Summary of SF Express Conference Call Company Overview - **Company**: SF Express (顺丰控股) - **Industry**: Express Delivery and Logistics Key Points and Arguments Business Performance and Strategy - SF Express has significantly increased its express delivery volume by refining its large parcel business, expanding air resources, and establishing a heavy cargo transport team, effectively responding to market changes following JD's acquisition of Debon and Kuaixue [2][3] - The increase in e-commerce return parcels has compensated for the decline in single-ticket revenue from business parcels, with SF Express handling nearly half of the industry's return parcels due to its one-hour pickup capability, creating a differentiated competitive advantage [2][3] - The company has undergone organizational transformation, shifting its headquarters' functions to service-oriented operations, promoting a results-driven approach, and implementing a partner-like model to enhance employee motivation and overall operational efficiency [2][5][7] Cost Control and Management - SF Express has implemented various measures for internal management and cost control, including reducing low-end outlets and focusing on the mid-to-high-end market after a loss of 1 billion yuan in Q1 2021 [5][10] - The company has streamlined its management structure by reducing the number of regions and optimizing back-office functions, leading to significant labor cost savings [9][10] Financial Performance and Projections - Capital expenditures have decreased from 20 billion yuan in 2021 to 9.9 billion yuan in 2024, with a forecast of 9 to 10 billion yuan for 2025, while free cash flow has improved from a negative 3.8 billion yuan in 2021 to 22.3 billion yuan in 2024 [4][12] - Revenue is expected to maintain a double-digit growth rate of around 10% in 2025, with a projected net profit margin increase of 0.2-0.3 percentage points to 3.8%-3.9% [4][14] - The company anticipates net profits of 11.7 billion yuan and 13.6 billion yuan for 2025 and 2026, respectively, both showing a year-on-year growth of 16% [4][14] Competitive Landscape - SF Express has capitalized on the market changes following the acquisition of Debon and Kuaixue by JD, focusing on the growth of its large parcel business and adjusting pricing strategies to enhance market competitiveness [6][14] - The company has expanded its collaboration with SF Same City to improve efficiency in last-mile delivery and urban express products [2][5] Global Expansion and Innovation - SF Express is exploring global expansion by adopting strategies from companies like Jitu in Southeast Asia and South America, utilizing flexible equity incentives to support future international operations [8] - The introduction of unmanned vehicles is expected to significantly reduce costs, with potential savings of 7,000 to 8,000 yuan per vehicle per month compared to traditional vehicles [11] Investment Opportunities - The company’s stock is perceived to be undervalued in the Hong Kong market, with a target market capitalization of 280 billion yuan by the end of the year and a mid-term target of 350 to 400 billion yuan [4][14] Additional Important Information - The company has committed to increasing its dividend payout ratio from 20% in 2022 to 40% in 2024, with a promise of steady increases in the following years [12][13] - The pilot program for easy pickup and drop-off stations in the southwest region has improved courier income stability and customer satisfaction [9]

