Should it be sf Express?
Zhang rice | | new entropy, author, page editing | Iraq after several days of continuous tumbled after the share price was counter-offensive wave motion.At the end of March and the beginning of April, THE stock price of SF Express stopped falling and rose 3.62% and 7.22% respectively on that day. By the end of April 1, the stock price stood at 49 yuan per share.Since the announcement of the first-quarter earnings forecast on April 8 last year, SF Express’s share price has fallen from a high of nearly 124 yuan to a low of 43 yuan in a year, and its market value has evaporated by nearly 100 billion yuan.Apparently, the share price behind the rise, also directly linked to performance — On the evening of March 30, SF Holding released 2021 annual report.Among them, the fourth quarter revenue of 71.33 billion yuan, up 60.7% year on year, mother net profit of 2.47 billion yuan, up 43.0% year on year, deduct non-mother net profit of 1.50 billion yuan, up 46.1% year on year.Overall performance in line with the previous forecast.Only combined with Q4 performance, “go bad” SF finally took a breath, ushered in the moment to stop falling.However, it may be too early to enter.In fact, before the previous explosion, SF Express stock price has started to fall, the logic behind lies in the weak growth of aging parts, years of losses in new business has become a “chronic disease”.It is still necessary to return to the bottom logic of THE whole BUSINESS system of SF Express to discuss whether it is the moment of bottom-fishing at present.From the 2021 annual report, SF Express achieved operating revenue of about 207.187 billion yuan, a year-on-year growth of 34.55%;The net profit of the mother was about 4.269 billion yuan, down 41.73% year on year.Non-deduction net profit was about 1.834 billion yuan, a year-on-year decrease of 70.09%.The above financial data can be fully counted as “increase in revenue and decrease in profit”. Further derivation shows that SF Express has an obvious trend of “price for volume”.Financial reports show that in 2021, SF Express business volume of 10.55 billion votes, year-on-year growth of 29.65%;In contrast, in 2021, THE average income of SF Express ticket was 16.25 yuan/piece, down 8.57% from 17.77 yuan/piece in the previous year.Traditionally, growth in businesses such as economy express, which are less profitable, has been the main culprit for sf express’s decline in single ticket revenue.And so it is.In the financial report, SF Express business is mainly divided into express, express, city, supply chain and international four sectors.In 2021, the revenue of express business of SF Holding was 132.319 billion yuan, contributing more than 60% of the revenue.Among them, the express business includes time-sensitive express and economic express, which are the pillars of the company’s revenue.In terms of revenue, the two accounted for 46.4% and 15.6% of the total revenue, respectively, but the revenue growth of time-delivery showed a declining trend.In 2021, SF Express achieved revenue of 96.16 billion yuan from its express delivery business, up 7.3% year on year.In contrast, SF Express’s economic express business posted revenue of 32.27 billion yuan, up 54.7 percent year on year.As the main position of SF Express, the decline in revenue growth lies in the sinking strategy of SF Express business.Traditionally, SF Express mainly featured in the express business of high-priced business parts and medium and high-end e-commerce parts. Its operation strategy was different from tongda’s low-priced model, but sf Express later adopted a sinking strategy that changed from the previous one. What made SF express have to “stay grounded”?Before the implementation of the sinking strategy, according to the financial data: in 2018, SF Express achieved operating revenue of 90.943 billion yuan, up 27.60% year on year, and the net profit of shareholders of listed companies was 4.556 billion yuan, down 4.57% year on year.In the first half of 2019, the volume of express packages grew by 8.54%, while the revenue of time-sensitive packages in the core business only grew by 4.02%.It can be seen that AT that time, SF Express was also facing the dilemma of “increasing revenues but not profits”, but the focus of the market was that the main business growth of SF Express slowed down and was getting closer to the “ceiling”.In this regard, in order to tell a story to the capital market, SF Express will focus on the sinking market.In October 2013 and May 2016, SF Express made two attempts at e-commerce special items market. In May 2019, SF Express again launched special items targeted at e-commerce market and entered the e-commerce parts market with higher price concessions.Since then, SF Express has carried out a series of strategic changes to start the sinking strategy.In the past, e-commerce is the main battlefield of “Tongda”, with the end of SF express, price war once again become the norm of the express industry.The specific details will not be repeated. In general, although the price war increased the business volume and revenue of all express delivery enterprises, the single ticket revenue declined to varying degrees. The market thought that the price war was coming to an end in the first round of price war, but the price war continued again with the sudden emergence