Summary of SF Holding Co. Ltd - 4Q24 Briefing Company Overview - **Company**: SF Holding Co. Ltd - **Industry**: Logistics and Supply Chain Management Key Takeaways 1. **Positive Financial Performance**: SF Holding's 4Q24 net profit surged by 35% year-over-year (Y/Y) to Rmb2.65 billion, exceeding J.P. Morgan's forecast of Rmb2.30 billion, driven by robust revenue growth and improved operational efficiency [2][6][9] 2. **Revenue Growth**: For FY24, revenue increased by 10% Y/Y to Rmb284.42 billion, with significant contributions from the Supply Chain and International business segments, which grew by 18% Y/Y [6][10] 3. **Enhanced Shareholder Returns**: The company raised its payout ratio to 40% (excluding special dividends), translating to a dividend yield of approximately 2% for SF-A/H shares [6][9] 4. **Strategic Cost Management**: Capital expenditures decreased by 27% Y/Y, accounting for only 3.5% of revenue, while operating cash flow increased by 21% Y/Y [6][9][10] 5. **Integration of Kerry Logistics**: The acquisition has strengthened SF's ability to provide comprehensive supply chain solutions, positioning the company to meet the evolving logistics needs of Chinese e-commerce players [2][6] Operational Highlights 1. **Segment Performance**: - Time-definite express revenue rose by 5.8% Y/Y, while economy express revenue increased by 11.8% Y/Y, reflecting strong demand across different market segments [6][7] - The Supply Chain and International business accounted for 24.8% of total revenue, with international parcel revenue growing by 20% Y/Y [6][8] 2. **Market Position**: SF maintains a leading position in the premium logistics segment in China, benefiting from a stable service quality and high frequency of delivery [6][8] Technological Advancements 1. **AI and Technology Investments**: SF plans to enhance operational efficiency through increased investment in AI and autonomous vehicles, which could optimize 110,000 daily vehicle trips [9][20] Risks and Challenges 1. **Market Competition**: The logistics industry is facing increasing competition, particularly from JD Logistics, which could impact SF's growth trajectory [8][23] 2. **Macroeconomic Factors**: A weaker-than-expected macro recovery could pose risks to express parcel volumes and overall business performance [23][28] Valuation Metrics 1. **Current Valuation**: SF-A/H shares are trading at 15.2x/12.5x FY26E P/E and 5.4x/4.2x FY26E EV/EBITDA, considered attractive given the company's growth prospects [3][20] 2. **Price Targets**: - SF-A: Rmb48.00 - SF-H: HK$46.00 [5][24] Conclusion - SF Holding Co. Ltd is well-positioned for continued growth in the logistics sector, supported by strong financial performance, strategic investments in technology, and a commitment to enhancing shareholder returns. However, the company must navigate competitive pressures and macroeconomic uncertainties to sustain its growth trajectory.