Group 1: Stock Movements in Hong Kong Market - Youqu Holdings (02177) surged over 24% as it actively expands into the health sector with the launch of the Canadian anti-aging health food brand Vanpearl containing ergothioneine [1] - Longfly Fiber Optics (06869) rose nearly 10% following the commencement of mass production at its advanced Wuhan base, successfully producing its first 6-inch silicon carbide wafer [1] - SF Holding (06936) increased over 5% with a reported 19.1% year-on-year growth in express delivery volume in April 2025, reaching 16.32 billion parcels [1] Group 2: Notable Developments in Other Companies - Alibaba Pictures (01060) gained over 4% after announcing a name change to Damai Entertainment, indicating a focus on offline performances and IP derivatives [2] - Innovent Biologics (01801) rose over 4% after presenting promising results for its innovative drug IBI343 for treating advanced pancreatic cancer at the 2025 ASCO annual meeting [2] - Ideal Auto (02015) saw a rise of over 6% with May deliveries reaching 40,856 units, marking a 16.7% year-on-year increase [4] Group 3: U.S. Market Highlights - Ferguson (FERG.US) increased by 2.9% with Q3 sales of $7.621 billion, a 4.3% year-on-year growth, exceeding market expectations [5] - Credo Technology (CRDO.US) surged over 14% with Q4 revenue of $170.3 million, a 179.7% year-on-year increase [6] - Nvidia (NVDA.US) rose by 2.8% as UBS projected significant revenue from a new AI data center project in Texas [6]

Group 1 - As of June 3, a total of 105 stocks reached their 52-week highs, with Huayin International Holdings (00989), Dingyifeng Holdings (00612), and Youquhui Holdings (02177) leading the high rate at 57.26%, 37.93%, and 23.02% respectively [1] - The closing prices and highest prices for the top three stocks are as follows: Huayin International Holdings at 1.370 and 1.950, Dingyifeng Holdings at 0.770 and 0.800, and Youquhui Holdings at 3.550 and 3.580 [1] - Other notable stocks that reached their 52-week highs include China Antibody-B (03681) with a high rate of 21.62% and Fengcheng Holdings (02295) at 19.52% [1] Group 2 - The report also lists stocks that reached their 52-week lows, with Des Holdings (08437) showing the largest decline at -38.79%, followed by Dimi Life Holdings (01667) at -20.50% [3] - The closing prices and lowest prices for the top three stocks that reached their lows are: Des Holdings at 0.177 and 0.071, Dimi Life Holdings at 0.140 and 0.128, and Lujizhi Technology (01745) at 0.197 and 0.194 [3] - Other stocks with significant declines include GBA Group (00261) at -11.48% and Baide International (02668) at -10.88% [3]

Investment Rating - The investment rating for the company is "Buy" [6][7]. Core Views - The company is a leading global express delivery enterprise, with a double-digit growth in parcel volume since 2025, driving rapid profit growth. The expansion of the product matrix enhances competitiveness, ensuring future development and a focus on shareholder returns [7]. - In Q1 2025, the company achieved a net profit growth of nearly 20% year-on-year, with a total of 4.876 billion parcels delivered, representing a year-on-year increase of 22.36%, outperforming the industry average [7]. - The company is expanding its presence in various supply chain segments, transitioning from sales logistics to integrated logistics solutions, which is expected to translate into increased parcel volume and revenue [7]. Summary by Sections Company Information - The target price for H shares is HKD 48, with the current price at HKD 40.20. The market capitalization is approximately RMB 164.59 billion [1]. - The company has a price-to-book ratio of 2.13 and a net asset value per share of RMB 18.87 [1]. Recent Ratings - The company has consistently received "Buy" ratings in recent evaluations, with the latest rating issued on March 31, 2025 [2]. Product Mix - The product mix consists of 70.4% express and large parcel services, 3.2% local delivery, and 26.0% supply chain and international services [3]. Financial Performance - For 2025, the company is projected to achieve a net profit of RMB 11.93 billion, with a year-on-year growth of 17%. The earnings per share (EPS) is expected to be RMB 2.39 [9]. - The company’s revenue is forecasted to reach RMB 306.1 billion in 2025, with a year-on-year increase of 7.6% [11]. Shareholder Returns - The company has initiated a share buyback program with a total amount of RMB 500 million to RMB 1 billion, indicating a commitment to shareholder returns [7].

