Prism 丨 SF in the same city listed two consecutive falls: to make a single loss and a single, was jokingly called "to work for the rider"?

Author 丨 Li Xiaobai

Edited by 丨Yang Pudding

Produced by Prism Tencent News Xiaoman Studio

On December 14, SF Tongcheng officially landed on the Hong Kong Stock Exchange. At the listing ceremony held in Shenzhen, Wang Wei, chairman and general manager of SF Holdings, wore a toolcover jacket from SF Tongcheng and sounded the listing gong with several executives and 4 grassroots employees.

Although the scene was once hot, the trend curve of SF in the same city after the opening of the market was somewhat cold. The SF Tongcheng public offering of 131 million shares to the world at an issue price of HK$16.42 per share. At 9:30 on the same day, the opening price of SF Tongcheng was broken at HK$15.2, down 7.43% from the issue price, and by the end of the day, SF Tongcheng fell by -9.26%.

On December 15, SF Tongcheng still did not recover its decline. It continued to fall after the opening, with a low of -8.86% and a close of -3.09% at the end of the session. SF Tongcheng is already the fourth listed company under Wang Wei. Since 2016, it has been incubated within SF Holdings, and in 2019, SF Tongcheng announced independent operation. In the expression of Sun Haijin, CEO of SF Tongcheng, the company has grown into "the largest third-party instant delivery service platform in China".

The business has been operating independently for less than 3 years before entering the Hong Kong Stock Exchange, and the growth rate of SF Tongcheng can be described as rapid. According to the prospectus, before the listing, Taobao China and Hello Travel subscribed for HK$851 million and HK$39 million respectively, becoming cornerstone investors in SF City.

So, as the "concubine" of SF Holdings, why does the market not give SF enough recognition to the same city?

Market share "stealing the concept"?

Unlike SF Express, which users are more familiar with, SF Tongcheng's business in the field of instant delivery is relatively more independent.

The predecessor of SF Tongcheng is the instant delivery service division established by SF Holdings in 2016. Backed by SF Holdings, in 2019 SF announced the independent operation of the same-city distribution business. In contrast, Dada and Flash Delivery were established in 2014, and the following year, the US group special delivery and hummingbird special delivery were launched.

The establishment and development of SF Tongcheng in the past few years coincided with the rapid growth of China's local consumer market business, and a fierce battle between various business models such as the catering market, supermarket express delivery, and community group buying.

According to iResearch report data, in 2020, the transaction value of China's local consumer market reached 23.8 trillion yuan, and is expected to reach 36.5 trillion yuan in 2025. Among them, the number of instant delivery orders increased from 4.6 billion in 2016 to 21 billion in 2020, with a compound annual growth rate of 46.0%.

The proportion of orders in the third-party ready-to-match industry where SF Tongcheng is located has also increased from 11.9% in 2016 to 14.4%, and is expected to reach 20.5% by 2025.

According to the SF City Prospectus, the current consumption scenarios of the company's instant delivery are mainly divided into four categories: catering takeaway, same city retail, near-field e-commerce, and near-field service.

Among them, catering takeaway is the most mature development scene in instant delivery. SF Tongcheng mainly serves KA merchants such as McDonald's, KFC, Pizza Hut, Lao Niang Uncle, Xicha, etc., and the main competitors are the self-owned delivery teams of Meituan and Ele.me platform.

Same-city retail includes delivery of fresh fruits and vegetables, flowers and green plants, cakes and desserts and other department stores. SF Tongcheng's main service objects are well-known supermarkets and retail brands such as Tianhong, Yonghui and Lady M, and the main competitors are not only takeaway platforms, but also fresh O2O and instant delivery companies such as Hema and Daily Excellent Fresh.

In the field of near-field e-commerce, SF Tongcheng provides delivery for products with high e-commerce penetration such as digital 3C (such as xiaomi), clothing, shoes and bags, jewelry and makeup, and books and stationery. Near-field services are customized services for consumers and businesses, such as errands.

At present, SF Tongcheng has covered more than 1,000 cities and counties across the country, with more than 2.8 million registered knights, serving 530,000 B-end merchants and 126 million C-end users.

However, from the four major service scenarios, it can be seen that although SF Tongcheng positioned itself as the "largest third-party instant delivery service provider" according to the order volume, announcing that its market share reached 11.1%, this statement is suspected of "stealing the concept". SF Tongcheng excludes Meituan, Ele.me (Hummingbird Delivery) and Dada Group from the "third-party instant delivery service provider". But in fact, there is a high degree of overlap in the service scenarios and riders of several companies.

From the perspective of actual market share, according to Southwest Securities data, in 2020, the average daily order number of Meituan delivery is 27.8 million, the average daily order number of hummingbirds is 4.5 million, the average daily order number of Dada is 2.9 million, and the average daily order number of SF tongcheng is more than 2.7 million. Its order volume is only equivalent to one-tenth of that of Meituan's delivery.

