2020, SF holdings realized a total operating revenue of 153.987 billion yuan, a year-on-year increase of 37.25%, far higher than the industry growth rate of 17.3%.

Shunfeng holdings financial report disclosed that the company's traditional business increased revenue last year. Among them, the revenue of time effective parts business increased by more than 17% year on year; The revenue of economic business increased by 64% year on year, accounting for more than 40% of the total revenue increment.

Other business sectors continued to maintain high-speed growth, with total revenue increasing by about 51% year-on-year, accounting for more than 35% of the overall revenue increment.

Reporter of 21st century economic report noted that last year, SF held fast growth in new business sectors such as express, cold transport, medicine, intra city and international.

According to the financial report, from 2018 to 2020, the three-year compound growth rate will reach 64.5%, accounting for 28.24% of the total operating revenue, which will become a new growth engine, and the comprehensive logistics service capacity and supply chain service capacity will be further enhanced.

In terms of profit, the net profit attributable to shareholders of listed companies reached 7.326 billion yuan last year, up 26% over the same period of last year. After deducting non-profit, the net profit attributable to shareholders of listed companies was 6.132 billion yuan, with a year-on-year increase of nearly 46%.

Shunfeng holdings reported that on the one hand, the company's business volume grew rapidly, the capacity utilization rate was improved, and the scale efficiency was highlighted. On the other hand, the company's land transportation products such as economic express and express transportation grew rapidly, and the proportion of business increased significantly.

It is worth noting that the company also mentioned that it expects that the business segments will continue to maintain high-speed growth in the future, so it will make a front-end layout in terms of key resources such as site upgrading and automation equipment transformation. Moreover, "the above investment will have cost pressure in the short term".

However, it also said that with the gradual growth of business volume and the expansion of network scale, the scale efficiency will gradually release and appear in the future after a certain climbing period.

It is worth mentioning that SF has also expanded the company's positioning and will be committed to becoming an independent third-party industry solution data technology service company.

At a performance conference some time ago, Wang Wei, chairman and general manager of SF holdings, answered questions from investors

The company is committed to becoming a data technology service company with independent third-party industry solutions, which is our future orientation based on external industry trends and our own capabilities.

"SF adheres to the independent third-party positioning and maintains neutral and professional third-party services to support customers' Omni channel operation more effectively under the trend of decentralized traffic channels," he said. At the same time, it is not competitive to serve customers with a single homogeneous product in the future. There are many pain points and demands in the customer supply chain. It is the future development trend to provide end-to-end comprehensive logistics solutions for customers through product combination and achieve better benefits for the customer supply chain. "