Investment Rating - The investment rating for the company is "Buy" [6][2]. Core Insights - The company is a leading global express delivery enterprise, with a significant increase in parcel volume exceeding expectations, driving rapid profit growth. The company is focusing on shareholder returns and has a positive long-term outlook [7][6]. - In Q1 2025, the company achieved a net profit growth of nearly 20%, with a total parcel volume of 4.876 billion, representing a year-over-year increase of 22.36%, outperforming the industry average [7][9]. - The company is expanding its business into various supply chain segments, which is expected to enhance parcel volume and revenue growth [7][9]. Summary by Sections Company Information - The target price for H shares is HKD 48, with the current price at HKD 40.20. The market capitalization is approximately RMB 164.59 billion [1]. - The company has a price-to-book ratio of 2.13 and a net asset value per share of RMB 18.87 [1]. Recent Ratings - The company has consistently received "Buy" ratings in recent evaluations, with the latest rating issued on March 31, 2025 [2]. Product Mix - The company's product mix includes 70.4% from express and large parcel services, 3.2% from same-city delivery, and 26.0% from supply chain and international services [3]. Financial Performance - The company forecasts net profits of RMB 11.927 billion, RMB 13.475 billion, and RMB 15.157 billion for 2025, 2026, and 2027, respectively, with year-over-year growth rates of 17%, 12.97%, and 12.48% [9]. - The earnings per share (EPS) are projected to be RMB 2.39, RMB 2.70, and RMB 3.04 for the same years, with corresponding price-to-earnings (P/E) ratios of 15.70, 13.89, and 12.35 for H shares [9]. Cash Flow and Capital Management - The company is expected to generate a net cash flow from operating activities of RMB 27.513 billion in 2025, with a focus on maintaining shareholder returns through share buybacks [11].

Summary of SF Express Conference Call Company Overview - **Company**: SF Express (顺丰控股) - **Industry**: Logistics and Express Delivery Key Points and Arguments 1. **Operational Adjustments**: SF Express is enhancing customer acquisition and collection efficiency through organizational restructuring and employee incentives, which could lead to revenue growth and profit elasticity if domestic consumption improves [2][4] 2. **Valuation Comparison**: The company's EV/EBITDA is approximately 5x for Hong Kong shares and under 7x for A-shares, compared to 7-8x for international peers like UPS, FedEx, and DHL, indicating potential for valuation recovery with target price increases of 30% for Hong Kong shares and 20% for A-shares [2][5] 3. **Business Transformation**: SF Express is transitioning from traditional express delivery to comprehensive logistics services, with traditional express revenue now accounting for less than half of total revenue, establishing a diversified logistics network [2][6][7] 4. **Market Position**: The company is focusing on the Asian logistics market, which is the largest and fastest-growing globally, while gradually expanding internationally, particularly in express and supply chain services [2][7] 5. **Cost Efficiency**: The use of Ezhou Airport as a central hub is reducing rental costs and the number of distribution centers, improving asset utilization and lowering fixed capital expenditure as a percentage of revenue, thus enhancing gross margins [2][15][16] 6. **Revenue and Profit Growth**: Projected revenue compound annual growth rate (CAGR) is about 8% over the next two years, with net profit CAGR expected to reach 16%, forecasting net profits of 11.7 billion yuan in 2025 and 13.7 billion yuan in 2026 [2][11][17] 7. **Shareholder Returns**: The company is enhancing shareholder returns through regular dividends and share buybacks, which are expected to accelerate revenue growth and act as catalysts for both short-term and long-term performance [3][18] Additional Important Insights 1. **Profitability Fluctuations**: Past profitability fluctuations were primarily due to mismatches between capacity and demand cycles, but improvements in network infrastructure and capital expenditure ratios are enhancing cash flow visibility [4] 2. **Market Dynamics**: The global logistics market is valued at approximately $11 trillion, with Asia accounting for $5 trillion and China for $2.6 trillion, representing about 13-14% of GDP [6][7] 3. **Segment Performance**: Different business segments are expected to show varied growth rates, with express services projected to grow around 9% from 2022 to 2023, and international supply chain services expected to grow over 20% in 2024 [12][13] 4. **Core Competencies**: SF Express's strengths include a direct sales model, comprehensive service capabilities, and a strong independent third-party market position, supported by a large customer base of 700 million users [10] 5. **Future Directions**: The company aims to enhance operational efficiency and resource integration while expanding its international market presence, particularly in Asia, to achieve long-term stable growth [8][14]

