Cai Chongxin's first month in office: rookie "flew solo", Ali fired the first shot of the spin-off and listing

Source: Time Weekly Author: Yang Lingling

Alibaba's founder, Jack Ma, once said that rookie was his "last business dream." Now, Tsai's first fire as chairman of Alibaba Group's board is on the rookie.

On September 26, following the night that Alibaba announced its intention to spin off Cainiao's listing, information on the website of the Hong Kong Stock Exchange showed that Cainiao had officially submitted a listing application to the Hong Kong Stock Exchange, becoming the first business group to officially enter the IPO process after Alibaba's "1+6+N".

On September 10, Teachers' Day, Tsai Chongxin officially assumed the role of chairman of Alibaba Group's board of directors, and he has not been seen in public for half a month since he took office.

At this point, Cainiao may become the first independent listed subsidiary after Alibaba's spin-off. On September 26, the Times reporter consulted Cainiao related people on the details of the listing, but did not receive a specific reply as of press time.

Cainiao went public, and Ali benefited

Through the listing application materials, the outside world can peek into the background of this logistics unicorn that grows under Ali's "big tree".

The data shows that from fiscal 2021 to fiscal 2023 (the year ended March 31), Cainiao achieved revenue of 52.733 billion yuan, 66.867 billion yuan and 77.800 billion yuan, respectively, and recorded net losses of 2.015 billion yuan, 2.286 billion yuan and 2.801 billion yuan in the same period, and gross profit margins of 10.5%, 10.7% and 10.5% respectively.

Source: Screenshot of listing application materials

In the first quarter of fiscal 2024 (the three months ended June 30), which was also the first quarter after Cainiao announced the spin-off, Cainiao achieved revenue of 23.164 billion yuan, a year-on-year increase of 34%; Adjusted EBITA was $877 million, compared to a loss of $185 million in the same period last year compared to a loss of $319 million in the previous quarter. That is, the rookie turned a profit.

"Although our external customers include merchants and brands that transact on Alibaba's e-commerce platform, we do not rely on Alibaba to acquire merchants or brands as customers." In the listing application materials, Cainiao tried to emphasize its operational independence, but after independence, Cainiao still maintained a close relationship with Alibaba.

According to the listing application materials, the board of directors of Cainiao Company consists of 8 directors, including 2 executive directors, 3 non-executive directors and 3 independent non-executive Directors. Among them, Cai Chongxin serves as the chairman of the board, and other members include Dai Shan, Jiang Fan, Wan Lin and other Alibaba executives.

According to the listing application materials, Cainiao has granted share options totaling 1.923 billion shares to 10,774 employees under the equity incentive plan, including 2 directors, 1 member of senior management, 4 other related persons of the Company and 10,767 other employees, consultants and suppliers of the Group and Alibaba and its affiliates.

At the same time, the listing application materials disclosed that Ali currently holds 69.54% of Cainiao's shares, and after the spin-off, Ali will continue to hold more than 50% of Cainiao's shares, and Cainiao will remain a subsidiary of Alibaba.

Source: Cainiao official website

At present, Cainiao provides several logistics services to Alibaba, such as AliExpress and the delivery of Alibaba's direct business Tmall Supermarket. In addition, Cainiao also generates revenue from merchants on Alibaba's different e-commerce platforms and consumers within Alibaba's ecosystem.

From FY2021 to FY2023 and the first quarter of FY2024, Cainiao's revenue from its top five customers accounted for 34.4%, 34.8%, 32.3% and 34.4% of its total revenue for each period, respectively, and revenue from its largest customer, Alibaba, accounted for 29.2%, 30.8%, 28.2% and 29.7% of its total revenue for each period, respectively.

"Cainiao is listed, the biggest beneficiary is still Ali, Cainiao is a relatively heavy asset in the Ali system, which can have a better valuation and a more focused business. Cainiao has heavy assets, but it is not without growth, Ele.me is merged into Cainiao, and Cainiao may integrate instant delivery and local business in the future, and its business may be able to benchmark against Meituan. Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, said.

At the same time, Pan and Lin pointed out that the logistics express industry has entered a mature stage, and the market expansion space is very limited, although Cainiao is a platform enterprise, it has certain asset-heavy characteristics, business expansion, market competition need to invest a lot of money to continue.

According to the listing application materials, Cainiao intends to raise funds through the listing to further develop international and domestic logistics service capabilities and networks, research and development and technological innovation, as well as for working capital and other general corporate purposes.

Logistics are treacherous

At the turn of spring and summer 2013, Alibaba joined forces with express delivery companies such as SF, CTG, Shentong, Yunda, and large group enterprises such as Yintai, Fosun and Fuchun to form Cainiao Network.

Different from other logistics express companies, Cainiao was positioned as an Internet technology company at the beginning of its establishment, and its goal was only to open up the logistics backbone network and capillaries, build a logistics network in all directions, and change the efficiency and cost of the logistics express industry to cope with the rapid growth of express parcel volume.

At that time, Cainiao planned to enter the market with the first phase of 100 billion yuan, and in 5~8 years, build an open and social logistics infrastructure throughout the country, and weave an intelligent backbone network that can support an average of 30 billion yuan per day and an annual online retail sales of about 10 trillion yuan.

In the past 10 years, Cainiao has progressed step by step according to the original goal, not only building a fast and convenient Skynet (online data platform) and a crisscrossing national ground network (offline warehousing and logistics center), personally doing logistics express distribution services, but also expanding its territory overseas, becoming more and more "heavy".

Within Alibaba, the status of rookies is also increasing day by day. Its revenue contribution to the group's total revenue increased from 2% in fiscal 2018 to 6% in fiscal 2023, with a compound annual growth rate of more than 60%, while the compound annual growth rate of SF and JD Logistics in the same period was about 30%.

In the past quarter, after offsetting the impact of cross-segment transactions, Cainiao's revenue increased by 18% year-on-year to 13.619 billion yuan, accounting for 7% of total revenue, maintaining steady growth.

This gives rookies the confidence to "fly solo". But the test for rookies is not small. Looking at the entire market, there are more than just rookie logistics companies that want to seek IPOs.

Source: Figureworm Creative

On June 16, J&T Express officially submitted listing application materials to the Hong Kong Stock Exchange, planning to raise 5-1 billion US dollars, which is expected to be listed within the year at the earliest.

SF, which has been rumored to be going to Hong Kong for secondary listing, also submitted its listing application materials on August 21. If the listing in Hong Kong is successful, SF will become the first "A+H" listed company in the express delivery industry.

At present, the three express delivery companies of Cainiao, Jitu and SF are expected to gather on the Hong Kong Stock Exchange. Industry insiders believe that the competitive landscape of the express delivery industry is undergoing some subtle changes. With the start of the price war and the continuous integration of the industry, the competition pattern of "three links and one delivery" + SF + JD logistics is slowly being broken. In the new round of fighting, all parties need financial support.

Throughout the express delivery industry, various companies continue to hone their internal skills in timeliness and "home delivery" services. SF, JD.com, and Cainiao continue to increase half-day delivery and same-day delivery, and "door-to-door delivery" has also become an important means to compete in service quality.

According to Zhang Xiaorong, president of Deepin Science and Technology Research Institute, for Cainiao, on the one hand, it is necessary to jump out of the Ali department and accept a wider range of markets and merchants to expand business scale and market share; On the other hand, it needs to continuously improve the quality and efficiency of its services to meet the needs and expectations of its customers. In addition, Cainiao also needs to respond to industry competition and market changes to maintain technological innovation and competitiveness.