The "Jitu 1.18 billion acquisition of Fengwang" has attracted attention in the industry for several days. On social networks, a number of Fengwang Express franchisees posted asking the headquarters for compensation, "I chose to join Fengwang because I fancy SF's brand premium, but now it was thrown out overnight, and the investment of hundreds of thousands and millions of vehicles and factories in the early stage was lost overnight." ”
The Nandu reporter recently learned from people close to Fengwang Express that Fengwang Express issued an "important notice on the relevant work of franchisees during the transition period" on the intranet, indicating that 100% refund of the franchisee fee, 100% refund of the deposit, and 100% refund of their account balance for the franchisee who voluntarily applied for withdrawal from the network. The notice stated that it will respect the wishes of Fengwang franchisees, take into account corporate responsibilities and cooperation friendship on the basis of legal and contractual requirements, and make appropriate arrangements to ensure orderly implementation and smooth transition.
Fengwang Express will be collected and dispatched normally, and the franchise fee and deposit will be refunded 100%.
On the evening of May 12, SF Holding issued an announcement that it intends to transfer its economic express brand Fengwang Express to Jitu Express for 1.183 billion yuan, and after the completion of the transaction, Fengwang will no longer be included in the consolidated statement scope of SF Holding. SF Holding said that the company's development strategy focuses on three major areas: "network standard products, digital industry supply chain services, and global end-to-end supply chain services". After the completion of this transaction, the company can focus more on the development of core businesses such as domestic high-end express, international express, global supply chain services, and digital supply chain services.
After the news was released, how Fengwang Express maintained its operations during the transition period and where the personnel would go attracted attention. The Nandu reporter learned that after J&T acquired the business of Best Express in China, it was unable to reach a consensus on the agreement on the transition period of the handover because some franchisees could not reach a consensus, resulting in the closure of many terminal outlets and the inability to operate normally. At that time, industry insiders analyzed to Nandu reporters, such franchised express brand acquisition and integration, will encounter problems in the integration of the management team of both sides, the perfection of network integration, the linkage and terminal stability of the outlets, and the appeasement of franchisees.
Youfeng Express franchisees said that the transit yard where they are located has been closed and waiting for further arrangements. According to the internal notice of Fengwang flowing out on the Internet, from May 13 to the transaction delivery date, all delivery of Fengwang will be the responsibility of SF, and Fengwang franchisees can ship according to the original plan to ensure the continuity of service. Nandu reporter consulted the relevant staff of Fengwang Express, the other party said that at present, Fengwang's express mail maintains normal collection and delivery, if there is a delay or suspension, customers can contact customer service staff to follow up.
On May 14, Fengwang issued a notice showing that in order to ensure the stability of the network during the transaction and transition period, Fengwang will promote the transition period in an orderly and efficient manner. On the one hand, for franchisees who are willing to join the relevant parties of the transaction, Fengwang will assist and cooperate with them to carry out relevant work; On the one hand, for Fengwang franchisees who do not choose to join the transaction related parties during the transition period but voluntarily apply to withdraw from the network, Fengwang will also fully respect their wishes, and refund 100% of the joining fee paid to join the Fengwang operation network, 100% refund the deposit paid to join Fengwang, and 100% refund the balance of the recharge account opened at Fengwang headquarters.
In addition, Fengwang introduced the "friendship gold" program in the franchised express delivery industry for the first time. The notice mentioned that based on corporate social responsibility, Fengwang specially formulated the "friendship money" program to thank franchisees for their support and contribution. The specific amount will be based on factors such as the average daily delivery volume of franchisees in the past year, the time of network access, and the agency situation. For those who do not support the work related to the transition period, the "friendship money" will be reduced or cancelled depending on the seriousness of the case.
In terms of personnel placement, Fengwang Express said that considering the employment of the franchisee's grassroots employees, for franchisees who withdrew from Fengwang Network during the transition period in this transaction, if the jobs of their employees cannot continue, for franchisee employees who meet the recruitment standards, Fengwang will coordinate SF to provide corresponding job interview opportunities, and give priority to franchisee employees under the same conditions.