Core Viewpoint - S.F. Holding is initiated with an OUTPERFORM rating and target prices of HK$50.37 for H-shares and Rmb51.87 for A-shares, driven by improving logistics network and domestic demand for logistics services [1] Investment Positives - The logistics market in Asia is the largest globally, accounting for 46% in 2023, with S.F. Holding ranking No.1 in various submarkets [1] - The company is expected to leverage its logistics network and diversified product portfolio to reduce logistics costs for clients [1] Operating Efficiency - The capex-to-revenue ratio has decreased from 13.9% in 2021 to 3.8% in 2024, indicating improved operating leverage and capacity utilization [2] - Earnings visibility has improved due to better control over investment pace [2] Revenue Growth Projections - Revenue for express and freight, global supply chain, and intra-city delivery segments is expected to grow at CAGRs of 9%, 3%, and 19% respectively from 2024 to 2026 [3] - Gross margin is projected to rise by an average of 0.4 percentage points per year [3] Market Differentiation - Historical fluctuations in business operations are attributed to mismatches between capacity investment and market demand cycles [4] - The company’s logistics network construction is expected to reduce cyclical fluctuations significantly [4] Financial Forecasts - EPS is forecasted at Rmb2.35 and Rmb2.74 for 2025-2026, indicating a CAGR of 16% [5] - EBITDA is projected at Rmb36.2 billion and Rmb40.4 billion for 2025-2026 [5] - H-shares are trading at 5.5x 2025e EV/EBITDA, with a target price set at HK$50.37, offering a 30% upside [5]

Financial Performance - For Q1 2025, the company achieved operating revenue of RMB 69,849,924 thousand, representing a year-on-year increase of 6.90%[7] - Net profit attributable to shareholders was RMB 2,234,197 thousand, up 16.87% compared to the same period last year[7] - The gross profit for Q1 2025 was RMB 9,292,000 thousand, with a gross margin of 13.3%, an increase of 0.1 percentage points year-on-year[12] - The net profit margin attributable to shareholders was 3.2%, an increase of 0.3 percentage points year-on-year[12] - Operating revenue for the three months ended March 31, 2025, was RMB 69,849,924 thousand, representing a 6.90% increase compared to RMB 65,341,051 thousand in 2024[13] - Operating profit for the same period was RMB 3,032,077 thousand, up 14.4% from RMB 2,651,002 thousand year-over-year[33] - Net profit attributable to the parent company was RMB 2,234,197 thousand, representing a 16.9% increase from RMB 1,911,636 thousand in the previous year[33] - Basic and diluted earnings per share for the first quarter of 2025 were both RMB 0.45, compared to RMB 0.39 in the same quarter of 2024[34] - Total comprehensive income for the three months ended March 31, 2025, was RMB 2,287,374 thousand, significantly higher than RMB 990,588 thousand in the same period of 2024[34] Cash Flow and Investments - The company reported a net cash flow from operating activities of RMB 4,061,813 thousand, down 14.21% from the previous year[7] - Cash flow from operating activities generated RMB 4,061,813 thousand, a decrease of 14.2% from RMB 4,734,437 thousand in the prior year[36] - Cash flow from investment activities resulted in a net outflow of RMB 7,380,110 thousand, compared to a net outflow of RMB 8,130,095 thousand in the same period of 2024[39] - The company's cash flow from financing activities showed a significant decline of 192.90%, resulting in a net outflow of RMB 3,382,679 thousand, attributed to increased loan repayments and share repurchases[14] - Cash flow from financing activities showed a net outflow of RMB 3,382,679 thousand, contrasting with a net inflow of RMB 3,641,197 thousand in the previous year[41] Operational Efficiency - Management expenses as a percentage of revenue decreased by 0.6 percentage points, reflecting improved operational