text | Shao Lanjie Ma Weibing Liu Xueer
Edit | Chen Fang
htmlOn April 9, the topic of SF Express hit the limit has been on the hot search list on Weibo. The reason is that , SF Holdings, had a market value of more than 300 million yuan on the opening day, hitting the daily limit, falling 8.08 yuan per share to 72.72 yuan, and the total market value evaporated by 36.8 billion yuan. 165,200 SF stock investors were in a rage and commented, "unbelievable", "what happened to SF Express", and "want to know the reason". The cause of the
incident has to start with the announcement released by SF Holdings the night before. It is expected to lose 907 million to 1.1 billion yuan in the first quarter, while the profit in the same period last year was 907 million yuan. An investor sighed that SF Express made money in the same period last year, but now it is losing money, which is almost 2 billion yuan. As soon as the announcement of
was released, the first impression that SF Express had burst. AI Finance and Economics noticed that this is the first time SF Express has suffered a loss in history. In the past 15 years, with its fast direct delivery service, SF Express has always been the company with the strongest profitability in the express delivery industry. It has firmly been sitting in the altar, making its peers far beyond the reach. The 2020 annual report submitted by SF Express more than 20 days ago showed that the net profit attributable to shareholders of listed companies was as high as 7.326 billion yuan.
Why did SF Express, which has been making money, suddenly lose money? Is the loss long-term or temporary? What does SF Express’s losses mean to the express delivery industry?
SF Express burst, losing for the first time
"How many limit down this value?"
On the evening of April 8, SF Holdings threw out a report card that surprised everyone. It is expected to lose 907 million to 1.1 billion yuan in the first quarter of 2021. This is the first time that SF Express has suffered a loss since its listing, which shocked investors. After all, the situation in the same period last year was a profit of 907 million yuan. After seeing the announcement, some investors placed orders overnight, hoping to successfully escape after dawn.
picture/Visual China
He is destined to be disappointed. Because, on April 9, SF Holdings hit the limit, and the blue-chip stock with a market value of more than 300 billion yuan burst, causing 165,200 SF stock investors to explode and even became a hot search. SF Express’s limit downward hit also dragged down the A-share express stocks across the board, with the decline of Yuantong Express , Yunda and Debang Shares falling by more than 3%, Pulutong fell by more than 2%, Shentong Express falling by more than 1%; Hong Kong stock ZTO Express also fell by more than 1%.
"I've been silent on this data." An investor said that he had already expected SF Express's poor performance in the first quarter. He thought it was just a decline in revenue and profit growth, but he didn't expect to lose 1 billion directly. "This script has made a brain-breaking idea."
SF Express is known as "Moutai in the express delivery industry". Its money-making ability is completely better than SeTongYida . Just over 20 days ago, it still maintains its position as a leading brother. In 2020, SF Express delivered 8.1 billion express delivery in a year, bringing revenue of 153.9 billion yuan, an increase of nearly 40% year-on-year, far higher than the industry's 17.3% growth rate, and earned 7.3 billion yuan, ranking first in the industry.
But unexpectedly, the style changed after more than half a month, and thunder fell from the sky, from big profits to huge losses. Some investors even speculated that SF Express's stock price has been weak recently, and the limit down on April 9 may just be the beginning, and they judged that SF Express still has at least 5 limit downs.
In fact, SF Express's stock price has been falling all the way over the past month. Since it reached its highest peak of 124.7 yuan on February 18, setting the best record since its listing, SF Express's situation has turned sharply, and its stock price has fallen continuously. The closing price on April 9 fell by as much as 71.48% compared with the highest point, and the total market value evaporated by 236.8 billion yuan and shrunk to 331.344 billion yuan.
Perhaps the market had predicted it, and the big brother SF Express could not bear it anymore. On the evening of March 17, SF Express disclosed its 2020 financial report. Although the figures were good, after the opening the next day, SF Holdings opened high and closed low, and fell 5% during the session, closing at 91.7 yuan per share, down 2.37%.
The reason is that the figures in the fourth quarter of 2020 may reveal some information.According to financial report data, SF Express's net profit growth rate in the fourth quarter was only 16%, which slowed significantly compared with the growth of more than 50% in the first two quarters. This trend extends to the first quarter of 2021 and further dives.
This shows that although it is the "express delivery industry Moutai", SF Express's life is not as restless as Moutai. In the highly competitive express delivery market, due to the lack of a moat, SF Express needs to continue to fight with you guys in the industry to grab territory. Therefore, SF Express cannot show any fatigue along the way, otherwise it will be quickly scrambled to share food by Sitong and Yida.
