2021 is a key year for China's express delivery industry and SF's "year of water reversal".
In the year when the domestic express delivery business volume exceeded 100 billion pieces for the first time, SF, which has always shown its "high-end" image, handed over a report card of a sharp decline in performance on the evening of March 30, and its net profit was almost waist-cut, lower than that of Zhongtong for the first time.
The new round of price war in the express delivery industry, which began in 2019, has become an important reason behind the sharp decline.
Starting from SF's 2021 financial report, we try to explain why it is involved in the price war, why it is "hurt" the most in the express price war, and what changes the financial data shows.
Through these questions, we may be able to see a more three-dimensional SF.
01 Has SF's "Vitality" recovered?
Looking back at 2021, SF has big events happening every quarter. In the first quarter, Wang Wei, who has always been low-key, apologized and said that "similar problems will not appear a second time"; in the second quarter, the spin-off of SF Real Estate Trust was listed, opening up new financing channels; in the third quarter, Kerry Logistics was acquired for HK$17.6 billion to make up for the international freight forwarding sector; in the fourth quarter, SF was listed in the same city, and Dada Flash sent "rolled up".
Among them, the big loss in the first quarter made many investors feel uneasy.
(Wang Wei)
For a long time, express delivery is actually in the general trend of price reduction, the reason can be roughly attributed to the increase in residential density and various technological advances, so that the express delivery industry is more and more efficient, the cost is getting lower and lower, providing the possibility of price reduction.
In this context, as long as the price reduction does not exceed the cost reduction, the industry's profits can still be maintained. However, since the epidemic, due to the restriction of some outlets, some express delivery companies have taken the lead in starting and starting a new round of "violent" price reductions with price for volume.
At the same time, Jitu Express from Southeast Asia has entered the Chinese express delivery market at a very low price to "stir up trouble", stimulating the industry to continue to reduce prices. In Yiwu, the "place where soldiers must fight" with a huge number of shipments, there is even an extreme situation of "1 yuan free shipping".
This war without smoke of gunfire, finally after the regulatory came out, in the second quarter of the flag to end, back to God, the profitability of each express delivery company in the first quarter has declined to varying degrees, and the first quarter of the huge loss of 1.155 billion yuan SF, is undoubtedly the most seriously "injured" one.
So from the perspective of the annual data, how about SF recovery?
From a quarterly point of view, SF has indeed been "repairing" itself at a visible rate since the second quarter of 2021, with net profits of -1.155 billion yuan, 1.571 billion yuan, 849 million yuan and 2.655 billion yuan respectively.
In 2021, SF sent a total of 10.55 billion express deliveries, an increase of 29.7% year-on-year, and revenue of 207.187 billion yuan, an increase of 34.55% year-on-year, mainly because SF's acquisition of Kerry Logistics brought important performance increments in the fourth quarter.
However, in contrast to the growth revenue, SF's net profit for the whole year was 3.919 billion yuan, a year-on-year decrease of 43.46%, and if the "fig leaf" of non-recurring profit and loss of 2.435 billion yuan was excluded, its non-net profit was only 1.484 billion yuan, down 74% year-on-year.
During the year, SF Holdings transferred three wholly-owned subsidiaries holding three property assets to SF Reservist Fund and went public in Hong Kong for a profit of RMB890 million; another technology company, Fengxing Zhitu, which had been incubated since 2018, sold it to its controlling shareholder, Mingde Holdings, with a profit of RMB830 million, with the proceeds from the two disposals accounting for 43.89% of its annual net profit.
It can be seen that although SF's vitality throughout the year has recovered, it is not ideal enough.
The reason is more evident from the revenue per ticket. Since falling to a low of 14.6 yuan in February 2021, although SF's single ticket revenue returned to the level of 16.4 yuan in December, the 12.23% increase was limited, compared with the price increase between 23% and 53% of Yunda, Yuantong and Shentong, the repair force was smaller and the duration was shorter.
Behind the average single ticket income, one of the main reasons is that the proportion of SF's unprofitable business is getting higher and higher.
Since 2017, SF began to develop the economic parts business, and in 2019, it joined the price war of the express delivery industry, and its low-cost express products, including electric trademark fast, special offers and Fengwang Express (franchised brands), have shown substantial growth in 2021, and the profitability of the supply chain and international business of the new merger table in September 2021 is also relatively low.