Backed by SF, increase income does not increase profits

In the prospectus, SF Tongcheng emphasized the company's order volume, compound growth rate and narrowing of losses. But in fact, the above data is highly correlated with the number of orders obtained by SF Tongcheng from SF Holdings.

According to the prospectus data, the total number of orders of SF Tongcheng in 2018, 2019 and 2020 was 0.798 billion, 210 million and 760 million respectively, with a compound annual growth rate of 208.7%. During the same period, the compound annual growth rate of the industry as a whole was 27.0%.

In terms of profits, the gross profit margin of SF Tongcheng achieved -23.3%, -16% and -3.9% respectively in 2018-2020, and the loss continued to narrow.

However, at the same time, the proportion of revenue contributed by SF Holdings to SF's same city is also increasing year by year. According to the prospectus data, from 2018 to 2020 and as of May 2021, SF Holdings contributed 2.9%, 13.1%, 33.6% and 38.6% of the revenue to SF Tongcheng respectively. SF Holdings is undoubtedly the largest customer of SF In the same city.

However, unlike Meituan, Hummingbird, Dada backed by catering and JD.com customers to obtain core business flows, SF Holdings is limited by its own business model and profits, and it is difficult to maintain high quality and high profits for the business allocated to SF in the same city.

At present, the orders obtained by SF Tongcheng from SF Holdings mainly come from the service order volume of SF's "last mile". Compared with the cost of competitors, the last mile service fee of "home blood transfusion" is much lower than the ordinary same-city delivery cost.

According to the prospectus, from 2018 to 2020 and the first five months of 2021, the average service fee of SF's same-city delivery service was 12.3 yuan, 10 yuan, 10.2 yuan and 10.3 yuan respectively, while in the last-mile delivery service, the average service fee decreased rapidly, from 25 yuan in 2018 to 3.6 yuan in the first five months of 2021, a decline of more than 85.6%.

This also directly affects the unit price of SF in the same city. According to interface news according to the "revenue / order quantity" to calculate the order revenue, from 2018 to May 2021, SF in the same city each order received revenue of 12.45 yuan, 9.99 yuan, 6.36 yuan, 2.85 yuan, showing a downward trend year by year. In contrast, Dada Group received revenue of 3.65 yuan, 4.13 yuan and 5.18 yuan per order, respectively.

Working for a rider?

In general, the development of instant delivery is inseparable from three major elements: stable business flow in the upstream, a large number of riders on the service side, and accurate and reasonable matching and deployment of the system. Among them, the efficient deployment of the system requires the stable scale of the business flow and the number of services provided by the riders as the basis.

From the rider's point of view, according to analysys Qianfan data, the riders with the highest degree of activity are flash delivery, Meituan, UU running errands, Dada and SF in the same city, but the riders in SF are the most sticky. According to the author's understanding, SF Tongcheng has a leading advantage in the industry in terms of rider care, welfare protection and cultural construction.

However, labor costs are still difficult for the entire industry in the field of instant delivery to get rid of the curse of loss. As a labor-intensive industry, the listed Dada human outsourcing and employee welfare expenses account for more than 90% of the operating costs.

The high welfare of SF and the high stickiness of riders have hindered its profit path to some extent. According to the prospectus, from 2018 to 2020, the cost of manpower outsourcing and the welfare expenses of employees in SF Tongcheng were 1.198 billion yuan, 2.377 billion yuan and 4.921 billion yuan respectively, accounting for between 97% and 98% of the operating costs.

In the same period, the revenue of SF Tongcheng was 993 million yuan, 2.11 billion yuan and 4.84 billion yuan respectively, and the labor cost has exceeded the revenue, it can be said that SF Tongcheng is doing a single loss, which is jokingly called "the company works for riders". While seeking to reduce labor costs, the next greater challenge for SF Tongcheng is to open up just needs and stable business flows. Meituan and Hummingbird backed by the most large and stable catering instant delivery, the market share is difficult to shake; Dada is backed by Jingdong home, supermarket delivery and other Jingdong business flows; SF Tongcheng's current business is still mainly serving B-end businesses, although the local consumer market and instant delivery market is still expanding, but SF Tongcheng traffic will still be in the long run in instability, it is difficult to eat more dividends.

The upstream traffic is unstable, it is difficult to leave SF Holdings to walk independently, the unit price of customers is difficult to increase, and the labor cost is not easy to fall, which together constitutes an unknown prospect for SF's same city.

At present, the market has chosen to vote with its feet, falling for two consecutive days. Next, whether SF Tongcheng can rely on cornerstone investors such as Ali to obtain a broader business flow to transform and reconcile its own business layout is the market's expectation of whether SF Tongcheng can run through the profit model in the future.

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