Core Viewpoint - SF Express City anticipates a profit increase of no less than 100% for 2024, driven by growth in the domestic catering and retail sectors, alongside a projected revenue growth of at least 25% [1] Group 1: Financial Performance - The company expects revenue growth of no less than 30% in the second half of 2024 [1] - Non-catering scene revenue increased by 32% year-on-year in the first half of 2024 [3] - Active merchant scale reached 550,000, a 45% year-on-year increase [5] Group 2: Business Development - SF Express City has established itself as a new benchmark in the instant logistics industry, with significant growth in revenue and order volume exceeding industry growth rates [1][2] - The company maintains a balanced development across three main business lines: merchant-facing, consumer-facing, and last-mile delivery services [2] - The company has expanded its service offerings to include luxury goods delivery and upgraded services for individual users [3] Group 3: Market Position and Strategy - The instant retail market in China is projected to exceed 1 trillion yuan in 2024, with SF Express City positioned as a leading independent third-party delivery service [2] - The company has formed partnerships with major platforms like Douyin, Alibaba, and WeChat to enhance its service offerings in new consumption scenarios [5][6] - SF Express City has entered the Hong Kong market under the "SoFast" brand, marking its first foray outside mainland China [7] Group 4: Operational Efficiency - The company utilizes technology and lean management to enhance operational efficiency, including a comprehensive urban logistics system [4] - The integration of various delivery methods, including four-wheeled vehicles, drones, and human resources, has improved delivery capabilities [4] - The company has seen a significant increase in order density and efficiency, with a doubling of income from same-city express services in the first half of 2024 [3][4] Group 5: Growth in Emerging Markets - SF Express City has achieved substantial growth in lower-tier markets, with a 51% year-on-year increase in revenue from these areas [6] - The company has successfully tapped into the expanding market for fresh tea and coffee, with a 60% increase in tea delivery revenue [6] - The company has reported significant growth in delivery volume in various regions during peak shopping periods, indicating strong market demand [7]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 13.50, indicating a potential upside of 46.7% from the current price of HKD 9.20 [2][3][11]. Core Insights - The company has issued a positive earnings forecast, expecting revenue and profit growth of no less than 25% and 100% respectively for 2024. The second half of 2024 is projected to see revenue growth of at least 30% year-on-year [2][7]. - The revenue forecast for 2024 has been revised upward by 4%, driven by better-than-expected growth in key account (KA) business and last-mile delivery services. The report anticipates a decrease in unit prices due to improved delivery efficiency and changes in business structure [2][7]. - The adjusted net profit for 2024 is expected to be RMB 132 million, reflecting a year-on-year increase of 160%, with a corresponding net profit margin of 0.8% [2][7]. Financial Forecasts - Revenue projections for 2024E, 2025E, and 2026E are RMB 15,498 million, RMB 19,350 million, and RMB 23,490 million respectively, with growth rates of 25.1%, 24.8%, and 21.4% [6][15]. - The adjusted net profit for 2024E is projected at RMB 132 million, with a net profit margin of 0.8%. For 2025E, the adjusted net profit is expected to reach RMB 262 million, with a margin of 1.4% [6][15]. - The report highlights a significant increase in the gross profit for 2024E, estimated at RMB 1,022 million, with a gross margin of 6.6% [6][15]. Market Performance - The stock has shown a year-to-date change of -0.97%, with a 52-week high of HKD 12.60 and a low of HKD 8.30. The market capitalization is approximately HKD 6,695.48 million [5][15]. - The report indicates that the company's stock performance is expected to align positively with the anticipated growth in the instant delivery industry, driven by strong demand [2][7].

Group 1 - The company, SF Express City (09699, HK), forecasts a net profit growth of no less than 100% year-on-year for 2024, with total revenue expected to increase by no less than 25% year-on-year [1] - The growth in performance is attributed to the rising demand for instant delivery services driven by increased consumption in the catering and retail sectors, as well as rapid growth in same-city delivery and last-mile orders [1] - The company emphasizes its commitment to technological innovation, enhancing its digital capabilities, and improving operational efficiency, which contributes to better gross margins and cost ratios [1] Group 2 - For 2024, the company plans to focus on local life service industries, adapting to changes in local consumption patterns and seizing opportunities from market trends such as the diversification of traffic, local retail development, and the acceleration of same-city logistics [2] - The company aims to expand the boundaries of instant fulfillment services, strengthen technological innovations, and collaborate with more partners to increase scale and broaden service scenarios, thereby enhancing long-term revenue and profit potential [2]