of the Rabbit.This also directly led to an unprecedented loss of nearly 1 billion yuan in the first quarter of 2021 for SF Express, which was mainly self-operated. Fortunately, with the introduction of policies to intervene in vicious competition in the express industry, the price war in the market has been somewhat restrained.Things get interesting this way, and the game seems to be: sinking means scraping through the dirt, not increasing profits;Without sinking, revenue growth slows.The data, to some extent, support this logic.According to the monthly operating data released by SF Express in February 2022, SF Express logistics business achieved revenue of 9.849 billion yuan, down 3.36% year-on-year, and completed business volume of 638 million tickets, down 8.33% year-on-year.This is related to THE fact that SF Express began to adjust the product structure of e-commerce components. Starting from the second half of 2021, SF Holding took the initiative to optimize the product structure and reduce the number of low-margin products.Now, after the first quarter of the thunder, SF Express for economic parts of the attitude is very cautious.It was also evident on the recent earnings call — when asked about structural adjustments for economic components in 2021, “For economic components…We will not give up easily, but we will invest in healthy management.02 When will the new business take off?Although sf Express’s traditional business segments (aging business and economic business) are the core of the group, it also needs to find new profit points, to which it has been expanding new businesses in recent years.Sf Express has explored e-commerce many times before, and Wang Wei has insisted that e-commerce is an opportunity.Since the beginning of 2010, SF Express has never stopped its efforts in e-commerce, from “E Business Circle” for daily necessities, to “Zunlihui” for high-end gifts, and to SF Best, an e-commerce platform for high-end food.In 2014, SF Express launched O2O community store “Heke”, and so on.It can be said that despite repeated failures, SF Express is still looking for opportunities to deploy business.The most recent foray into e-commerce has been in community group-buying, which once sparked a war of capital.At the beginning of 2021, SF Express quietly launched fresh food distribution platform “Fenghuotai”. It was once believed that SF Express would take advantage of the community group buying outlet to enter the e-commerce field again, but wang Wei later denied it in the investor exchange meeting.Overall, after billions of lessons learned, SF Express has not made much progress in e-commerce.Besides e-commerce, SF Express has a wide layout in the field of logistics.According to SF Express’s annual report, from 2018 to 2020, new businesses, including express, cold transportation and medicine, same-city, international and supply chain logistics, increased to 28.24 percent of total revenue from 18.9 percent.The latest financial data for 2021 shows that the overall proportion of SF Express’s new business increased from 28.2% in 2020 to 38% in 2021, an increase of nearly 10%.With the expansion of new business revenue, losses are not small. Sf Express lost 1.158 billion yuan in 2020, while supply chain logistics and same-city business lost 1.064 billion yuan in total.In the latest financial results, the express division lost 582 million yuan, compared with a loss of 908 million yuan a year earlier.The same-city division posted a loss of 899 million yuan, up 19 percent year-on-year.Among them, in 2021, due to the merger of Kerry Logistics, SF Express supply chain and international business revenue reached 39.2 billion yuan, accounting for 18.9% from 8.5%, becoming the third largest revenue source.Consolidated income also directly affected the group’s net profit.Here basically see express, city business.The same-city Express business will be split and listed independently at the end of 2021. Sf Express will remain its controlling shareholder and be included in the consolidated statements of SF Holding.According to the company’s financial report, its total revenue reached 8.174 billion yuan in 2021, up 68.8% year on year.The gross profit turned from negative to positive, reaching 94.8 million yuan, and the gross profit margin reached 1.2%.The net loss was 899 million yuan, up from 758 million yuan last year.So far, same-city distribution still accounts for a low proportion of THE overall revenue of SF Holding, but it is still the sector with the lowest net interest rate among the major businesses of SF Holding, and has dragged down the overall profitability of SF Holding.From 2018 to 2020, SF Express reported a net loss of 330 million yuan, 470 million yuan and 758 million yuan, according to its previous prospectus.The reason is that, as the biggest cost in the instant delivery industry, the human cost that cannot be replaced in a short time cannot be reduced. In addition, the scale effect is difficult to achieve, and the profit becomes out of reach.At present, the expansion of non-food scene is also one of its focus, but in the long run, it needs to pay attention to whether near-field e-commerce can become a new growth point of same-city express delivery business.Look at the field of express, review the development of express industry in recent years, on the one hand, express