Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

Several weeks after its October IPO (and a fortnight after its maiden set of results) shares of Chinese express parcel carrier <a href="https://www.smartkarma.com/entities/23628" target="_blank" data-smartkarma-citation="entities:23628:1">ZTO Express (ZTO US)</a> continue to languish, trading almost 28% below the IPO price of US$19.50. Elsewhere, China's largest express parcel carrier byvolume, <a href="https://www.smartkarma.com/entities/20319" target="_blank" data-smartkarma-citation="entities:20319:1">YTO Express (600233 CH)</a>, recently completed a reverse takeover; shares in the newly-formed company began trading in Shanghai on December 6th, and promptly fell by -9% that day.Meanwhile, China's largest private express parcel carrier byrevenue, SF Express, is in the final stages of its own reverse takeover, via Shenzhen-listed <a href="https://www.smartkarma.com/entities/4128" target="_blank" data-smartkarma-citation="entities:4128:1">Maanshan Dingtai Rare A (002352 CH)</a>. The new availability of pro-forma financial statements for both YTO and SF Express gives us an opportunity to compare these two companies to ZTO, which has been a focus of our recent coverage here on Smartkarma. In this note we will compare and evaluate the finances and operations of the three subject Chinese express parcel carriers (ZTO, YTO, SF Express) plus the two dominant US express parcel companies, <a href="https://www.smartkarma.com/entities/19984" target="_blank" data-smartkarma-citation="entities:19984:1">United Parcel Service Cl B (UPS US)</a> and <a href="https://www.smartkarma.com/entities/14577" target="_blank" data-smartkarma-citation="entities:14577:1">Fedex Corp (FDX US)</a>. Our main objectives in writing this note are:<ol><li>To give a better understanding of the different ways the three Chinese companies are approaching China's fast-growing express parcel market</li><li>To identify the advantages and risks associated with each company's specific approach to the market</li><li>To provide an initial look at Best Logistics Technologies (private), another leading Chinese express company that enjoys backing from <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding Ltd (BABA US)</a> and <a href="https://www.smartkarma.com/entities/745" target="_blank" data-smartkarma-citation="entities:745:1">Hon Hai Precision Industry (2317 TT)</a> and which may pursue an IPO as early as Q1 2017, according to recent media reports</li></ol>

Several weeks after its October IPO (and a fortnight after its maiden set of results) shares of Chinese express parcel carrier ZTO Express (ZTO US) continue to languish, trading almost 28% below the IPO price of US$19.50. Elsewhere, China's largest express parcel carrier byvolume, YTO Express (600233 CH), recently completed a reverse takeover; shares in the newly-formed company began trading in Shanghai on December 6th, and promptly fell by -9% that day.Meanwhile, China's largest private express parcel carrier byrevenue, SF Express, is in the final stages of its own reverse takeover, via Shenzhen-listed Maanshan Dingtai Rare A (002352 CH). The new availability of pro-forma financial statements for both YTO and SF Express gives us an opportunity to compare these two companies to ZTO, which has been a focus of our recent coverage here on Smartkarma. In this note we will compare and evaluate the finances and operations of the three subject Chinese express parcel carriers (ZTO, YTO, SF Express) plus the two dominant US express parcel companies, United Parcel Service Cl B (UPS US) and Fedex Corp (FDX US). Our main objectives in writing this note are:To give a better understanding of the different ways the three Chinese companies are approaching China's fast-growing express parcel marketTo identify the advantages and risks associated with each company's specific approach to the marketTo provide an initial look at Best Logistics Technologies (private), another leading Chinese express company that enjoys backing from Alibaba Group Holding Ltd (BABA US) and Hon Hai Precision Industry (2317 TT) and which may pursue an IPO as early as Q1 2017, according to recent media reports

Where Is The Value in Chinese Express? We Compare ZTO, YTO, SF Express, & Preview Best Logistics IPO

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

<ul>
<li>The Time-definite express services are actually a double-edged sword for S.F.- Although it helps S.F. establish core competitiveness, such strategy limits the Company's market share and growth ceiling in China.</li>
<li>The issue here is that S.F. has encountered growth bottlenecks, but due to its heavy asset model, the only truly suitable solution is internationalization, which however is full of uncertainties.</li>
<li>S.F. is facing many challenges. The IPO final offer price of HK$34.3 is expensive, which might explain why S.F.'s share price has been a bit “boring” since its listing.</li>
</ul>


The Time-definite express services are actually a double-edged sword for S.F.- Although it helps S.F. establish core competitiveness, such strategy limits the Company's market share and growth ceiling in China.
The issue here is that S.F. has encountered growth bottlenecks, but due to its heavy asset model, the only truly suitable solution is internationalization, which however is full of uncertainties.
S.F. is facing many challenges. The IPO final offer price of HK$34.3 is expensive, which might explain why S.F.'s share price has been a bit “boring” since its listing.


S.F. Holding (6936 HK) - Here's Why Post-IPO Share Price Performance Is So "Boring"

Hong Kong

S. F. Holding Co., Ltd. offers express courier services. The Company provides logistics, order tracking, supply chain management, warehousing, and other services. S. F. Holding offers services worldwide.

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Where Is The Value in Chinese Express? We Compare ZTO, YTO, SF Express, & Preview Best Logistics IPO

Several weeks after its October IPO (and a fortnight after its maiden set of results) shares of Chinese express parcel carrier ZTO Express (ZTO US)...

Daniel Hellberg

S.F. Holding (6936 HK) - Here's Why Post-IPO Share Price Performance Is So "Boring"

S.F. has encountered growth bottlenecks. Due to heavy asset model, internationalization is the only solution but is full of uncertainties. The IPO...

Xinyao (Criss) Wang