Interface News Reporter | Pang Yu
S.F. Holdings (002352. SZ) has released its performance report for the first quarter of 2024, with a total operating income of 65.341 billion yuan, a year-on-year increase of 7.03%, and a net profit attributable to the parent company of 1.912 billion yuan, a year-on-year increase of 11.14%.
In the first quarter of this year, SF Holding ended the negative revenue growth, but the revenue growth was still weak, and the year-on-year growth rate of net profit also slowed down compared with the fourth quarter of last year. In 2023, the company achieved operating income of 258.409 billion yuan, a year-on-year decrease of 3.39%, and net profit attributable to the parent company of 8.234 billion yuan, a year-on-year increase of 33.38%.
For the performance growth in the first quarter, SF Holding mentioned two reasons, one is that the company completed the divestiture of the Fengwang business of the franchise model at the end of June 2023, if the Fengwang business is not included, the total volume will increase by 12.96% year-on-year, and the operating income will increase by 8.20% year-on-year, of which the revenue of the express logistics segment will increase by 6.30% year-on-year, and if the Fengwang business is not included, the revenue will increase by 7.87% year-on-year; Second, benefiting from the stabilization of international air and sea freight demand and the year-on-year increase in freight rates, as well as the continuous development of the supply chain and the international market, the revenue of the supply chain and international segment increased by 6.40% year-on-year.
However, this result does not seem to be satisfactory to the market. On April 30, the two institutions lowered their previous profit forecasts, BOC Securities lowered SF Holdings' 2024 net profit attributable to the parent company from 11.170 billion yuan to 10.125 billion yuan, and Huachuang Securities also lowered the 2024 net profit attributable to the parent company from 9.69 billion yuan to 9.32 billion yuan.
On April 30, the share price of SF Holdings fell slightly by 0.47% to close at 36.25 yuan per share, and the stock price has fallen by about 36% in the past year.
Last year's revenue fell for the first time in nearly eight years
In the face of the current competitive landscape of slowing down the overall growth rate of the express delivery industry, SF Holding said in a survey in March this year, "At present, all players need to expand the scale of cargo volume, so that the unit operating cost can reach a better state, and improve profits and benefits as much as possible. ”
However, despite its efforts to consolidate its position as the "first brother of express delivery", SF Holding ended its seven-year positive revenue growth situation last year and made a rare U-turn. In 2023, the company's operating income will be about 258.4 billion yuan, a year-on-year decrease of about 3%. In comparison, the revenue growth rate in the previous three years has maintained about 30%.
On the net profit side, SF Holding achieved a growth of more than 30% last year through refined operation and management. In 2021, the company's net profit plummeted by about 42% year-on-year to 4.3 billion yuan, and in 2022, the net profit rebounded by about 45% to 6.2 billion yuan. Compared with 2020, the revenue in 2023 will increase by more than 100 billion yuan, an increase of about 68%, but the net profit will only increase by 900 million yuan, with a growth rate of only 12%.
SF Holdings' revenue declined last year, which was "dragged back" by the supply chain and international business.
From the perspective of business segments, SF's main business is divided into two major sectors: express logistics business, supply chain and international business.
Among them, supply chain and international business are regarded as new growth points, which mainly include international express delivery, international freight forwarding and agency, and supply chain business. According to SF, "In the international market, the company will take advantage of its local advantages in the Asian market to accelerate the global network layout and build a second growth curve." ”
In 2021, the company acquired Kerry Logistics (00636. HK), the revenue of supply chain and international business rose by leaps and bounds, driving the annual revenue to exceed 200 billion yuan for the first time. At that time, some institutions expected that the consolidated Kerry Logistics would contribute more than 1 billion yuan of net profit to the company every year in the next 2~3 years.
However, the volatility of international capacity prices is full of uncertainty. Since the second half of 2022, the demand and freight rates of international air and sea transportation have dropped sharply from historical highs to the level of 2019, and the scale of the international freight market will decline significantly year-on-year in 2023. As a result, in 2023, the operating income of SF Holdings' supply chain and international business will be RMB59.98 billion, a year-on-year decrease of 31.7%, and the net loss of its supply chain and international segment will be RMB535 million.
SF Holding also stated in its 2023 annual report that "with the development of the company's international business, especially after joining hands with Kerry Logistics, the proportion of international business has expanded rapidly, and the countries covered by the company have increased. International logistics services rely on international trade, subject to the influence of many unpredictable factors such as trade relations, there are many uncertainties in international trade, including large fluctuations in international capacity prices, stability problems in some countries and regions that have carried out business, etc., all of which bring challenges to the company's operations. If the company is unable to take effective measures to respond, it may adversely affect the company's international business development. ”
Since 2024, international freight rates have risen sharply due to the impact of the Red Sea situation. With the recovery of international air and sea freight demand and freight rates, in January ~ March this year, SF Holdings' supply chain and international business revenue increased by 2.00%, 12.72% and 8.91% year-on-year respectively. Prior to this, supply chain and international business revenue had declined year-on-year for 15 consecutive months.