efficiency[12] - The company continues to innovate in logistics services, enhancing competitiveness and expanding market presence[10] Shareholder Information - The total number of ordinary shareholders at the end of the reporting period was 167,808, with 167,725 being A-share holders[16] - Shenzhen Mingde Holdings Development Co., Ltd. held 51.37% of the shares, amounting to 2,561,927,139 shares, with 948,600,000 shares pledged[16] - The company announced a share repurchase plan with a total amount not less than RMB 500 million and not exceeding RMB 1 billion, with a repurchase price capped at RMB 53 per share[21] - The company repurchased a total of 23,270,358 A-shares for approximately RMB 859 million, accounting for 0.47% of the total share capital, with an average transaction price of RMB 36.91 per share[22] Asset and Liability Management - As of March 31, 2025, total current assets decreased to RMB 84.74 billion from RMB 88.69 billion as of December 31, 2024[28] - Total non-current assets slightly decreased to RMB 124.66 billion from RMB 125.14 billion during the same period[29] - Total liabilities decreased to RMB 104.71 billion from RMB 111.49 billion, indicating improved financial stability[30] - The company's total equity increased to RMB 104.69 billion from RMB 102.34 billion, reflecting a positive growth trend in shareholder value[30] - The company’s cash and cash equivalents decreased to RMB 27.05 billion from RMB 33.94 billion, indicating a reduction in liquidity[28] - The company’s accounts payable decreased to RMB 24.24 billion from RMB 27.39 billion, showing improved cash flow management[30] - The company’s retained earnings increased to RMB 41.38 billion from RMB 39.14 billion, indicating a strong profit retention strategy[30] Revenue and Parcel Volume - The total volume of parcels handled reached 13.56 billion, reflecting a year-on-year growth of 19.7%[10] - The company’s supply chain and international business revenue grew by 9.9% year-on-year, driven by enhanced international network capabilities[10] - Operating costs increased by 6.74% to RMB 60,561,674 thousand from RMB 56,738,060 thousand year-over-year[13] Research and Development - The company reported a decrease in research and development expenses to RMB 584,358 thousand from RMB 633,224 thousand year-over-year[32] Other Comprehensive Income - The company experienced a decrease in other comprehensive income, with a net amount of RMB -73,559 thousand compared to RMB -838,756 thousand in the previous year[33]

Investment Rating - The report assigns a "Strong Buy" rating for SF Holding (06936.HK) with an expected target price of 54.50 HKD, indicating a potential upside of 44% from the current price of 37.75 HKD [4][8]. Core Insights - The report emphasizes the sustainable improvement in net profit margins for the company, driven by resilient demand in core express delivery services and a strategic shift from product sales to industry solution offerings [1][2]. - The company is expected to achieve a revenue growth of over 20% in logistics income from e-commerce, telecommunications, automotive, and industrial manufacturing sectors in 2024 [1]. - The operational transformation aimed at cost reduction is based on a new operational model that has reduced the average distance for delivery personnel by 38% [2]. - The international business segment is projected to experience a profit increase, with significant growth in air cargo throughput at Ezhou Airport [2][8]. Financial Performance - In 2024, the company reported total revenue of 284.42 billion RMB, a year-on-year increase of 10.1%, with net profit reaching 10.17 billion RMB, up 23.5% [8]. - The net profit margin for 2024 was recorded at 3.6%, reflecting a 0.4% increase from the previous year [8]. - The company plans to distribute a cash dividend of 4.104 billion RMB for 2024, representing a 40% payout ratio [8]. Business Growth - The express delivery business volume is expected to grow by 11.8% year-on-year, with a revenue of 122.21 billion RMB in 2024, marking a 5.8% increase [1][8]. - The company has outperformed its peers in terms of business volume growth in March 2025, with a growth rate of 25.4% [8]. Valuation Metrics - The report maintains profit forecasts for 2025-2027, with expected net profits of 11.7 billion RMB, 13.7 billion RMB, and 15.6 billion RMB respectively, corresponding to EPS of 2.3, 2.7, and 3.1 RMB [8]. - The projected price-to-earnings (P/E) ratios for the next three years are 15, 13, and 11 times [8].