Group 1 - The report details the changes in the registered capital and issued shares of SF Holding Co., Ltd. as of March 31, 2025, indicating no change in the registered capital for H shares and a slight increase in A shares [1] - The total registered capital at the end of the month is RMB 4,987,646,658, with H shares remaining at 170,000,000 and A shares increasing to 4,817,646,658 [1] - The report also notes that 20,771,358 A shares are held as treasury shares, which were repurchased under a buyback authorization approved by the board on April 29, 2024 [1] Group 2 - The number of issued shares for H shares remains unchanged at 170,000,000, while A shares increased by 617,506 to a total of 4,817,646,658 [1] - The report confirms that all securities issuance and treasury share transactions have been authorized by the board and comply with applicable listing rules and regulations [2] - The report emphasizes that all necessary conditions for listing and compliance with legal requirements have been fulfilled [3]

Investment Rating - The report assigns a "Buy" rating for the company, indicating a potential upside of 15% to 35% [6][9]. Core Insights - The company achieved a revenue of RMB 284.42 billion in 2024, representing a year-over-year growth of 10.07%. The net profit attributable to shareholders was RMB 10.17 billion, with a year-over-year increase of 23.51% [7]. - The express and large parcel segment accounted for 70.4% of the company's revenue, with a notable increase in volume and profit margins [2][10]. - The supply chain and international business segment showed signs of recovery, with a revenue increase of 17.72% year-over-year [7][10]. - The company plans to distribute a total dividend of approximately RMB 41.04 billion for 2024, reflecting a dividend payout ratio of about 40% [7]. Financial Performance - The company reported a net profit of RMB 10.17 billion for 2024, with projections for future profits of RMB 11.83 billion in 2025, RMB 13.60 billion in 2026, and RMB 15.20 billion in 2027, indicating a steady growth trajectory [9][11]. - The earnings per share (EPS) for 2024 is projected at RMB 2.11, with expected growth in subsequent years [9][11]. - The company's price-to-earnings (P/E) ratio is forecasted to decrease from 16.42 in 2024 to 11.36 by 2027, suggesting an attractive valuation over time [9][11]. Business Segments - The express and large parcel segment generated revenue of RMB 200.16 billion in 2024, with a net profit of RMB 10.98 billion, reflecting a profit margin of 5.49% [7][10]. - The same-city delivery segment saw a revenue increase of 22.24%, with net profit growth exceeding 160%, driven by increased order volumes and improved operational efficiency [10]. - The supply chain and international business segment recorded a revenue of RMB 74 billion, although it faced a net loss of RMB 1.32 billion due to restructuring efforts [7][10]. Market Position - The company maintains a strong competitive edge in the logistics sector, with a fleet of 110 aircraft and a significant ground transportation network, positioning it well to capitalize on the growing demand for logistics services [10]. - The report highlights the company's strategic focus on international expansion, with over 9,100 international cargo flights in 2024, marking a 19% increase year-over-year [7][10].

Investment Rating - The report assigns a "Buy" rating for the company, indicating a potential upside of 15% to 35% [6][9]. Core Insights - The company achieved a revenue of RMB 284.42 billion in 2024, representing a year-over-year increase of 10.07%. The net profit attributable to shareholders was RMB 10.17 billion, up 23.51% year-over-year [7]. - The express and large parcel segment accounted for 70.4% of the company's revenue, with a significant increase in volume and profit margins [2][10]. - The company is focusing on international expansion, with over 9,100 international cargo flights in 2024, a 19% increase from the previous year [7][10]. Financial Performance - The company reported a net profit of RMB 10.17 billion for 2024, with a projected growth of 16.35% for 2025, reaching RMB 11.83 billion [9][11]. - The earnings per share (EPS) for 2024 is RMB 2.11, with expectations to grow to RMB 2.37 in 2025 [9][11]. - The dividend payout for 2024 is expected to be approximately RMB 41.04 billion, with a dividend yield of 5.31% [7][9]. Business Segments - The express and large parcel segment generated RMB 200.16 billion in revenue, with a net profit of RMB 10.98 billion, reflecting a 29.91% increase year-over-year [7][10]. - The supply chain and international business segment saw a revenue increase of 17.72% year-over-year, although it recorded a net loss of RMB 1.32 billion due to restructuring [7][10]. - The same-city delivery segment achieved a revenue of RMB 9.01 billion, with a remarkable net profit growth of 161.80% [10]. Market Position - The company maintains a strong competitive edge with a leading fleet of 110 aircraft and over 100,000 delivery vehicles, positioning it as a dominant player in the logistics sector [10]. - The report highlights the company's robust logistics network and its strategic focus on international markets, which are expected to drive future growth [10].

