2025-10-31 01:53Summary 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]