In 2017, SF Express went public through a backdoor listing and was regarded as the number one express delivery company, but it began to show its timidity the following year. In 2018, SF Express experienced its net profit decline for the first time. That year, SF Express achieved operating income of 90.943 billion yuan, a year-on-year increase of 27.6%; but its net profit after deducting non-recurring gains and losses was only 3.484 billion yuan, a year-on-year decrease of 5.92%, and its debt-to-asset ratio also rose slightly, from 46.23% at the end of 2017 to 48.45% at the end of 2018.
According to statistics, shareholders such as Shunda Fengrun, Yuanhe Shunfeng, and Jiaqiang Shunfeng reduced their holdings by about 60.5053 million shares in 2018 and cashed out about 2.7 billion yuan. Performance factors combined with major shareholders’ cash out, the stock price of SF Holdings fell by 34.69% in the whole year of 2018.
By the first half of 2019, SF Express Express volume growth rate was 8.54%, significantly lower than the industry average growth rate, and its core business timeliness piece revenue increased by only 4.02%. However, SF Express experienced a wave of low first and high last market in 2019, and its business accelerated significantly in the second half of the year. One major reason is that SF Express launched a new "special special distribution" product for the e-commerce market and customers in 2019, and at the same time, it won Vipshop's parcel delivery business.
entered the e-commerce parcel market, which is inevitable to lower the single ticket revenue and affect profits. SF Express's overall gross profit margin in 2019 fell slightly by 0.5 percentage points compared with the previous year, at 17.42%. But SF Express will definitely not give up this market, but will continue to increase resource investment. The only hope is to reduce costs.
SF Holdings Secretary Gan Ling revealed last year that the price of SF special packages is between 5 yuan and 8 yuan. The previous cost of special packages exceeded 10 yuan. The cost in 2019 has dropped to less than 10 yuan, but it is still far from the unit price of 5 yuan to customers. The goal in 2020 is to hope that the cost can be reduced by 50%.
e-commerce files were originally the starting field of Sitong and Yida. After SF Express entered, its advantages were not obvious. In February 2021, SF Express's logistics business volume was 699 million tickets, an increase of 47.16% year-on-year. However, competitors are growing faster. According to the express delivery business data in February 2021, the order volume of Yunda Co., Ltd., Shentong and YTO have increased by more than 100% compared with last year.
Although SF Express wants to start the volume with special discounted items, it is difficult to make money. Especially when the price war of Sitong and Yida Express is in full swing, another Jiraoke emerges, deeply involved in a price war. Only by facing the battle can you defend the market. It is almost a fantasy to reduce costs at this time.
made an error while busy. If you don’t make ends meet,
Why did SF Express, which has been making money, suddenly lose money?
In the announcement, SF Express took the initiative to explain the reasons and gave five factors. First, in order to expand market share, it is necessary to continue to increase the expansion of new businesses, and investment growth will bring cost pressure; second, the epidemic has delayed capital expenditure investment, and SF Express's business volume has grown rapidly, resulting in a capacity bottleneck in multiple operational links; third, the company is integrating its business lines, and there is overlap in resource allocation in the early stage; fourth, it does not close during the Spring Festival, and the subsidies to employees hit a record high; fifth, it has launched express and new standard fast products and special special distribution business volumes have grown rapidly, and e-commerce packages put pressure on gross profit margins.
explanation seems to be very good, but since the specific data has not been disclosed, the outside world has no way to know which business lines SF Express loses more, and it is impossible to know whether SF Express’s losses are strategic. It is just generally believed that SF Express has lost more money.
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Regarding SF Express’s losses in the first quarter, an investment industry insider explained that the core points are two points. First, the production capacity was put into operation in the fourth quarter of last year, and the goods were too small in the first quarter, so it could not grab competitors such as Jitu, resulting in idle production capacity and operating costs, so it was a loss; second, the cost of the Spring Festival is high, especially this year, and the income is less, so it has changed from not making money to losing money.
Express is an industry that emphasizes scale effect. To put it bluntly, what the big brother SF Express has done for so many years is to constantly strengthen its own competitive barriers. Not long ago, SF Express Chairman Wang Wei revealed at the financial report meeting that in the future, customers will not be competitive with a single homogeneous product serving customers. There are many pain points and demands in the customer's supply chain. It is necessary to provide logistics solutions to customers through product combinations, which is the future development trend. Therefore, SF Express has deployed more and more business lines over the years.
