20210531-招银国际-顺丰控股-002352.SZ-Spin-off_of_intra-city_instant_delivery_business_to_unlock_value_6页_1mb

CMB International Securities | Equity Research | Company Update Summary

Core Content

This report discusses the strategic move by SF Holding-A (002352 CH) to spin off its intra-city instant delivery business, which is conducted through Hangzhou SF Intra-City (杭州顺丰同城实业), to unlock value. The business is valued at RMB23.5bn, based on a 5x 2021E EV/Sales multiple and a 50% revenue growth assumption for 2021. The spin-off is expected to be listed on the HKEX, and the analysis highlights the potential benefits of this move for SF.

Key Financials of SF Holding-A (002352 CH)

Intra-City Instant Delivery Business

• Target to be spun off: Hangzhou SF Intra-City, which accounts for 66.76% of SF's equity interest.
• Coverage: The business operates in 500 cities in China with 2 million riders.
• Revenue (2020): RMB4.84bn (including internal revenue).
• Net Loss (2020/1Q21): RMB760mn/RMB210mn.
• Net Assets (Mar 2021): RMB2.1bn.
• Estimated Valuation (2021E): RMB23.5bn (based on 5x EV/Sales).
• Intra-City Revenue Growth (2021E): Expected to reach RMB7.26bn with 50% YoY growth.

Valuation and Investment Recommendation

• Target Price (TP): RMB77.00 (unchanged).
• Upside/Downside: ±10% from current price (RMB69.85).
• CMBIS Rating: HOLD, indicating a potential return of +10% to -10% over the next 12 months.
• Valuation Justification: Based on a 55x 2022E P/E multiple, which is 38% above historical average, due to SF's unique infrastructure network, diversifying revenue streams, and transition to a data/technology-driven model.

Key Risks and Opportunities

Upside Risks:

1. Better-than-expected earnings recovery in 2H21E.
2. Recovery of parcel shipment ASP (Average Selling Price).

Downside Risks:

1. Prolonged price war.
2. Further increase in operating costs.
3. Higher-than-expected spending on new business development.

Shareholding and Stock Data

Stock Performance:

Market Cap and Trading:

• Market Cap: RMB318,267 million
• 52-week High/Low: RMB124.7 / RMB46.42
• Total Issued Shares: 4,448 million

Operating Data and Assumptions

• Intra-City Business Model: Utilizes a network of riders and cooperative brands.

• Operating Metrics:

  • Number of Cities Covered: 500
  • Number of Brands Under Cooperation: 7,000
  • Number of Merchants Covered (000): 330
  • Registered Customers (mn): 100
  • Riders (mn): 2

• Key Assumptions:

  • Shipment Volume (mn units): Expected to grow steadily from 2017 to 2023.
  • ASP (RMB/unit): Expected to decline from RMB23.1 to RMB14.9.
  • Unit Cost (RMB/unit): Expected to decrease from RMB18.6 to RMB14.1.
  • Gross Margin: Expected to decline from 17.4% to 13.8%.

Earnings Sensitivity Analysis

• Net Profit (2021E) Sensitivity to ASP and Unit Costs:
  • ASP Increase: Leads to positive net profit changes.
  • Unit Cost Increase: Leads to negative net profit changes.
  • Unit Outsourcing Cost Increase: Negative impact.
  • Unit Transportation Cost Increase: Negative impact.
  • Unit Employee Cost Increase: Negative impact.

Balance Sheet and Cash Flow

Key Ratios

Conclusion

The spin-off of SF's intra-city instant delivery business is seen as a strategic move to unlock value, with a potential valuation of RMB23.5bn. Despite short-term pressures from business transformation and competition, the company's long-term infrastructure and management execution are viewed positively. The HOLD rating is based on the assumption that SF may not deliver significant upside in the near term, but could show improvement in the longer run. The report highlights the importance of ASP recovery and cost control for future profitability.