Summary of S.F. Holding Co Ltd 3Q25 Earnings Call Company Overview - **Company**: S.F. Holding Co Ltd (002352.SZ) - **Industry**: Transportation & Infrastructure - **Market Cap**: Rmb207.216 billion - **Stock Rating**: Equal-weight - **Price Target**: Rmb49.50, representing a 21% upside from the closing price of Rmb40.93 on October 30, 2025 Key Financial Highlights - **3Q25 Net Profit**: Rmb2.6 billion, down 8.5% YoY [2] - **Adjusted Net Profit**: Rmb2.2 billion, down 14% YoY [2] - **Revenue**: Rmb78.403 billion, up 8.2% YoY [9] - **Gross Margin**: 12.5%, down 1.6 percentage points YoY [9] - **Operating Profit**: Rmb3.114 billion, down 23.3% YoY [9] - **Recurring Net Profit**: Rmb2.227 billion, down 14.2% YoY [9] - **Free Cash Flow (9M25)**: Estimated at Rmb5.3 billion, with operating cash flow down 14% YoY [8] Key Positives - **Domestic Express Revenue Growth**: 14% YoY growth in domestic express revenue [8] - **Time-Definite Parcels Revenue**: Increased by 8.1% YoY, faster than the 6.6% growth in 2Q25 [8] Key Negatives - **International Revenue Decline**: 6% YoY drop in international revenue due to global trade tensions [8] - **Margin Compression**: Gross margin and operating margins narrowed, indicating pressure on profitability [8] - **Earnings Forecast Risks**: 4Q25 profit target implies downside risks to earnings forecasts [8] Strategic Actions - **Share Repurchase Plan**: Increased from Rmb0.5-1 billion to Rmb1.5-3 billion, aimed at providing downside protection [8] Valuation and Risks - **Valuation Methodology**: Probability-weighted DCF valuation with 15% bull case, 70% base case, and 15% bear case [10] - **Key Assumptions**: WACC of 8.7% and terminal growth rate of 2.5% [10] - **Upside Risks**: Better volumes from e-commerce penetration, higher international revenue growth, and cost efficiency [12] - **Downside Risks**: Increased competition, lower profitability from new businesses, and inflated labor costs [12] Conclusion - **Market Reaction**: Anticipated negative share price reactions to earnings due to wider-than-expected profit drop [8] - **Investment Outlook**: The company remains under an equal-weight rating, with limited upside risks before margin expansion resumes [8]