Core Insights - SF Holding achieved record-high operating performance in 2024, with revenue reaching approximately 284.4 billion yuan, a year-on-year increase of over 10%, and net profit surpassing 10 billion yuan for the first time, reaching 10.17 billion yuan, a growth of over 20% [1][3][4] Financial Performance - In 2024, SF Holding's revenue increased by 26.01 billion yuan compared to the previous year, marking a growth rate of 10.07% [3] - The net profit attributable to shareholders grew by 1.93 billion yuan, with a year-on-year increase of 23.51% [3] - The company plans to distribute cash dividends exceeding 8.9 billion yuan, setting a historical high [2] Business Segments - The express delivery business generated 122.21 billion yuan in revenue, up 5.8% year-on-year, with a business volume increase of 11.8% [5] - The economic express segment reported 27.25 billion yuan in revenue, a growth of 8.8%, with a business volume increase of 17.5% [5] - The freight business achieved 37.64 billion yuan in revenue, reflecting a 13.8% increase, with cargo volume growing over 20% [5] - The cold chain and pharmaceutical segment saw a revenue decline of 4.9% to 9.81 billion yuan, primarily due to climate factors affecting seasonal fresh produce [5] - The same-city instant delivery business grew by 22.4%, generating 8.87 billion yuan [5] - Supply chain and international business revenue exceeded 70.49 billion yuan, with a growth rate of 17.5%, indicating a solid second growth curve [5] Cost Management - Structural cost reduction has been a significant factor in the net profit growth, with continuous optimization of the network and a decrease in average operating costs [6] - The comprehensive gross margin and net margin for 2024 were 13.93% and 3.59%, respectively, both showing year-on-year increases [7] Technological Innovation - SF Holding emphasizes technological empowerment, integrating advanced logistics technology to enhance operational efficiency and customer service [8] - The company has developed proprietary models for logistics decision-making and large language models, improving demand forecasting and operational decision-making [8][9] - The application of automation technologies, such as AGV and RPA, has optimized business processes and enhanced network efficiency [8][9] R&D Investment - Since 2020, SF Holding has invested over 3 billion yuan annually in research and development [10] - As of the end of 2024, the company holds 4,180 active and pending patents, with 2,505 software copyrights, of which 61.5% are invention patents [10] - The company aims to accelerate industry transformation by shifting from a "product-selling" model to a "solution-selling" model, expanding its supply chain capabilities [10]

Financial Performance - The company reported a total cash dividend of approximately RMB 4.1 billion for the fiscal year 2024, representing 40% of the profit attributable to the owners of the company, an increase from 35% in 2023[6]. - Total revenue for 2024 is projected to be RMB 284.4 billion, representing a 10.1% increase from 2023[21]. - Gross profit for 2024 is expected to reach RMB 38.9 billion, with a gross margin of 13.7%[26]. - Net profit attributable to the company's owners for 2024 is forecasted at RMB 10.2 billion, reflecting a 23.5% growth[18]. - The company achieved operating revenue of RMB 284.42 billion in 2024, representing a year-on-year growth of 10.07%[35]. - The net profit attributable to the owners of the company reached RMB 10.17 billion, an increase of 23.51% compared to the previous year[35]. - The gross profit margin improved to 13.68%, up 1.05 percentage points from 2023[37]. - The company reported a net cash flow from operating activities of RMB 32.19 billion, a 21.14% increase year-on-year[36]. - The logistics business revenue was RMB 205.8 billion, growing by 7.7% year-on-year, while supply chain and international business revenue increased by 17.5% to RMB 70.5 billion[39]. - The company's express delivery segment generated RMB 122.21 billion, with a growth rate of 5.85% compared to RMB 115.46 billion in 2023[132]. - The supply chain and international business segment saw revenue of RMB 74.00 billion, reflecting a 17.72% increase from RMB 62.86 billion in 2023[132]. - The overall gross profit for 2024 was RMB 38.90 billion, up 19.19% from RMB 32.63 billion in 2023, with a gross margin increase of 1.05 percentage points to 13.68%[137]. Market Position and Strategy - The company aims to become a leading global logistics service provider, expanding its influence in Asia and globally while maintaining its leadership position in the Chinese market[13]. - The flagship express delivery service holds a dominant market share in China, with the company leading in five segments domestically and four segments in Asia[12]. - The company is committed to sustainable and healthy development, continuously expanding its service capabilities and product systems across various logistics sectors[12]. - The company is