giants began to set foot in express business.On the other hand, traditional express enterprises accelerate the transformation.On November 11, 2021, Aneng Logistics was listed on the main board of the Hong Kong Stock Exchange and won the title of “The first Stock of Hong Kong Stock Express”.So far, the players on the field are mainly SF express, Deppon, Aneng, and Zhongtong Express, Best Express, One meter Tick.Recently, JD acquired Deppon.Obviously, Jingdong is looking at the deppon express advantage, with the layout of zero load express track.At the present stage, SF Express operation income advantage is more obvious, faint become the leader of express.In the accelerated integration of the industry, the field of express or to compete for market share to usher in a more intense price war.For SF Express, the move may have an impact on sf Express’s future growth and profitability.03 How to return to “Express MAO”?Previously, as a leader in the express delivery industry, SF Express has always maintained good performance and growth, also known as “express MAO” by shareholders, which means that SF Express has the same competitive advantages and growth potential as Maotai.Now, although SF express has stopped falling trend, but with the “express MAO” is far away.After a 2020 annual shareholder meeting, after the quarterly results for future expectations, wang wei said: “companies do not blindly burning money to start new business, but if short-term profit pressure can bring long-term competitiveness and have the opportunity to establish suitable abundant become indispensable choices on the market, is willing to lower the next 1-2 years profit expectations, this is an important strategy.”The reason for SF Express’s loss in the first quarter is, in essence, the dislocation of production cycle and demand cycle, which leads to the disjunction of revenue structure and cost structure.In the context of low profit expectations, SF Express needs solid business results if it wants to regain the confidence of investors and return to the “express industry”.At present, investors are most impressed by internationalization, capacity expansion and cost reduction.Previously, SF Holding announced on September 28, 2021 that its wholly-owned subsidiary had completed the acquisition of 931 million shares of Kerry Logistics, which accounted for approximately 51.5% of the issued share capital of Kerry Logistics.For the acquisition of Kerry Logistics, SF express previously said that the main purpose is to further enhance the company’s integrated integrated logistics solution capabilities, as well as improve the strategic layout of freight forwarding and international business.Kerry Logistics is an international third-party logistics service provider based in Asia. In the first half of 2021, its logistics operation revenue outside mainland China was HK $8.8 billion, accounting for 72% of the total logistics operation revenue, up 4.4% year on year, data showed.According to the report, UPS ‘international business accounted for 19 percent of total revenue in 2020 and FedEx’s international business accounted for 30 percent of total revenue in fiscal 2021.Sf Express’s international business (excluding Kerry Logistics) only accounts for 4 per cent of total revenues, which would give sf express room to grow.Also keep an eye on the domestic market.On February 16 this year, Liang Nan, director of the Department of Transportation of civil Aviation Administration, revealed that the airport project of Ezhou Huahu Airport, aviation fuel project, sf Aviation base of the first phase of the project has been basically completed.As the largest cargo airline in China, SF Express has 66 self-operated freighters and 13 leased freighters in the first half of 2021. Although it has outstanding advantages in China, it still lags far behind international express giants (DHL, UPS and FedEx).Meanwhile, logistics companies such as Yto and JD.com are also expanding their aviation business.Obviously, building your own cargo airport is the only way to grow into an international Courier giant.It is the cost side that deserves the most attention.In the first half of 2021, SF Express proposed the “four-network integration” to strengthen the integration and optimization of resources such as sites and routes in the express network, express network, storage network and franchise network.The so-called “four networks integration” refers to the integration of the four networks, to achieve resource reuse, in order to reduce operating costs.Take the “left and right interaction” between time-sensitive express and economic express mentioned above as an example, “four-network integration” is the way to solve the problem at the cost end.According to industry insiders, it is difficult to reduce the cost of “four networks”, the actual operation process will face resource allocation problems.The above three areas are the key to SF’s return to “express MAO”.However, no matter how good the strategy is, it is also facing the dilemma that knowing is easy to do is difficult. Sf Express needs more time to prove whether it can restore market confidence.Reference materials: Caixin Weekly, SF Holding struggles to Sink the Market, SF Holding 2021 Annual Report Performance Meeting Minutes, Sinolink Securities, SF Holding: Solid Barriers, Broad space for Growth