Core Viewpoint - SF Express City expects significant growth in both profit and revenue for the fiscal year ending December 31, 2024, indicating strong operational performance and market demand [1] Financial Performance - The company anticipates a profit attributable to owners of the company to increase by no less than 100% compared to the previous year [1] - Group revenue is expected to grow by no less than 25% year-on-year, with a projected increase of no less than 30% in the second half of the year compared to the same period last year [1]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is expected to achieve a revenue of 86 million yuan in H2 2024, representing a year-on-year growth of 30%, and a net profit of 0.69 million yuan, with a year-on-year increase of 100% [7] - The company's revenue for 2024 is projected to be 155 million yuan, reflecting a year-on-year growth of 25%, and a net profit of 1.35 million yuan, indicating a year-on-year increase of 167% [7] - The company benefits from an increase in cooperative clients and maintains a competitive advantage in the KA same-city delivery business, which is expected to grow by 30% year-on-year in H2 2024 [7] - The last-mile delivery service is anticipated to see a 30% year-on-year revenue growth in H2 2024, driven by increased collaboration with major clients and enhanced service penetration [7] - The company is expanding into lower-tier markets, with county-level revenue growing by 51% year-on-year in H1 2024, and has entered the Hong Kong market under the "SoFast" brand [7] - The report adjusts the net profit forecast for 2024-2026 to 1.35 million yuan, 2.73 million yuan, and 4.53 million yuan respectively, while maintaining a "Buy" rating [7] Financial Summary - Total revenue for 2022 was 10,266 million yuan, with a year-on-year growth of 25.57%, and is projected to reach 22,130 million yuan by 2026 [1] - The company reported a net profit of (286.90) million yuan in 2022, expected to turn positive with 50.60 million yuan in 2023 and grow to 452.75 million yuan by 2026 [1] - The latest diluted EPS is projected to increase from (0.31) yuan in 2022 to 0.49 yuan in 2026 [1] - The P/E ratio is expected to decrease from 148.28 in 2023 to 16.57 by 2026, indicating improved profitability [1]

Investment Rating - The report maintains an "Outperform" rating for the company [3][4]. Core Views - The company is expected to see significant growth in its revenue and net profit, with a projected net profit of 1.28 billion, 2.56 billion, and 4.61 billion for 2024E, 2025E, and 2026E respectively, reflecting year-on-year growth rates of 171.01%, 99.97%, and 80.03% [4][5]. - The company is benefiting from strong demand in the instant delivery sector, particularly in the tea and coffee markets, with a 51% year-on-year revenue growth in lower-tier markets and a 60% increase in tea delivery revenue [4][5]. - The expansion of the company's operational capacity and the increase in order density are expected to enhance profitability as scale effects are realized [4]. Financial Data and Profit Forecast - Revenue (in million) is projected to grow from 12,400 in 2023 to 22,364 in 2026, with a compound annual growth rate (CAGR) of approximately 20.33% [2]. - Net profit is expected to turn positive in 2023 with 47 million, reaching 461 million by 2026, indicating a strong recovery trajectory [2]. - Earnings per share (EPS) is forecasted to increase from 0.06 in 2023 to 0.50 in 2026 [2].

Investment Rating - Buy rating with a target price of HKD 14.9, implying a 55.6% upside from the current price of HKD 9.57 [1][16] Core Views - The company's revenue grew 19.6% YoY to RMB 6.87 billion in H1 2024, with order volume increasing over 30% YoY [3][7] - Net profit reached RMB 62 million, a 105.1% YoY increase, with net profit margin improving to 0.9% [3][7] - Same-city delivery revenue grew 19.2% YoY to RMB 4.04 billion, while last-mile delivery revenue increased 20.3% YoY to RMB 2.84 billion [3][9] - The company benefits from the rapid growth of the tea beverage market in lower-tier cities, with registered tea-related enterprises up 6.1x YoY [3][10][12] - The company's scale effect continues to drive profitability, supported by its extensive delivery network and efficient data algorithms [3][14][16] Business Performance - Non-meal delivery scenarios grew rapidly, with revenue up 32.4% YoY in H1 2024 [8] - Coverage in county-level markets expanded to over 1,200 counties, with revenue from these areas growing 51% YoY [8] - The company added over 6,000 new partner stores and increased its active merchant base to 550,000, up 45% YoY [8] - Revenue from consumer delivery grew 20.1% YoY to RMB 1.163 billion, driven by an expanding active user base and higher repurchase rates [8] Market Position - The company is a leading independent third-party instant delivery platform, with a strong position in the tea beverage delivery market [12] - During the 2024 Double 11 shopping festival, the company's daily delivery orders increased 43% YoY, with categories like beauty, beverages, and convenience stores seeing over 100% growth [13] - Last-mile delivery orders during Double 11 grew 160% YoY, and external cooperation orders increased 149% YoY [13] Growth Drivers - Deepening cooperation with key accounts (KA) and leveraging synergies with SF Holding for last-mile delivery [14][16] - Expanding commercial scenarios in lower-tier cities to further enhance scale effects [14][16] - The company's PS ratio for 2024 is estimated at 0.9x, reflecting its strong market position and commercial potential [16]