As a result, the comprehensive gross profit margin of SF Holdings decreased from 16.35% in the previous year to 12.37%, a decrease of 4.02 percentage points, the largest decline since its listing.
SF, which is "testing downwards", has obviously suffered "bitterness" in the process of expanding the business territory of economic parts.
02 Why is SF the most hurt under the price war?
An interesting question is, the same price war, why is it only SF that lost a lot in the first quarter?
In fact, the difference between SF and tongda departments (Zhongtong, Yuantong, Shentong, Yunda) is that the former is mainly self-operated, while the Tongda department is mainly franchised.
The self-operation of the whole link means that SF needs to participate in multiple links from picking, sorting, transshipment to final delivery, and the assets invested are naturally more. By the end of 2021, SF has 86 aircraft (68 self-operated, 18 leased), 168,000 terminal outlets, more than 300,000 Fengchao express cabinets, 420,000 dispatchers, 324 express transit yards and 2,119 operation and management warehouses, which are all efficient transportation capacity systems built by SF.
In contrast, the Tongda Department is mainly based on joining, more responsible for the trunk line transportation and sorting links, the frontmost receiving and the most terminal delivery, it is completed by the franchisee, and the Tongda Department collects transportation fees, sorting fees, information fees and so on from the franchisees according to the amount of business.
SF, which covers more logistics links, also earns money from multiple links, and its single ticket income has ranged from 15-25 yuan since 2018, while it is only responsible for the access system of trunk line transportation and sorting links, and the single ticket income in the same period is between 1.5-3.5 yuan.
However, the high income did not bring high gross profit to SF, in contrast, SF invested higher costs in the transportation system, and the gross profit margin was even lower than that of ZTO.
The data shows that in the first half of 2021, SF's gross profit margin has approached the lower level of Yunda and Yuantong, and the gap between the gross profit margin and Zhongtong in the whole year has been enlarged.
The problem is that although SF's single ticket income is much higher than that of the Tongda department, the huge team of franchisees in the Tongda department can share and digest the price reduction pressure during the price war, of course, this pressure transmission may also lead to the overburden of the franchised express outlets, and eventually there will be an extreme situation of express backlog and courier strike.
As a courier company that installs the whole link in the listed entity, SF has higher requirements for it from supervision to society, and it needs to digest the cost of the whole chain under the price war, so the impact of the price reduction on the final profit is also more obvious.
The direct embodiment is that SF's gross profit margin fell by nearly 9 percentage points to 7.16% in the first quarter of 2021, while the gross profit margin of Tongda Department only decreased by 1-4 percentage points in the same period.
On this basis, the first quarter of 2021 caught up with the peak period of SF's asset investment, and the high depreciation brought by the new assets eroded the net profit, which eventually led to a large loss in the first quarter.
From another point of view, SF originally hoped to bring more performance increments through the development of economic parts business, but there is actually a boundary between the new and old businesses, once the boundary is exceeded, the economic parts occupy too much of the capacity of the time-sensitive parts, and the low income is difficult to cover the high cost of the original time-sensitive parts, at this time there will be a situation where the income is not increased, and even the loss is lost.
For the Tongda system, which has long earned a few cents of gross profit per ticket, it naturally has a more mature control over the price reduction range, and for SF, which has not long entered the economic parts field and its business volume is in a stage of substantial growth, it is likely that it has touched that boundary in this round of price reduction.
In the 2021 semi-annual report, SF once described the "special offer" (one of the economic parts categories) priced at 4-5 yuan, "In the future, corresponding segment control will be done in the peak resource investment to ensure that the corresponding resource and cost inputs are more compatible with product positioning and improve product yields." ”
In addition, SF has also begun to adopt a franchise model similar to the Tongda system, opened up an independent brand "Fengwang Express" that benchmarks the sinking market, built a franchisee network at both ends of the collection and dispatch, and only used the financing advantages of SF Network in the transit and transportation links, and the price was set at less than 3 yuan.
SF, which has realized the problem, is making adjustments, but judging from the full-year results, this adjustment will take time.
03 Industry involution intensified
Another way of thinking, since joining the price war means sacrificing gross profits and walking on the edge of losses, why doesn't SF simply "watch the fire from the other side" and maintain its "high-end" tone?
To some extent, this is actually an inevitable result of the industry trend. Because the courier companies have long ceased to be in a state of "each side and nothing to do".
