作者｜Eastland
Header photo: The Wolf of Wall Street
According to the "2023 Annual Report" released by SF Holdings (SZ: 002352) on March 27, 2024: the revenue for the fiscal year was 258.4 billion, a year-on-year decrease of 3.4%; The net profit attributable to the parent company was 8.23 billion, a year-on-year increase of 33.4%.
According to the "First Quarter Report of 2024" released on April 30, 2024: quarterly revenue was 65.43 billion, a year-on-year increase of 7%; The net profit attributable to the parent company was 1.91 billion, a year-on-year increase of 11.1%.
After withdrawing from the price war that swept the entire industry, SF's revenue growth slowed down and profitability recovered year by year, but the trend of future performance is still uncertain.
The "SF premium" was preserved
1) "SF Premium"
In 2014, SF's business volume was 1.61 billion pieces, with an average price of 23.6 yuan per piece. This year, the total business volume of express delivery in the country was 14 billion pieces, with an average price of 14.7 yuan per piece. To sum up: the fee is 60% higher than the average price of the industry (the premium rate is 61.2%), and the market share is more than 10% (the market share is 11.5%).
In the following years, the price of the express delivery industry fell unilaterally, and SF Express did not participate in the "involution". By 2018, SF's average ticket income was 23.1 yuan per piece, with a premium rate of 93.7%, but its market share fell to 7.63%.
In 2019, SF Express prices loosened slightly, but remained at a high level (21.9 yuan/piece), with a premium rate of 85.9% and a market share of 7.61%.
In 2020, SF finally lowered its noble head and began to "exchange price for volume".
However, after the premium rate fell to 64.3% in 2021, SF Express is suspected of giving up "exchanging price for volume", and the revenue of a single ticket rose against the trend. In 2023, the premium rate will return to 75.7%.
SF started with a direct sales model, and the cost is naturally higher than that of the franchise model, and the price is still much higher than the industry average.
SF Express has also tried the franchise model, and the main operating entity is "Fengwang Information Technology". In May 2023, SF Express sold 100% of the equity of Fengwang for 1.183 billion yuan, which means that it will return to the "main channel" of providing high-quality services at high prices.
2) Give up obsessions
In 2023, the national express delivery business volume will reach 132.07 billion pieces, a year-on-year increase of 19.4%; business revenue was 1.2 trillion yuan, a year-on-year increase of 14.3%; The average price is 9.14 yuan/piece (the average price in 2022 is 9.56 yuan/piece).
In the express delivery business: 115.36 billion pieces of non-local express delivery, a year-on-year increase of 20.5%; 13.64 billion pieces of express delivery in the same city, a year-on-year increase of 6.6%; 3.07 billion pieces of international/Hong Kong, Macao and Taiwan express delivery, a year-on-year increase of 52%.
Zhongtong, Yunda, Yuantong, Shentong, J&T, and SF Express (excluding JD Logistics), with a total business volume of 115 billion pieces and a total market share of 87.1%.
Zhongtong, Shentong, Yuantong and J&T have all increased their market share - Zhongtong's business volume exceeded 30 billion pieces, with a market share of 22.9%; YTO's business volume reached 21.2 billion pieces, with a market share of 16.1%; Shentong's business volume was 17.5 billion, with a market share of 13.3%; J&T's business volume was 15.3 billion, with a market share of 11.6%;
The market share of Yunda and SF Express declined - Yunda's business volume was 18.9 billion yuan, with a market share of 14.3%, a loss of 1.6 percentage points, and SF's business volume was 11.9 billion pieces, with a market share of 9%, a loss of 1 percentage point.
If the premium is lost, SF will be lost to everyone; If the market share is too low, the industry position is worrisome.
Although both must be guaranteed, SF Express does not seem to be obsessed with "10% market share".
Profit "out of nothing".
1) "Magical" gross profit margins
Based on 2015, the average ticket income was 23.8 yuan per piece, and the gross profit margin of the express business was 19.9%, earning 4.7 yuan per order.