Revenue Growth - Revenue from continuing operations increased by 19.6% from RMB 5,749.2 million in H1 2023 to RMB 6,878.5 million in H1 2024, with order volume growing over 30% year-on-year[9]. - Revenue from intra-city delivery services rose by 19.2% from RMB 3,388.0 million in H1 2023 to RMB 4,038.0 million in H1 2024[10]. - Last-mile delivery service revenue increased by 20.3% from RMB 2,361.2 million in H1 2023 to RMB 2,840.5 million in H1 2024[10]. - Revenue from non-food scenarios in intra-city delivery services grew by 32.4% to RMB 1,665.6 million in H1 2024[12]. - Revenue from merchant-oriented same-city delivery reached RMB 2,874.1 million, a year-on-year increase of 18.8%[13]. - Revenue from consumer-oriented same-city delivery was RMB 1,163.9 million, reflecting a year-on-year growth of 20.1%[17]. - Revenue from same-city express services, such as "pick-up" and "same-day delivery," doubled compared to the same period last year, indicating strong growth in these segments[18]. - Revenue from major customer SF Holding's subsidiary reached RMB 2,855,518 thousand for the six months ended June 30, 2024, up from RMB 2,355,281 thousand in the same period of 2023, representing an increase of approximately 21.2%[108]. Profitability - Net profit attributable to owners was RMB 62.2 million, representing a 105.1% year-on-year increase, surpassing the total net profit level of 2023[10]. - Gross profit for continuing operations reached RMB 473.3 million with a gross margin of 6.9%, up from RMB 383.4 million and 6.7% in the same period last year[10]. - Operating profit for the six months ended June 30, 2024, rose to RMB 62.6 million, compared to RMB 28.6 million for the same period in 2023[23]. - Basic and diluted earnings per share for the six months ended June 30, 2024, were RMB 0.07, compared to RMB 0.05 for the same period in 2023[24]. - The profit attributable to the company's owners from continuing operations for the six months ended June 30, 2024, was RMB 62,174,000, compared to RMB 44,576,000 for the same period in 2023, reflecting a 39.5% increase[123]. Cash Flow and Financial Position - Operating cash inflow was RMB 99.2 million, reflecting a 189.0% year-on-year growth[10]. - Cash and cash equivalents as of June 30, 2024, were RMB 1,452.7 million, a slight decrease from RMB 1,501.1 million as of June 30, 2023[38]. - Net cash generated from operating activities for the six months ended June 30, 2024, was RMB 99.2 million, significantly higher than RMB 34.3 million for the same period in 2023[40]. - Total assets as of June 30, 2024, amounted to RMB 4,261.2 million, compared to RMB 4,199.7 million as of December 31, 2023[25]. - The company's total equity as of June 30, 2024, was RMB 2,906,081 thousand, down from RMB 2,981,094 thousand, a decrease of about 2.5%[85]. Operational Efficiency - The company aims for high-quality and healthy growth, optimizing operational efficiency and cost management[9]. - The urban logistics system (CLS) enhances operational efficiency through AI decision-making and big data analysis, optimizing order and rider matching[20]. - The company expanded its network to enhance operational efficiency during peak times, achieving a service timeliness rate of approximately 95%[15]. - The "hourly delivery" service volume doubled, significantly boosting revenue from this service[17]. - The on-time delivery rate improved to 95%, reflecting a 5% increase from the previous reporting period[176]. Employee and Rider Management - The number of active merchants on the platform reached 550,000, representing a year-on-year growth of 45%[13]. - The number of active riders on the platform exceeded 970,000 as of June 30, 2024, with a 20% increase in the number of mid-to-high income riders compared to the previous year[19]. - The company has implemented a special fund of RMB 5 million for rider welfare, conducting over 5,000 offline care activities during the reporting period[19]. - The company is committed to enhancing rider experience and safety through regular satisfaction surveys and the establishment of standardized safety protocols[19]. - The total remuneration for key management personnel was RMB 7,900,000 for the six months ended June 30, 2024, compared to RMB 5,348,000 for the same period in 2023, reflecting an increase of approximately 47.5%[164]. Research and Development - Research and development expenses increased by 24.2% to RMB 51.2 million for the six months ended June 30, 2024, from RMB 41.2 million in the same period of 2023, reflecting higher R&D investments[31]. - Investment in new technology development increased by 30%, focusing on enhancing delivery efficiency and customer experience[176]. Share Repurchase and Corporate Governance - The company repurchased a total of 18,904,200 H-shares from November 30, 2023, to July 26, 2024, demonstrating the board's long-term confidence in business development[22]. - The company has adopted a corporate governance code and has complied with all applicable provisions, except for the separation of the roles of Chairman and CEO[50]. - The employee incentive plan adopted on April 19, 2023, grants trust beneficial ownership rights to Chen Xiwen[54]. - The company aims to align employee interests with those of shareholders to enhance cohesion and maximize company value through the incentive plan[60]. Future Outlook - The company expects revenue growth to continue at a rate of 25% for the second half of 2024, driven by new product launches and market expansion[176]. - A strategic acquisition of a logistics firm is anticipated to be finalized by Q3 2024, expected to enhance operational capabilities[176]. - The company plans to expand its market presence in third-tier cities, targeting a 10% increase in market share by the end of 2024[176].