A former middle-level SF Express told AI Finance and Economics: "SF Express is indeed willing to invest. For example, SF Express has suffered particularly severe losses and has no hope of making profits in the short term, but SF Express is insisting on investing because it is an important piece in the O2O field and can compete with Meituan, Alibaba and others." However, SF Express, which is known for its business parcels and service quality, has a pain point that there is no business flow, and the development of e-commerce parcels is relatively difficult.
Compared with JD Logistics and Sitongyida, SF Express does not have e-commerce platforms like Alibaba and JD, nor does it have dark horse Jitu backed Pinduoduo . There has been no e-commerce platform bundling for many years. SF Express has insisted on being a third party, and the number of delivery items cannot grow rapidly.
Under pressure, SF Express began to enter the low-end e-commerce market in May 2020, adding a "cold transportation special" service, attracting fruit farmers of different sizes at a price starting from 13 yuan/1kg for the first weight and 2 yuan/kg for a continuous weight. We have invested a lot of manpower and material resources to sink the outlets to the "first mile" of agricultural products, and even entered the mid- and low-end e-commerce market with "special discounts and special distribution".
A person in the express delivery industry believes that SF Express’s entry into the low-end e-commerce parcel market is a forced defensive strategy. Because Santong Yida, Cainiao and JD Logistics are constantly impacting SF Express’s high-end customers, in order to deal with it, SF Express can only attack its least advantageous e-commerce components. "The most significant consequence is to kill 1,000 enemies and hurt 800 themselves."
Compared with the rapid growth of the entire express industry in China, SF Express has been slowing down since the fourth quarter of last year. Based on the performance data previously disclosed by SF Express, it can be found that although SF Express's business maintained growth in the first two months of this year, its single ticket revenue has dropped significantly. In January 2021, single ticket revenue fell by 12.39% year-on-year and 16.93% year-on-year in February.
A courier veteran who has been in the industry for 20 years. Liu Huan, who is now a franchise in Yimi Tieda, told AI Finance and Economics that SF Express may want to follow the SARS period this time and take advantage of the epidemic dividends to achieve another takeoff. In other words, SF Express wants to seize more market share by reducing single ticket revenue.
Anxin Securities stated in the report that the leading e-commerce express delivery shares are differentiated, and burning money to fight a price war is still the primary means to increase share in the short term, and the turning point has not yet appeared. In 2020, the shares of Zhongtong, Yunda, YTO, Shentong and SF Express accounted for 20.4%, 17.02%, 15.18%, 10.58% and 9.8% respectively. Compared with 2019, Shentong's market share fell by 1.02%, while SF Express increased by 2.2%.
The red ocean market will retreat if it does not advance. SF Express has a strong sense of crisis. AI Finance and Economics understand that SF Express and China Post were in a monopoly position in the Spring Festival market in the past. This pattern has been completely broken this year because the competitors are too fierce.
When the main business is threatened, the squeezed SF Express began to find a way out. In addition to business investment, SF Express also had two large capital investments in the first quarter, acquiring Kerry Logistics' international business in its new business, increasing its capital of 409 million yuan to develop its SF Express's SF Express's Site City. But except for the express delivery sector, other express delivery parts, economic parts, cold chain and pharmaceuticals, same-city express delivery, international business, supply chain management and other businesses are all in losses.
"SF Express losses are, on the one hand, the investment of real money, and on the other hand, the price concessions made to seek market share." In addition to the well-known SF Express in the price war in the e-commerce parcel field, Liu Huan found that SF Express Express also once competed for the market at 40% off, and the cost control is not good and it is easy to lose money. What is reflected in the financial data is that SF Express has suffered a rare loss. Industry insiders judged, "SF Express's capital expenditure is still very high, and it is still unknown when it will move towards a positive cycle. It is a high probability event that the stock price will continue to decline this year."
is burning money and the express delivery price war begins again
Due to the overall concentration of my country's logistics industry and the homogeneity of competition, the logistics industry has always been stuck in inefficient competition such as price wars. Under the siege of Tongda Group, JD Logistics and Jitu, the express delivery boss SF Express is also in a dilemma.
After failing to try multiple businesses, SF Express had no choice but to enter the Tongda Department territory and grab business. In November 2013, SF Express launched the "e-commerce special offer" service for the first time, with an average price of around 15 yuan, which is nearly 40%-50% cheaper than standard express delivery. It also once won brand companies such as Uniqlo, , Xiaomi , etc.
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However, due to the high cost of the self-operated model, SF Express's loading rate after taking over e-commerce packages is not high, and its profits are directly affected, so it has to stop business. However, with the launch of Pinduoduo in 2018, Wang Wei once again wanted to acquire new markets with low prices, and took advantage of the trend to launch a special series and once again attack the e-commerce parcel market. At that time, the new business achieved a growth rate of 54% in the first half of the year, but it was still dragged down by the old problem of low profits in the later period.