From 2016 to 2019, the average ticket revenue decreased by no more than 8%, and the gross profit margin decreased by less than 3 percentage points;
In 2020, the average ticket revenue decreased by 25.4% compared with 2015, but the gross profit margin of the express business still reached 16.4%;
In 2023, the average ticket revenue decreased by 32.6% compared to 2015, and the gross profit margin of the express business was 12.7%.
The magic of SF Express is that in 2023, it will earn 7.8 yuan less per order than in 2015, but it will not "send one order and lose one order", but earn 2.1 yuan "out of nothing".
2) The true nature of high-performing stocks has not changed
The blue line represents the gross profit (rate), the colored stacked column represents the expense (rate), and the blue submerges the color to obtain the operating profit.
In 2018, before the price war, SF's gross profit was 16.3 billion yuan, with a gross profit margin of 17.9%; The total expenses of sales, administration and R&D were 11.2 billion, with a total expense rate of 12.1%;
In 2021, amid the price war, gross profit stagnated, and the profit margin fell to 12.2%; The total cost of the three expenses is 20 billion, and the total expense ratio is 9.7%;
In 2022, gross profit returned to growth.
In 2023, it will fall again to 33.1 billion, with a gross profit margin of 12.8%; The total cost of the three expenses was 17.6 billion, with a total expense ratio of 8.9%;
In 2018, SF's gross profit margin was 5.6 percentage points higher than the total expense ratio, in 2021, the gap between the two was only 2.7 percentage points, and in 2023, it widened again to 4 percentage points.
Despite participating in the price war, SF Express has not lost the demeanor of a high-performing stock - the blue color is "high", and it can be claimed that "there is a profit gene flowing in the blood" like Ctrip.
3) Changes in cost structure
Classification of operating costs, sales expenses, management expenses, R&D expenses, etc. by nature, the third place is outsourcing costs (manpower outsourcing, capacity outsourcing), transportation costs and employee compensation.
In 2023, these three types of expenses together accounted for 65.6% of revenue, 10.7 percentage points lower than in 2018.
- Outsourcing is a powerful tool to reduce costs and increase efficiency
In 2018, the outsourcing cost was 40 billion, accounting for 44% of the revenue;
In 2020, the outsourcing cost increased significantly to 81.9 billion, accounting for 53.2% of revenue; Among them, 54.7 billion yuan was outsourced by manpower and 27.2 billion yuan was outsourced by transportation capacity;
In 2021, the outsourcing cost will exceed 100 billion, accounting for 51.9% of revenue; Among them, 71.5 billion yuan of manpower outsourcing and 36 billion yuan of transportation capacity outsourcing;
In 2022, the cost of outsourcing will increase to 116 billion, and the proportion of revenue will drop sharply to 43.4%; Among them, 77.8 billion yuan of manpower outsourcing and 38.2 billion yuan of transportation capacity outsourcing;
In 2023, the outsourcing cost will be 127 billion, accounting for 49.2% of revenue; Among them, 88.6 billion yuan was outsourced by manpower and 38.4 billion yuan was outsourced by transportation capacity;
Nine years ago (2015), SF's outsourcing cost was 7.91 billion, accounting for only 20% of revenue; In 2016, it was successfully backdoor listed, and the proportion of outsourcing costs to revenue jumped to 36.5%; In 2017, the outsourcing cost was 28.3 billion, accounting for 39.8% of the revenue...... By 2023, the cumulative growth will be more than ten times!
If it were not for this, SF would have lost its profitability.
- Employee compensation
In 2017, SF had 136,400 salaried employees, with a total salary of 16.3 billion yuan and an average annual salary of about 120,000 yuan.
In 2020, SF's business volume increased by 167% compared to 2017, but the number of salaried employees decreased by 10.9%. The number of front-line operators dropped from 102,000 in 2017 to 66,000 in 2020, a decrease of 36%.
Compared with 2017, the number of parcels handled by SF Express per capita in 2020 has increased by 3 times! In addition to technological progress and improved management level, SF's annual manpower outsourcing expenditure reached 54.7 billion yuan for the first time in 2020!