Economic express growth is weak, and will focus on mid-to-high-end and international express
Founded in 2020, "Fengwang Express" is the main body of economic express business operation under SF's franchise model, and forms a dual-brand operation with the direct-operated model "SF Express", which together constitute SF's economic express segment. Among them, "Fengwang Express" mainly serves the sinking e-commerce market that pursues affordability, with more favorable pricing; "SF Express" mainly serves merchants who pursue quality. The two cover the multi-level needs of customers with differentiated service standards and pricing.
SF's financial report shows that in the early stage of 2021, Fengwang Express completed coverage in 12 provinces and 140 cities and 884 franchised sites, and independently put into operation 10 transit sites. In this year, in order to promote the coordination of SF Express, Fengwang Express, SF Express and warehousing networks, reduce repeated investment in resources, improve the operational efficiency of each network, and reduce operating costs, SF implemented the "four-network integration" strategy to provide cost-effective and economical express delivery services with "timeliness determination and stable service".
"The customer group targeted by Fengwang is a relatively high price part of the e-commerce express or economic express network market." "Fengwang must be SF Group's unswerving strategy." In 2021, SF executives emphasized: "SF wants to obtain a full express delivery market including high, medium and low end. After the formation of the Fengwang network, it will form an effective synergy with the group's large network to realize the integration of sales and resources. ”
As a latecomer to the industry's economic express delivery network, during the online investment promotion period, Fengwang franchisees even once shouted out "accessible price, SF service" to attract customers. However, due to the higher price premium provided than its peers, the business volume could not cover the operating costs that promoted the four-network financing, and Fengwang did not achieve the desired benefits. According to the financial report, due to factors such as increasing the pre-investment in new businesses, accelerating the market development of diversified business sectors and investing in network resources, in the first quarter of 2021, SF recorded a net loss of 989 million yuan, down 209.01% year-on-year, and its net profit in the first half of the year fell by nearly 80% year-on-year.
At the investor relations event in August 2021, SF executives frankly said: "The first priority of Fengwang's business strategy in the second half of the year is to strictly control the loss range, and rhythmically increase business volume and reduce transit costs under the premise of providing service quality delivery that is superior to the main e-commerce express products in the market." "(The group) needs direct express network resources to support Fengwang in the short term, and after 1~2 years, Fengwang can feed back to Fengwang and help reduce costs and increase efficiency."
While promoting the "four-network integration" strategy, in sharp contrast to Fengwang Express, SF's international business has been "soaring" - acquiring Kerry Logistics, a listed company on the Hong Kong Stock Exchange, improving the strategic layout of freight forwarding and international business, and moving towards an international integrated logistics service provider. With the consolidation of Kerry Logistics' performance, SF's supply chain and international business are growing at an average triple-digit monthly pace, which is regarded as the "second growth curve of the company", and this business has now contributed more than 30% to SF Holding's total revenue.
Nandu reporters combed and found that in comparison, the proportion of SF economic express business revenue to total revenue has been declining, accounting for 28%, 15.5% and less than 10% in 2020~2022 respectively. The acquisition announcement further disclosed that Fengwang Information, which holds 100% of Fengwang Express, achieved revenue of 3.275 billion yuan, a net loss of 747 million yuan, and total liabilities of nearly 2 billion yuan in 2022. In the first quarter of 2023, Fengwang Information had revenue of 690 million yuan, a net loss of 140 million yuan, and total liabilities of 2.126 billion yuan. This is farther and farther away from the expectation of "Fengwang feeds back to the express network".
SF said frankly in the announcement that in view of the changes in the economic express market environment of the franchise model, Fengwang Information is still in the initial stage of development and continues to lose money, and this sale can eliminate the negative impact of Fengwang Information's loss on SF Holding. It is expected that the equity investment income realized in this transaction will affect the net profit attributable to the consolidated parent of SF Holding by approximately RMB150 million.
Some people believe that through this acquisition, SF's business resources will further focus on high-end express delivery and international express delivery, and its performance will get rid of the negative impact. On the basis of obtaining Best Express China regional outlets, J&T will reintegrate Fengwang's national outlets, including many original franchisees of the "Tongda Series", which may pose a certain challenge to the "Tongda Series" at the end, which is of great significance for the subsequent listing and the expansion of its market share. But at the same time, issues such as the placement of its franchisees and the integration of terminal outlets will continue to face tests.
Written by: Nandu reporter Fu Xiaoling