2025-08-29 02:19Summary of S.F. Holding and Kerry Logistics Conference Call Company Overview - Companies Involved: S.F. Holding (002352.SZ/6936.HK) and Kerry Logistics (0636.HK) Key Points 1. Financial Performance - 2Q25 Revenue: S.F. Holding reported revenue growth of +11% year-over-year (yoy) to Rmb77.008 billion, in line with expectations [1] - Net Profit: Pre-exceptional net profit was Rmb2.577 billion, down -13% compared to guidance, with a gross margin of 13.1%, lower than 14.5% in 2Q24 [1][3] - EBIT Margin: EBIT margin was 5.1%, missing the expected 6.0% [3] 2. Market Share and Growth - Time-Definite Express Growth: Revenue growth for time-definite express was 7% in 1H25, with overall parcel volume growth accelerating to 19% yoy, increasing market share to 8.2% [2] - Future Projections: Expected time-definite express revenue growth of 7% yoy in 2025, with group revenue growth projected at 10% and 9% for 3Q and FY25, respectively [2] 3. Margin Outlook - Near-Term Margin Pressure: Short-term gross margin is expected to face pressure due to a flexible pricing strategy, with projections of 13.4% and 13.3% for 3Q25 and FY25, respectively [3] - Long-Term Margin Improvement: Confidence in margin improvement in 2026 due to increased volume and revenue base [3] 4. Supply Chain and International Growth - Revenue Growth: Supply chain and international revenue grew by 10% yoy in 1H25, despite deceleration due to tariff uncertainties [4] - Future Growth Expectations: Anticipated growth of 10% in supply chain and international revenue for 2025, leveraging a large fleet and comprehensive network [9] 5. Shareholder Returns - Dividend Announcement: S.F. Holding plans to distribute Rmb2.3 billion as FY25 interim dividends, with a payout ratio of 40% [10] - Capex Reduction: Capex decreased by 24% to Rmb4.2 billion in 1H25, with expectations to maintain similar levels in 2025 [10] 6. Employee Shareholding Scheme - "Grow Together" Scheme: Launched to enhance organizational vitality, involving grants over a medium-to-long-term period of 9 years, with up to 200 million A shares allocated [11] 7. Investment Ratings - S.F. Holding: Maintained a Buy rating with a target price of Rmb57 for A-shares and HK$52 for H-shares, based on 8X and 7X EV/EBITDA multiples, respectively [12][24] - Kerry Logistics: Neutral rating with a target price of HK$9.0, citing risks around forwarding rates and geopolitical uncertainties [13] 8. Risks - Key Risks for S.F. Holding: Prolonged price competition, macroeconomic dependence on parcel volume growth, and higher capex [12] - Key Risks for Kerry Logistics: Weaker-than-expected freight forwarding performance and increased competition in the logistics market [13] Additional Insights - Operational Efficiency: The company is focusing on improving service quality while maintaining a flexible pricing strategy to expand market share [3] - Investment in Capabilities: Enhanced cross-border multimodal capabilities are expected to support resilience in international growth despite external uncertainties [4]