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 13.20 [7][8]. Core Views - The company has achieved rapid growth in scale and improved net profit margins due to increased penetration in non-food delivery scenarios, active expansion into lower-tier markets, and the realization of scale and network effects driven by technology [2][3]. - The company has been included in the Hang Seng Composite Index and the Hong Kong Stock Connect, which is expected to enhance stock liquidity [2]. - The company has launched the "SoFast" brand in the Hong Kong instant delivery market, although initial operational costs may increase [2]. Financial Performance Summary - For the first half of 2024, the company reported total revenue of RMB 6.9 billion, a year-on-year increase of 20%, with order volume growing over 30% [4]. - Gross profit increased by 23% to RMB 470 million, with a gross margin improvement of 0.2 percentage points to 6.9% [4]. - The net profit attributable to the parent company grew by 105% to RMB 62 million, with a net profit margin increase of 0.4 percentage points to 0.9% [4]. - The company’s operating cash flow increased by 189% to RMB 99 million [4]. Revenue Projections - The company’s revenue is projected to grow from RMB 12.39 billion in 2023 to RMB 14.84 billion in 2024, reflecting a growth rate of 19.82% [6][15]. - The net profit attributable to the parent company is expected to increase significantly from RMB 50.6 million in 2023 to RMB 159.95 million in 2024, representing a growth of 216.14% [6][15]. Market Trends - The demand in lower-tier markets is growing rapidly, with county-level income increasing by 51% year-on-year in the first half of 2024 [3]. - The online and offline integration is enhancing the penetration of instant retail markets, with significant growth in categories such as tea delivery, which saw a 60% increase in revenue [3]. Valuation Methodology - The target price of HKD 13.20 is based on a segmental price-to-sales (PS) valuation method, with the same valuation as previously estimated [11]. - The company’s city delivery service is valued at HKD 8.9 based on 0.84x 2024E PS, reflecting a 20% premium over the median valuation of comparable companies [11]. Key Financial Metrics - The company’s earnings per share (EPS) is projected to improve from RMB 0.06 in 2023 to RMB 0.17 in 2024 [6][15]. - The return on equity (ROE) is expected to rise from 1.69% in 2023 to 5.24% in 2024 [6][15].

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [2][8]. Core Insights - The growth path of the company is clear, with continued improvement in profitability [2][4]. - The company achieved a revenue of 6.902 billion yuan in H1 2024, representing a year-on-year increase of 20.05%, and a net profit attributable to shareholders of 62 million yuan, up 105.10% year-on-year [3][4]. - The report highlights the deepening of KA cooperation and rapid revenue growth across various segments [4][6]. Summary by Sections Revenue Performance - In H1 2024, the company's same-city delivery revenue reached 4.038 billion yuan, a year-on-year increase of 19.2%, with To B revenue at 2.874 billion yuan, up 18.83% [4]. - The last-mile delivery revenue was 2.841 billion yuan, growing 20.3% year-on-year, with daily average package volume exceeding one million [4][5]. Profitability Improvement - The gross margin for H1 2024 was 6.9%, an increase of 0.2 percentage points year-on-year, while the overall expense ratio decreased by 0.28 percentage points to 6.26% [5]. - The net profit margin attributable to shareholders improved by 0.38 percentage points to 0.90% due to expense optimization [5]. Growth Forecast - The company is expected to achieve revenues of 14.962 billion yuan, 17.856 billion yuan, and 20.968 billion yuan for 2024, 2025, and 2026, respectively, with year-on-year growth rates of 21%, 19%, and 17% [8][9]. - The net profit attributable to shareholders is projected to be 142 million yuan, 273 million yuan, and 418 million yuan for the same years, with growth rates of 181%, 92%, and 53% respectively [8][9].