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 industry investment rating is maintained as "Positive" [2][4]. Core Insights - The first equity-type asset-backed securities (ABS) have been successfully issued, indicating a vibrant issuance market [5][13]. - The market for REITs is expected to continue to perform well due to the downward pressure on bond market interest rates and the anticipated entry of social security and pension funds, enhancing the cost-effectiveness of allocations in this sector [4][6]. Market Overview - As of the 17th week of 2025, the CSI REITs index closed at 858.24, up 6.62% year-on-year but down 0.53% month-on-month. The CSI REITs total return index stood at 1058.94, up 11.55% year-on-year but down 1.43% month-on-month [6][21]. - The trading volume in the REITs market reached 677 million units, a year-on-year increase of 23.32%, with a transaction value of 2.947 billion yuan, up 39.67% year-on-year [28][34]. Sector Performance - Weekly and monthly performance of various REITs sectors showed fluctuations: - Affordable housing REITs decreased by 2.15% weekly but increased by 3.44% monthly - Environmental, highway, industrial park, warehousing logistics, energy, and consumer REITs also experienced declines [40][57]. - The performance of the REITs market indicates a mixed trend, with some sectors showing resilience while others face challenges [40][58]. Upcoming Developments - There are currently 13 REITs funds awaiting listing, indicating ongoing activity in the issuance market [7][40].

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].

Group 1 - China Unicom (00762.HK) reported Q1 2025 revenue of RMB 103.35 billion, a year-on-year increase of 3.9%, with net profit of RMB 5.93 billion, up 5.6% [1] - Tongcheng Travel (00780.HK) announced an agreement to acquire Wanda Hotel Management (Hong Kong) Co., Ltd. for approximately RMB 2.49 billion [1] - China Tower (00788.HK) achieved Q1 2025 revenue of RMB 24.771 billion, a year-on-year growth of 3.3%, with profit attributable to shareholders of RMB 3.024 billion, up 8.6% [1] - SF Holding (06936.HK) reported combined revenue of RMB 23.661 billion from express logistics, supply chain, and international business in March, reflecting a year-on-year increase of 9.63% [1] Group 2 - Zhaojin Mining (01818.HK) recorded Q1 revenue of RMB 3.041 billion, a year-on-year increase of 53.5%, with net profit attributable to shareholders of RMB 659 million, up 197.76%, and basic earnings per share of RMB 0.17 [2] - Yanzhou Coal Mining (01171.HK) reported Q1 self-produced coal sales of 30.6 million tons, a year-on-year decrease of 1.71% [2]

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].

Investment Rating - The report maintains an "Accumulate-A/Buy-H" rating for the company, with a current price of 43.32 RMB/38.40 HKD and a fair value of 48.04 RMB/46.46 HKD [4][44]. Core Views - The company achieved a revenue of 284.42 billion RMB in 2024, representing a year-on-year growth of 10.07%, and a net profit of 10.17 billion RMB, up 23.51% year-on-year [9][12]. - The report emphasizes the synergy between capacity and management cycles, indicating a continuous improvement in profitability [9][10]. - The company is expected to benefit from the recovery of the economic cycle, with projections for EPS of 2.40, 2.80, and 3.34 RMB per share for 2025-2027 [9][44]. Summary by Sections Financial Performance - In 2024, the company reported a total business volume of 13.26 billion parcels, a growth of 11.5% year-on-year, with an average revenue per parcel of 15.52 RMB, down 3.4% [9][12]. - The EBITDA for 2024 was 29.05 billion RMB, with a projected EBITDA of 32.45 billion RMB in 2025 [2]. Revenue Breakdown - The revenue from the express delivery segment was 122.21 billion RMB, growing by 5.85% year-on-year, while the economic express segment generated 27.25 billion RMB, up 8.78% [19][22]. - The freight segment achieved a revenue of 37.64 billion RMB, reflecting a growth of 13.8% [26]. - The same-city delivery segment saw a revenue increase of 24.29%, reaching 90.11 billion RMB [31]. - The supply chain and international segment reported a revenue of 740 billion RMB, up 23.38% [32]. Profitability and Efficiency - The gross margin for 2024 was 13.93%, an increase of 1.11 percentage points year-on-year, attributed to network optimization and cost reduction measures [9][10]. - The report highlights the company's focus on high-quality service and operational efficiency, which has led to improved profitability across various segments [16][19]. Future Outlook - The company is expected to continue its growth trajectory, with revenue projections of 315.85 billion RMB, 351.43 billion RMB, and 392.36 billion RMB for 2025-2027, reflecting growth rates of 11% [40]. - The report anticipates that the company will maintain a stable growth rate in its core segments, driven by economic recovery and strategic investments [40][44].

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].