By the end of 2023, SF Express had 153,000 salaried employees (87,000 for front-line operations), 31.8 billion yuan in salary expenses, and an average annual salary of about 200,000 yuan.
In 2018, compensation costs accounted for 21.9% of revenue; In 2023, it will fall to 12.3%, a difference of 9.7 percentage points.
SF Express has never adopted labor dispatch as an employment method on a large scale, but has adopted a "more advanced" "manpower outsourcing": the former is a tripartite cooperation between the employer, the dispatcher and the employee; The latter is a cooperation between the employer and the contractor, and the employer has no direct legal relationship with the employee.
- Shipping costs
Transportation costs include land, rail, air, sea and terminal pick-up and delivery costs.
In 2018, SF's transportation cost was RMB9.4 billion, accounting for 10.3% of revenue;
In 2021, SF's transportation costs increased significantly to RMB34.9 billion, accounting for 16.8% of revenue.
In 2022, SF's transportation cost will be 68.6 billion, accounting for 25.7% of revenue;
In 2023, SF's transportation costs will drop to RMB44.6 billion, accounting for 17.5% of revenue;
As of the end of 2023, SF has 100,000 trunk and branch trucks and 100,000 terminal collection and delivery vehicles, handling nearly 12 billion parcels throughout the year.
In 2023, SF's global air shipments will reach 2.1 million tons (including 550,000 tons internationally).
In 2023, SF Express will ship 2.5 million tons by rail and 1.26 million TEUs by sea.
The involution is all-encompassing. In addition to price, it is also necessary to roll up timeliness and customer satisfaction, which are guaranteed by the huge and efficient transportation capacity, and the transportation cost is the most hardcore expenditure of SF, and the money in this area cannot be saved.
There is only one business that makes money steadily
1) Revenue composition
"Logistics and freight forwarding" revenue accounts for nearly 100% of SF's total revenue (97.2% in 2023).
Time-sensitive express delivery is SF's flagship business, providing high-brand door-to-door delivery services with strong timeliness for individuals, enterprises and merchants. In 2023, the revenue of this business will reach 115.5 billion, a year-on-year increase of 9.2%;
Economic express is oriented to e-commerce and provides cost-effective services with quality assurance. E-commerce sellers are highly price-sensitive, and serving such customers is not SF's forte. In 2021, the revenue of economic express delivery will be 25.4 billion, a year-on-year increase of 21.9%; In 2022, the revenue growth rate will drop to 0.5%; In 2023, the revenue of economic express will be 25.05 billion, a year-on-year decrease of 2% (mainly due to the divestment of Fengwang, which adopts the franchise model).
Express/cold transportation is a To B business, providing services such as large-scale distribution, bulk transportation, and fresh/pharmaceutical transportation. In 2023, the revenue of express/cold operations will be 43.4 billion, a year-on-year increase of 18.8%;
The supply chain and international business mainly serve manufacturing enterprises and cross-border e-commerce, with revenue reaching 87.9 billion yuan in 2022, a year-on-year increase of 124%; In 2023, revenue will fall below 60 billion, a year-on-year decrease of 31.7%.
Intra-city Express provides instant delivery services for catering stores, retail/e-commerce merchants, and individuals/enterprises, which has a great intersection with Meituan. In 2023, the revenue will be 7.25 billion, a year-on-year increase of 12.6%.
Although there are many businesses to develop, there is only one business that can make money steadily.
2) Segment performance
In 2023, the total revenue of the express and bulky segment will be 186.8 billion yuan (offsetting inter-segment transactions), the net profit will be 8.45 billion yuan (a year-on-year increase of 54.6%), and the profit margin will be 4.5%;
In 2023, the intra-city express delivery business will lose money for the first time, with a net profit of 50.6 million and a profit margin of 0.7%;
In 2022, the net profit of the express and bulky business reached 1.95 billion, and in 2023, the revenue plummeted, with a net loss of 530 million.
In 2023, the supply chain business will turn from profit to loss, and the same city express will turn losses into profits, and it is impossible to confirm that it can make stable profits.
*The above analysis is for reference only and does not constitute any investment advice
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