Financial Performance - Total revenue for 2024 reached RMB 284.4 billion, representing a 10.1% increase compared to 2023[22]. - Gross profit for 2024 was RMB 38.9 billion, with a gross margin of 13.7%, up from 12.6% in 2023[27]. - Profit attributable to the owners of the company for 2024 was RMB 10.2 billion, reflecting a 23.5% growth year-over-year[19]. - The total parcel volume for 2024 is projected to be 13.33 billion, an increase of 11.3% from 2023[21]. - The weighted average return on equity for 2024 is expected to be 11.2%, a 2.0% increase from the previous year[19]. - The company achieved an operating profit before interest, taxes, depreciation, and amortization (EBITDA) of RMB 32.7 billion, marking an 11.0% increase from 2023[19]. - The company’s net profit for 2024 was RMB 10.22 billion, a 29.16% increase from RMB 7.91 billion in 2023, with a profit margin of 3.59%, up 0.53 percentage points from 3.06% in 2023[148]. - Operating cash flow for 2024 was RMB 32.19 billion, a 21.14% increase from RMB 26.57 billion in 2023, attributed to profit growth and improved cash flow management[154]. Dividend Distribution - The company plans to distribute a final cash dividend of RMB 4.4 per 10 shares, totaling approximately RMB 21.85 billion for the 2024 final dividend, which, combined with the interim dividend of about RMB 19.18 billion, results in a total cash dividend of approximately RMB 41.04 billion for the year, representing 40% of the profit attributable to shareholders[7]. - The company has implemented a mid-term cash dividend of approximately RMB 1.9 billion in 2024, with a dividend payout ratio of about 40%[50]. Market Position and Recognition - The company is recognized as the largest private third-party supply chain solution provider in Asia and the fourth largest comprehensive logistics service provider globally, maintaining a leading position in various logistics segments[15]. - The company has been ranked 415th in the Fortune Global 500 list, reflecting its significant scale and industry leadership[13]. - The company is committed to becoming a globally leading logistics enterprise connecting Asia and the world while solidifying its leadership in the Chinese market[14]. - The company has achieved the highest customer satisfaction in express delivery services in China for 15 consecutive years, indicating strong brand loyalty and service quality[15]. Service Expansion and Innovation - The flagship express delivery service holds an absolute leading market share in China, with the company expanding rapidly into more logistics service segments, including international markets[13]. - The company aims to replicate its successful domestic experience in overseas networks, leveraging its recognized brand and comprehensive logistics service capabilities to drive sustainable growth[14]. - The company is focused on enhancing its service capabilities and product systems across various logistics sectors, including cold chain and supply chain services[13]. - The company is dedicated to building a smart supply chain ecosystem powered by advanced technology, aiming to provide safe and efficient logistics solutions[13]. - The company is expanding its international logistics services, targeting Southeast Asian markets including Thailand, Vietnam, and Malaysia[19]. Operational Efficiency and Technology - The company has developed the industry's first unmanned container transfer center, enhancing operational efficiency through technological innovation[45]. - The company has empowered nearly 4,000 industry clients across various sectors, including high-end manufacturing and consumer goods, through its logistics technology solutions[47]. - The company has implemented automation and unmanned technologies across various logistics scenarios, completing over 5.2 million automated container transfers[118]. - The logistics decision-making model has improved operational efficiency, reducing server resource consumption by 80% while increasing operational efficiency by 120 times[116]. Strategic Initiatives - The company implemented a strategy to accelerate industry transformation, shifting from "selling products" to "selling solutions" in 2024[42]. - The company aims to provide end-to-end green solutions to over 60 clients in 2024, achieving the first commercial flight using sustainable aviation fuel in domestic all-cargo operations[49]. - The company is actively pursuing cross-border supply chain opportunities, enhancing its end-to-end solutions to improve competitiveness in international express and warehousing services[199]. Customer Engagement and Satisfaction - The company has over 2.3 million active monthly customers and more than 730 million individual members by the end of 2024, enhancing customer loyalty and business growth[62]. - The company has been ranked first in public satisfaction for express delivery services by the State Post Bureau for 15 consecutive years (2009-2023) and the first three quarters of 2024[64]. Future Outlook - The IMF projects a global economic growth of 3.2% in 2025, with China's GDP expected to grow around 5%[187]. - By 2025, the express delivery business volume in China is expected to reach 190 billion pieces, with revenue projected to exceed RMB 1.5 trillion, both growing approximately 8% year-on-year[188]. - The company aims to expand its logistics market share by enhancing supply chain penetration and providing comprehensive logistics solutions tailored to specific industries[191].