The net loss is nearly 900 million yuan, how far is SF from profitability?

Reporter | White sails

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On March 30, SF Tongcheng released its first annual performance announcement after listing. According to the financial report, in 2021, the total revenue of SF Tongcheng increased by nearly 70%, and the net loss ratio also narrowed. SF Tongcheng said that the current market value has not reached expectations, and the non-meal market and the sinking market will provide more opportunities in the future, and it is confident that it can quickly achieve profitability.

Gross profit has just turned positive and net loss widened to $899 million

According to the financial report, in 2021, SF's total revenue in the same city reached 8.174 billion yuan, an increase of 68.8% year-on-year; gross profit turned from negative to positive at 94.8 million yuan, with a gross profit margin of 1.2%; net loss was 899 million yuan, an increase from 758 million yuan last year, but the net loss ratio fell from 15.6% in 2020 to 11%. The basic loss per share was 1.28 yuan, which narrowed compared with the 1.6 yuan loss in 2020.

SF Holdings, the parent company of SF Tongcheng, pointed out in the financial report that the loss of the same city business was mainly due to the expansion of the scale of urban coverage and regional density, and the order volume maintained rapid growth.

So far, the same-city distribution business is still the lowest net interest rate sector among the several major businesses of SF Holdings, and has dragged down the overall profitability of SF Holdings.

However, comparing the data of SF Tongcheng in January-May and June-July last year, it can be found that SF Tongcheng gradually reversed its decline in the second half of last year. Among them, the gross profit margin in January-May was 0.9%, and the gross profit margin in June-December rose to 2.4%. In addition, the net loss ratio also improved in the second half of the year. The financial report pointed out that the change in operating gross loss was mainly due to the decline in the average cost of performance per order.

In terms of cost, SF Tongcheng's operating costs in 2021 increased by 60.6% year-on-year. Specifically, the top three types of operating costs are labor outsourcing costs, employee benefit expenses and marketing promotion expenses. Among them, the cost of labor outsourcing increased from 4.914 billion yuan in the same period last year to 8.027 billion yuan, and the sales and marketing expenses increased from 111 million yuan to 270 million yuan, an increase of 143.5% year-on-year.

For the increase in marketing costs, SF Tongcheng pointed out that this is mainly due to the increase in promotion and marketing activities and the continuous expansion of regional marketing teams. Sun Haijin, CEO of SF Tongcheng, pointed out in the media conference call held on March 31 that strengthening brand recognition is also one of the three strategic dimensions of SF Tongcheng's future.

He also said that as a service industry, same-city distribution is relatively low-frequency, so service awareness is very important. In the future, we hope to continue to improve the recognition and penetration rate of SF in the same city, thereby driving brand premium and business growth.

Non-meal scenario delivery becomes a growth engine

From the perspective of various business categories, same-city distribution services are still the core business of the company, with revenue of 5.09 billion yuan in 2021, an increase of 58.1% year-on-year; last-mile distribution increased by 89.3% year-on-year to 3.07 billion yuan.

The financial report pointed out that the growth of same-city delivery was significant, mainly because the delivery business outside the catering takeaway scene increased by 105%. Non-meal scenarios mainly include same-city retail, near-field e-commerce and near-field services, accounting for 37% of the total revenue of same-city delivery.

For the expansion of non-meal scenarios, Sun Haijin said, "The pattern of takeaway delivery is relatively fixed, and the growth rate is relatively low, but some new channels still have very big opportunities." He introduced that at present, the proportion of catering delivery revenue in SF's same-city distribution revenue has dropped to 40%, and in the future, the company will adhere to the development of all-scenario business, and the catering delivery revenue will be maintained within 30% to 50%.

From the perspective of specific industries, the revenue from the distribution of merchants in the pharmaceutical industry, the clothing industry and the digital 3C industry grew the fastest, with a year-on-year increase of more than 165%; including commercial supermarket fresh, flowers and green plants, desserts and other near-field e-commerce and same-city retail scenes, the delivery revenue of merchants increased by more than 95% year-on-year.

SF Tongcheng said that at present, SF Tongcheng's customers include chain enterprises in Xiaomi, OPPO, Gaoji Medical, Shuyu Civilian and other fields. SF Holdings also said in the institutional survey that it is expected that near-field e-commerce will become a new growth point for the development of the same-city express delivery business.

In order to further expand merchants and consumers, SF Tongcheng has cooperated with WeChat to provide instant logistics assistants, collection books and other services for merchants on WeChat channels. In addition, SF Tongcheng also aims at the live broadcast market, "We have developed a comprehensive instant delivery solution customized for the live broadcast e-commerce platform, and while the live broadcast is carried out, it can be delivered in a timely manner within the same city." ”

The market value did not meet expectations, and it is expected to make a quick profit

"Our market cap performance did not meet our expectations." In the media conference call on the performance release, Sun Haijin said so. In fact, since the listing of SF Tongcheng, the company's stock price has declined all the way, and the current market value is 6.562 billion yuan, which is far from the initial stage of listing.

Since its listing, SF Tongcheng's stock price has fallen all the way. Image from a screenshot of Flush Flush

He further pointed out, "If we can maintain a growth rate of 1.5 times higher than the industry, we can also achieve profitability in a short period of time, coupled with the current cash reserves of 2.8 billion yuan, we may be able to achieve tens of billions of revenue in a few years, so we are confident in the long-term development of the company." ”

For the future profit schedule, SF Tongcheng said that excluding the expenditure on shares and listing expenses in 2021, coupled with the improvement of gross profit margin, the emergence of scale effects, and the promotion of refined management measures, it is expected that the company can achieve breakeven as soon as possible. "We are very confident that we can quickly achieve profitability." Sun Haijin stressed it many times.

According to the data, the number of active users in SF Tongcheng is about 10.6 million, compared with about 5.1 million in the same period of 2020, and the rider group has expanded from 459,400 in the previous year to 606,000. Consumer-facing same-city delivery revenue has grown by more than 150% year-on-year for three consecutive years. Sinking market revenue increased 89% year-on-year last year.