focused on building a smart supply chain ecosystem through advanced technology and research capabilities[12]. - The company has been recognized as the largest integrated logistics service provider in China and Asia, and the fourth largest globally[11]. - The company maintains its leading position as the largest private third-party supply chain solution provider in Asia and the fourth largest globally[14]. - The company has achieved a 15-year consecutive record of customer satisfaction in China's express delivery services, ranking first in Asia[14]. - The company aims to accelerate industry transformation by shifting from "selling products" to "selling solutions" to enhance logistics service market share[41]. International Expansion - The company plans to replicate its successful domestic experience in international markets, leveraging its recognized brand and comprehensive logistics capabilities[13]. - The company is focusing on expanding its international logistics services, including cross-border e-commerce and local express services in Southeast Asia[24]. - In 2024, the company won over 100 overseas supply chain projects, with more than 45% of Fortune China's top 500 companies using its international products and services[43]. - The company aims to enhance its international logistics capabilities through strategic partnerships and acquisitions, particularly in Southeast Asia[59]. - The dual-track approach of "capacity going abroad" and "brand going abroad" is accelerating the internationalization of Chinese logistics companies, supported by efficient domestic logistics services[58]. - The company aims to become the preferred logistics partner for Chinese enterprises going global, supporting its strategic goals for Asia and global coverage[86]. - The company is actively expanding its international network, increasing the number of international stations in Asia to 10 and in Europe and America to 8[87]. Technological Advancements - The company is focused on enhancing its cold chain logistics capabilities, particularly in fresh produce and pharmaceutical logistics, by investing in automation and innovative warehousing solutions[196]. - The company has developed the "Logistics Decision Model" and "Large Language Model" to enhance operational efficiency and customer service across over 20 scenarios[45]. - The company has integrated a smart robot based on large language model technology, resolving over 5 million inquiries to improve operational efficiency and customer service capabilities[98]. - The logistics decision-making model has improved operational efficiency, achieving an 80% reduction in server resource consumption while increasing operational efficiency by 120 times and improving forecast accuracy by 5%[115]. - The automated warehouse system has been implemented to support high-density storage and manage over 100,000 daily shipping orders across various industries[118]. - The company has successfully integrated RPA technology to automate repetitive tasks, improving operational efficiency and customer service response times[119]. - The company has expanded its logistics network to include automated and unmanned technologies, enhancing operational efficiency and transforming its operational model[117]. Sustainability and Corporate Responsibility - The company provided green low-carbon solutions to over 60 clients in 2024 and achieved the first commercial flight using sustainable aviation fuel in domestic all-cargo operations[48]. - The company aims to continue promoting green low-carbon supply chain ecosystem construction and enhance employee welfare and social responsibility[184]. - The company has been recognized with a BBB rating by MSCI and a low-risk rating by Sustainalytics, leading the industry in ESG practices[48]. Customer Engagement and Satisfaction - The company has accumulated nearly 100 leading customer cases across various industries, enhancing service value for small and medium-sized clients through lightweight SaaS products[46]. - 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[61]. - The company has been ranked No. 1 in public satisfaction for express delivery services for 15 consecutive years (2009-2023)[124]. Future Outlook - 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[187]. - The company aims to expand its logistics market share by providing comprehensive supply chain solutions tailored to specific industries, focusing on digitalization, intelligence, and sustainability[190]. - The company plans to enhance its international logistics network, establishing overseas warehouses and integrating various transportation methods to support Chinese enterprises' global expansion[188]. - The logistics industry is expected to undergo significant technological advancements, with automation and smart technologies improving efficiency and reducing costs[189]. - The company will implement organizational upgrades and targeted strategies to accelerate logistics market share growth across various industries[194].