Summary of the Express Delivery Industry Conference Call Industry Overview - The express delivery industry experienced a growth rate of 21.6% in Q1, but dropped below 20% in April due to ongoing price wars. The competition is primarily concentrated in the central and northern regions of China, while traditional grain-producing areas maintain stable prices [1][3][5]. - Major companies like Shentong (申通) and YTO Express (圆通) have shown strong performance, with Shentong achieving a 19% increase in single ticket revenue in April, surpassing the industry average [1][7]. Key Insights and Arguments - **Price Stability and Competition**: Shentong has demonstrated remarkable price stability, with its franchisees showing resilience and actively capturing market share without excessive support from headquarters. This contrasts with other companies where franchisees lack motivation to seize market share [1][7]. - **Cost Control Strategies**: Companies are optimizing core costs such as transit and trunk transportation to cope with price competition. Yunda (运达) has achieved a historical low cost of 0.62 yuan per ticket, which is the lowest in the industry [1][8]. - **Single Ticket Delivery Fees**: Delivery fees have gradually decreased with the growth in business volume, but the extent of decline varies among companies. Shentong's delivery fees remained stable in Q1, validating its strategy of balancing profit and growth [1][9]. - **Capital Expenditure Disparities**: There is a divergence in capital expenditures among express delivery companies, with Zhongtong (中通) and YTO maintaining strong investments, indicating potential shifts in market share post-2025 [1][10]. Additional Important Points - **Market Sentiment and Stock Performance**: The overall market sentiment remains low, with stock prices of major companies declining despite Shentong's positive performance in Q1. SF Express (顺丰) has shown relative resilience due to its franchise model [2][13]. - **Regional Price Variations**: Prices in traditional grain-producing areas have not decreased significantly, while central and northern regions have seen substantial price drops, with some provinces experiencing growth rates of 30%-40% [6]. - **Future Industry Trends**: The express delivery industry is expected to face challenges in the upcoming months, with potential growth rates dropping to around 15% during the peak season. Companies may resort to price policies to enhance capacity utilization [14][15]. - **Impact of New Regulations**: New regulations are expected to influence the logistics industry significantly, promoting high-quality development and potentially providing government subsidies to leading companies [19][21]. Conclusion The express delivery industry is navigating a complex landscape characterized by price wars, varying performance among companies, and significant regional differences. Companies that effectively manage costs and maintain price stability, like Shentong and YTO, are likely to emerge stronger in the evolving market. The anticipated changes in capital expenditure and regulatory environment will also play a crucial role in shaping the industry's future dynamics.

Core Viewpoint - In Q1 2025, SF Holding achieved steady revenue growth and improved profitability, driven by high-quality development and cost control measures [1][2][3]. Group 1: Financial Performance - In Q1 2025, SF Holding reported operating revenue of 69.85 billion yuan, a year-on-year increase of 6.9% [1]. - The net profit attributable to shareholders reached 2.23 billion yuan, up 16.9% year-on-year, while the non-recurring net profit was 1.97 billion yuan, increasing by 19.1% [1]. - The express logistics business generated revenue of 51.86 billion yuan, reflecting a 7.2% year-on-year growth, with a total business volume of 3.56 billion parcels, a 19.7% increase year-on-year [1][2]. Group 2: Cost Management and Profitability - The company maintained a gross margin of 13.3%, an increase of 0.13 percentage points year-on-year, with costs accounting for 86.7% of revenue, down 0.13 percentage points [3]. - The net profit margin attributable to shareholders reached 3.20%, up 0.27 percentage points year-on-year, while the non-recurring net profit margin was 2.83%, an increase of 0.29 percentage points [3]. Group 3: Shareholder Returns and Capital Expenditure - Capital expenditure for 2024 decreased by 27% to 9.9 billion yuan, with the ratio to revenue dropping from 5.2% in 2023 to 3.5% in 2024 [4]. - Free cash flow increased by 70% to 22.3 billion yuan, providing a solid foundation for dividends and share buybacks [4]. - The total cash dividend payout ratio for 2022, 2023, and 2024 was 20%, 35%, and 40%, respectively, with a proposed buyback plan for 2025 of no less than 500 million yuan and no more than 1 billion yuan [4]. Group 4: Future Outlook - Revenue forecasts for SF Holding from 2025 to 2027 are 319.06 billion yuan, 354.32 billion yuan, and 390.61 billion yuan, representing year-on-year growth rates of 12%, 11%, and 10% respectively [5][6]. - The projected net profit for the same period is 11.796 billion yuan, 13.520 billion yuan, and 15.319 billion yuan, with year-on-year growth rates of 16%, 15%, and 13% respectively [5][6].

Investment Rating - The report maintains a "Buy" rating for the company [1][11][12] Core Insights - The company has demonstrated steady revenue growth and improved profitability, with a resilient performance in its first quarter of 2025 [5][6][9] - The company achieved a revenue of 69.85 billion yuan in Q1 2025, representing a year-on-year increase of 6.9%, and a net profit attributable to shareholders of 2.23 billion yuan, up 16.9% year-on-year [5][6] - The report emphasizes the company's focus on high-quality development, cost reduction, and efficiency improvement, which are expected to continue driving performance [7][9] Revenue and Profitability - In Q1 2025, the express logistics business generated revenue of 51.86 billion yuan, a 7.2% increase year-on-year, while the supply chain and international segments saw a 9.9% increase [5][6] - The total business volume reached 3.56 billion parcels, with a year-on-year growth of 19.7% [5][6] - The gross profit margin for Q1 2025 was 13.3%, reflecting a slight year-on-year increase, while the net profit margin improved to 3.20% [7][8] Cost Management and Shareholder Returns - The company has successfully implemented cost control measures, resulting in a decrease in the cost-to-revenue ratio to 86.7% [7] - Free cash flow increased by 70% year-on-year to 22.3 billion yuan, providing a solid foundation for dividends and share buybacks [9] - The company plans to repurchase shares with a total amount not less than 500 million yuan and not exceeding 1 billion yuan, with a buyback price capped at 60 yuan per share [9] Future Projections - Revenue forecasts for 2025-2027 are 319.06 billion yuan, 354.32 billion yuan, and 390.61 billion yuan, with growth rates of 12%, 11%, and 10% respectively [10][11] - Net profit projections for the same period are 11.796 billion yuan, 13.520 billion yuan, and 15.319 billion yuan, with growth rates of 16%, 15%, and 13% respectively [10][11] - The report highlights the company's commitment to shareholder returns and the potential for value creation through strategic initiatives [9][11]