In May 2019, SF Express launched a "special special distribution" product with higher cost performance, and the average price per ticket was further reduced to 8-10 yuan. Unlike in the past, this time it is mainly aimed at merchants with an average daily shipment of more than 1,000 tickets, and the receipt cost is reduced accordingly, and the effect is immediate. In the second half of 2019, SF Express's monthly business volume grew at 50% year-on-year, and the year-on-year growth rate of business revenue in the economic sector reached 31%.
For SF Express, low prices are a double-edged sword. It can increase business volume in the short term, but it cannot curb the decline in single-ticket revenue. This time, the sharp loss in the first quarter is related to SF Express's new round of low-price strategies.
Just as SF Express repeatedly lowered its prices to attack the sinking market, Jitu from Indonesian , with the number of orders on Pinduoduo backed upward to stir up the market. Within one year of starting the Internet, Jitu has reached a stable daily order volume of 20 million, causing a red ocean of express delivery market to be uneasy. The little brother Jitu seems to be coming in full force. It took the Tongda Department more than ten years to complete this data.
After several battles, SF Express has been defeated and has been in the whirlpool. At the 2020 annual performance briefing, Wang Wei took a different approach and said that SF Express is committed to becoming a data technology service company for independent third-party industry solutions and continues to invest in technology research and development.
Liu Huan also explained that the distribution of express delivery is not like a small piece. Small pieces basically realize automatic scanning, automatic sorting, and automatic bag handling, but the express delivery technology is not yet mature, so automatic assembly line is also needed. "This investment is quite large. I guess SF Express will launch some fully automatic devices."
Whether it is eager to rely on low-price strategies to leverage the new world, or invest in scientific research to enhance its high-end services, SF Express will inevitably spend money to rush. Once SF Express, which has a valuation of hundreds of billions of yuan, once it launches a long-term price war and uses losses to exchange for long-term growth, the entire industry will inevitably cause earth-shaking changes.
Some industry insiders defined SF Express’s loss as a landmark event. The boss personally burned money to grab the market, which was tantamount to a catastrophe for small and medium-sized express delivery companies. They are very likely to be wiped out by the big guys’ artillery fire. Wang Wei admitted that the current express delivery industry is no longer a labor-intensive industry, but a capital-intensive industry. Who can reach the end is the strength of funds.
htmlOn April 8, according to "LatePost" report: Jitu once again completed a financing of US$1.8 billion, with a post-investment valuation of US$7.8 billion. This valuation has exceeded the market value of YTO, STO and Yunda, second only to ZTO, which is listed on the Hong Kong stock market. With Pinduoduo backed by Pinduoduo, he has the advantage of quantity and is not short of money, Jitu has emerged in the express delivery industry.
SF executives said when talking about Jitu at the financial report communication meeting, "No matter how large the scale is, they cannot defend the market. This is a very profound lesson we have seen from our strategic perspective."
SF Express middle-level interpreted SF Express’s losses as “strategic losses” and attributed them to book losses caused by rising seasonal operating costs and large-scale expansionary investments. These investments are all for more market competitiveness in the future. Referring to JD.com, Meituan, etc., in order to grab the market, they all suffered strategic losses for many years. Then, after they occupied a certain market share, they said they would make a profit.
It is also because of this that some experts in the express delivery field are not surprised by SF Express’s performance forecast and believe that it is more in line with expectations. "SF Express's capital expenditure that should have been completed in 2020 has been postponed, and it is also increasing efforts to expand the entire industrial chain. In the future, it will significantly increase the intensity and space of capital expenditure." SF Express is now trying to grasp the market initiative and high ground, and can further enhance more leading advantages in the long run.
Wang Wei emphasized that SF Express and all new business sectors are in the critical stage of expanding network construction and expanding market share, which is a necessary investment for the company to build comprehensive logistics capabilities around a long-term strategy. The company believes that with the expansion of business scale and the enhancement of comprehensive capabilities, it will stand out in market competition in the future.
Although hope is good, due to the loss of performance, Wang Wei apologized at the shareholders' meeting on April 9, saying that due to management negligence, the operation in the first quarter was not done well. He promised: "Similar problems will not occur for the second time."
(At the request of the interviewee, Liu Huan is a pseudonym in the article)
This article is originally produced by AI Finance and Economics Corporation, an account under "Financial World" Weekly. Please do not reprint it on any channel or platform without permission. Violators will be prosecuted.
