The main target groups of the express ecosystem: (investors, private equity funds, brokerage institutions, local government decision-makers, express regulatory departments, express delivery operators, media practitioners, express upstream and downstream operators, franchise network owners, express logistics practitioners with an annual salary of more than 300,000 yuan)
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| Express Ecosystem Information Group
On April 23, Moody's, an international rating agency, affirmed the "A3" issuer rating of S.F. Holding Co., Ltd. ("SF Holdings"002352.SZ) and the "A3" of the bonds guaranteed by SF Holding Investment Limited and issued by SF Holding Investment Limited and SF Holding Investment 2021 Limited as supporting senior unsecured ratings.
Moody's maintains a stable outlook for all ratings.
Shawn Xiong, Vice President and Senior Analyst at Moody's, said: "The Rating Confirmation and Stable Outlook reflect Moody's expectation that SF Holding will continue to maintain its leading market position, improve its business diversification and solid credit profile, stabilize operating profitability and maintain debt leverage below 2.5x. ”
"The rating action also takes into account SF Holdings' aggressive cost optimization practices, disciplined capital expenditures and balanced use of financing channels, which mitigate the impact of slowing economic growth and an increasingly complex operating environment for its supply chain and international business units. Xiong added.
Rating justification
SF Holdings' "A3" rating reflects the company's (1) leading position in China's express delivery market, especially in the high-end segment; (2) its own business model with a flexible cost structure; and (3) consolidation and expansion of service capabilities, which will create revenue opportunities.
These advantages are offset by (1) the risks posed by intense competition in China's fragmented express delivery market, especially in the face of slowing economic growth; and (2) the Company's ongoing investments required to grow its business and maintain its leading position in the market. The rating also takes into account the volatility of the company's supply chain and international business units, mainly due to the normalization of international freight rates from cyclical peaks between 2021-2022.
SF Holding has strengthened its business profile by integrating Kerry Logistics Network Limited with its more diversified services, improving network efficiency and expanding its international footprint. After achieving record revenue growth in 2021 and 2022, its Supply Chain and International business unit saw a 31.7% decline in revenue in 2023 due to a significant decline in international freight and volume. Nonetheless, revenue in this segment has recovered in the first three months of 2024 compared to the same period, and Moody's expects revenue to grow modestly by about 5% in 2024.
Driven by revenue growth in most other business segments, SF Holdings' total revenue decline in 2023 was much more modest at 3.4%. Notably, the company achieved 9.2% revenue growth in its largest, higher-quality limited-time delivery division.
Moody's expects SF's revenue to grow by about 5%-7% over the next 12 months, driven by modest growth in the domestic business and a modest recovery in the supply chain and international business units.
In terms of operating margin, its profitability will be broadly stable at around 3.8%-3.9% over the next 12 months. The company will continue to improve its operations and cost efficiencies amid slower revenue growth.
As a result, SF Holdings' financial leverage, as measured by Moody's adjusted debt-to-EBITDA ratio, will remain below 2.5x over the next 12-18 months, driven by moderate revenue growth, stable operating margins, and positive free cash flow generation, which will reduce the need for debt.
SF Holdings' liquidity is very good. As of the end of December 2023, the Company had cash and cash-like resources totaling RMB49 billion, covering approximately RMB27 billion of short-term debt. The company is also likely to generate positive free cash flow over the next 12-18 months.
Factors that may lead to an upgrade or downgrade of a rating
Moody's may upgrade SF Holdings' rating provided that the company (1) maintains its leading position and strong revenue growth, (2) continues to increase product diversification and geographic expansion while significantly improving profitability and leverage, and (3) limits excessive shareholder dividends.
Specifically, Moody's may upgrade its rating if (1) the company's consolidated operating margin continues to improve to 7%-9%, (2) the adjusted debt/EBITDA ratio continues to decline below 2.0x, and (3) the company continues to generate solid free cash flow.
On the other hand, Moody's may downgrade SF if it is unable to maintain a strong market and financial position due to declining revenues and/or profitability due to increased competition, or if it makes large-scale debt-financed acquisitions or over-allocates to its parent company.
Specifically, Moody's may downgrade if the company's (1) operating margin continues to fall below 2.5%-3.0%, (2) cash flow generation continues to weaken, or (3) the adjusted debt/EBITDA ratio continues to approach 3.0-3.5x.
S.F. Holding Co., Ltd. provides diversified and integrated logistics services in China. The company was established in 1993 and is headquartered in Shenzhen. SF Holdings' business covers express delivery services (including limited time guaranteed express delivery services and general express delivery services), heavy cargo transportation, cold chain and international services. In 2017, SF Holding completed a backdoor listing and listed on the Shenzhen Stock Exchange.
Express ecosystem
It has been settled on the following platforms
Snowball | Straight flush | Oriental Fortune | Futu |
Weibo | Today's headlines | Zhihu | Penguin
Tik Tok | Xiaohongshu|Kuaishou|Video number|Himalayas
Twitter|ins|YouTube|Station B
Recently, the stock market continues to fluctuate, some criminals illegally make profits, harming the legitimate rights and interests of investors, I will increase the supervision of trading behavior, enrich the means of clue screening, make overall arrangements for special verification, strengthen the "penetrating" transaction monitoring, use multi-dimensional technical means to collect market intelligence, and carry out joint research and judgment with the Ministry of Public Security, and find a number of cases suspected of manipulating the market and malicious shorting.
An illegal gang controlled more than 100 securities accounts to manipulate a certain stock, used continuous pulling, reverse trading and other methods to affect the stock price, and then waited for the opportunity to clear the stock and smash the shipment, resulting in a flash crash and continuous decline in the price of individual stocks, with a total of 2.7 billion yuan sold and an illegal profit of about 130 million yuan.
The actual controller of an investment institution manipulated the prices of more than 20 stocks by suppressing stock prices, absorbing chips at a low level, and continuously pulling up, resulting in rapid fluctuations in the prices of individual stocks, and even extreme markets such as "sky flooring" within a day, from which the transaction illegally profited 140 million yuan.
A certain lawbreaker took advantage of his capital advantage and used hundreds of millions of yuan to frequently make false declarations for many futures products on the futures exchange, creating a false impression of trading, deceiving other investors, and taking the opportunity to sell them for a profit of more than 4,000 yuan.
The China Securities Regulatory Commission (CSRC) insists on responding quickly and resolutely investigating and dealing with illegal acts that affect the stable operation of the stock market and harm the legitimate rights and interests of investors.
Manipulating the market to maliciously short-sell, seriously eroding the people's "money bags", has stood on the opposite side of all stockholders, disrupting the normal rhythm of the healthy and stable operation of the stock market. The China Securities Regulatory Commission will maintain a high-pressure posture of "zero tolerance", resolutely crack down, and let those who dare to illegally manipulate and maliciously short sellers "go bankrupt and sit in prison". In this warning, don't defy the law and take the chestnut from the fire.
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The main target groups of the express ecosystem: (investors, private equity funds, brokerage institutions, local government decision-makers, express supervision departments, express logistics operators, media practitioners, express logistics upstream and downstream operators, franchise network owners, express logistics practitioners with an annual salary of more than 300,000 yuan.
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