However, the demand and freight rates of international air and sea transportation are difficult to control. The International Air Transport Association (IATA) expects air cargo demand to grow by 4.5% in 2024, while freight pressure is expected to reduce industry revenues. There are also analysts who believe that air cargo demand in 2024 will remain stable, or slightly higher than the level of 2023, but due to the uncertainties in the current market, it is difficult to accurately predict.
While the supply chain and international business are declining, the express logistics business, which accounts for more than 7% of SF Holdings' total revenue, is also growing relatively weakly.
According to the research report of Huachuang Securities, from the first quarter of 2023 to the first quarter of 2024, the year-on-year growth rate of SF Holding's express logistics business revenue was 14.9%, 12.1%, 5.4%, 5.2% and 6.3% respectively, and the year-on-year growth rate of business volume was 18.2%, 11.3%, 0.1%, 2.7% and 3.6% respectively, all showing a slowdown in growth.
After the release of the first quarterly report, Bank of China Securities and Huachuang Securities both released their latest research reports on April 30, lowering their profit expectations for SF Holdings, because considering that "the growth rate of the industry has slowed down, and the international business that the company is currently expanding is in the cultivation and development period", as well as "based on the complex and changeable international situation, the domestic macroeconomic environment is recovering rhythm".
Launched a 2 billion yuan repurchase plan within half a year to boost the stock price
Or due to the lack of "force" performance, in the secondary market, the share price of SF Holdings continued to be sluggish, with a cumulative decline of about 36% in the past year.
Looking at the timeline, the share price of SF Holdings has started a continuous and long downward trend since February 2021, and the latest closing price is 36.25 yuan/share, which is 7% lower than the high point of 123.94 yuan/share in February 2021.
In the face of the downturn in stock prices, SF Holding has launched four rounds of repurchase plans since March 2022. In March 2022, September 2022 and January 2024, the repurchase plan has been completed, with a total of 38,797,100 shares, 20,674,100 shares and 28,240,200 shares repurchased, respectively, with repurchase payments of 2 billion yuan, 1 billion yuan and 1 billion yuan. The purpose of these three rounds of share repurchase has been changed to cancellation and the registered capital has been reduced.
On the night of the release of the first quarterly report on April 29, SF Holding once again launched the second phase of the 2024 repurchase plan, planning to repurchase part of the public shares through centralized bidding in the secondary market with its own funds, with a total repurchase fund of not less than 500 million yuan and no more than 1 billion yuan, and the repurchase price not exceeding 53 yuan per share. The repurchased shares will be used for future employee stock ownership plans or equity incentive plans.
This is also a rare occurrence in the A-share market that listed companies have continuously launched repurchase plans of up to 1 billion yuan in just half a year.
As for the reason for this repurchase, SF Holding said that it is based on its confidence in the future development prospects and high recognition of the company's value, in order to further improve the company's long-term incentive mechanism and fully mobilize the enthusiasm of the company's core backbone and outstanding employees.
At the same time as the repurchase of A-shares, SF Holdings' plan to go public in Hong Kong has also affected the nerves of many investors.
On February 26 this year, it was reported that SF Holdings planned to resubmit an application for listing in Hong Kong, after the company submitted its first listing application to the Hong Kong Stock Exchange in August last year, which expired on February 21 this year due to the validity period of the Hong Kong stock market prospectus for 6 months.
On August 17, 2023, Wang Wei said at SF's 2022 Annual General Meeting of Shareholders that "the listing in Hong Kong is based on the consideration of internationalization, and SF should seize the opportunity in internationalization and expand rapidly through capital." Then, on August 21, 2023, SF Holding officially submitted a Hong Kong stock prospectus, saying that the listing of Hong Kong stocks is "to further promote the internationalization strategy, build an international capital operation platform, enhance the international brand image, and improve comprehensive competitiveness." ”
At present, SF Holding has 4 listed companies. In February 2017, SF Holding completed its backdoor listing on the Shenzhen Stock Exchange. In May 2021, SF REIT (2191. HK) listed under the management of SF REIT Asset Management Limited, which is 100% owned by SF Holdings. In September 2021, a wholly-owned subsidiary of SF Holding completed its investment in Kerry Logistics (0636.HK). HK) 51.5% of the shares, which were subsequently consolidated in the financial statements. In December 2021, SF City (9699. HK) was listed on the Hong Kong Stock Exchange, becoming the first third-party instant delivery platform in Hong Kong.
If it can successfully go public in Hong Kong, SF Holding will become the first "A+H" share listed company in the express delivery industry. Can this plan be realized at a time when revenue growth is slowing?