Once upon a time, SF gave the impression of "fast" and "good service"; Jingdong Logistics was only deeply bound to Jingdong Mall; "Tongda System" jointly occupied a larger share of the express delivery market with lower prices and slower timeliness.
At that time, everyone's "personality" was more distinct.
But unconsciously, the express delivery companies have long begun the horizontal and vertical layout - Yuantong acquired Xianda International and developed international logistics; Ali joined hands with Tee Yida to invest in Cainiao Station in 2019 to make up for the shortcomings of the last kilometer; Yunda became the second largest shareholder of Debon in 2021, trying to improve the transportation capacity of large pieces; in the same year, Jitu acquired Best Express with huge funds after disrupting the Chinese express market, standing firm in the domestic share; Jingdong Logistics, which completed the independent listing, is to acquire the controlling stakes of Leapfrog Express and Debon Express , to make up for the shortcomings of express transportation business and cross-border logistics business.
Spending money, mergers and acquisitions, and making up for shortcomings has become a major trend, and each express delivery company is using its own strong capital accumulation to strengthen its strength and reshape the industry pattern.
Among them, JD Logistics, which is also mainly self-operated and characterized by "fast" and "home delivery", and SF are "chess opponents" on more and more tracks.
Judging from the annual report data, in 2021, the revenue of JD Logistics from external customers accounted for more than 50% of its total revenue for the first time, providing To B supply chain services for Volvo, Xiaomi Youpin, Chivas and other enterprises, and the unit price of customers can reach 341,400 yuan, showing the strength of "holding the thigh". The same-city distribution business of its Dada Group is also growing, with revenue of 6.866 billion yuan in 2021, but it is still in a state of loss.
In addition to the horizontal expansion of the Tongda system, including international logistics, large logistics (express) and other businesses, it is also "upward" compatible, launching faster and more premium time-sensitive products.
In the face of this "chaotic fight" industry situation, it is not difficult to understand the reasons for SF's involvement in economic parts.
Since the rapid development of e-commerce, the corresponding e-commerce parts have gradually become the main driving force for the growth of the express delivery industry, and most of the nutrients that have grown in recent years by the Tongda System and Jitu Express come from here.
At the same time, sf, which started with time-sensitive parts, has a large part of its business from various documents and materials of corporate customers, and has occupied a high share in the field of high-premium time-sensitive parts. With the popularity of electronic invoices, electronic contracts, electronic financial vouchers, etc., "paperless" is a major trend, and SF's original customer demand for such customers will inevitably shrink.
Even if we rely on the aging parts of some high-end industrial products and consumer goods to make up for the lack of income in this part, it is obviously more difficult to achieve the sustained high growth of time-sensitive parts.
From 2016 to 2021, the revenue growth rate of SF's domestic aging products showed a downward trend, from 15.77% to 7.3%, but the year-on-year growth rate of economic parts rose from 22.58% in 2017 to 54.66% in 2021, and the growth potential is obvious.
Especially in 2020 and 2021, SF relies on the rapid growth in the field of economic parts, and its market share is 2 percentage points higher than that of 2019, reaching 9.72% - in the three years before that, SF's market share hovered between 7.5% and 7.7%.
If the growth rate is in 2021, then by 2024, the income brought by SF's economic parts is likely to be the same as that of time-sensitive parts, and SF's share in the entire express delivery market will naturally go to a new level.
Therefore, while expanding diversified businesses through mergers and acquisitions and making up for shortcomings, SF is "downward compatible" to develop more low-priced e-commerce parts business and join the reshaping team of the entire industry.
Only from the perspective of financial report data, SF hopes to have more room for growth, at the cost of a significant reduction in gross profit margins in the short term, an increase in capital pressure, and a risk of loss caused by improper segmentation of transportation capacity.
At the end of September 2021, SF's asset-liability ratio once reached a new high since its listing - 63.84%, and in the fourth quarter, it improved its capital structure through private placements, alleviated capital pressure, and returned to the level of 54.05%.
For consumers, SF's changes provide more choices, and there may be more e-commerce parts to join the arms of SF in the future, but for investors, in the huge e-commerce market, SF is facing more uncertainty, and it also needs more refined management and more cautious price reduction methods.
From the high point of 571.549 billion yuan, SF's current market value has fallen by 57.94%, and the capital market has not left SF room for a second mistake.
(Author 丨 Lin Xiahuai, Editor 丨 Liu Xiaoying)