20220103-招银国际-顺丰控股-002352.SZ-Set_to_deliver_strong_earnings_recovery_in_2022E__U_G_to_BUY_5页_1023kb

Summary of SF Holding-A (002352 CH) - CMB International Securities Equity Research

Core Content

SF Holding-A is set to deliver a strong earnings recovery in 2022E, driven by strategic shifts and business consolidation. The company has completed major fundraising activities and the spin-off of SF REIT and the intra-city business unit, positioning it to benefit from the industry's focus on service quality over pricing. The upgrade to "BUY" reflects improved financial outlook and potential for growth in the premium e-commerce delivery segment.

Key Points

• Earnings Recovery:

  • SF is expected to achieve a 26% increase in 2022E and a 22% increase in 2023E in core net profit.
  • Revised target price is RMB100, based on a 61x 2022E P/E, up from RMB77.
  • The upgrade to "BUY" indicates a strong potential return of over 15% in the next 12 months.

• E-commerce Standard Express:

  • A key product line with an ASP of RMB6/parcel.
  • Currently accounts for ~25% of SF's total daily volume (excluding Kerry Logistics).
  • Expected to gain market share in the premium e-commerce delivery segment due to rising demand for better delivery services.
  • Potential business relationship with major e-commerce platforms is not ruled out.

• Consolidation of Kerry Logistics:

  • SF acquired 51.5% of Kerry Logistics in late September, significantly boosting supply chain logistics revenue.
  • Supply chain logistics is projected to account for 25% of SF's consolidated revenue in 2022E.
  • Strong synergies are anticipated in the China supply chain logistics market.

• Freight Segment:

  • Shifted focus from scale to profit, resulting in segment net profit of RMB20-30mn in 3Q21, compared to a loss of RMB580mn in 1H21.
  • Targets a 20% profitable revenue growth in 2022E.

• Valuation:

  • The current share price has reflected margin pressure and weak earnings in 2021E.
  • The new target price of RMB100 is 1SD above the historical average of 44x P/E.
  • SF is believed to deserve a valuation premium due to its strong earnings recovery.

• Financial Highlights (YE 31 Dec):

  • Revenue is projected to grow from RMB112,193 in FY19A to RMB327,664 in FY23E.
  • Core Net Income is expected to rise from RMB4,948 in FY19A to RMB11,618 in FY23E.
  • Core EPS is forecasted to increase from RMB1.12 in FY19A to RMB2.37 in FY23E.
  • EBITDA is projected to grow from RMB10,429 in FY19A to RMB26,366 in FY23E.
  • P/E is expected to decrease from 61.2x in FY19A to 29.0x in FY23E.
  • P/B is expected to decrease from 7.2x in FY19A to 3.5x in FY23E.

Revenue and Profit Growth

• Revenue Growth:

  • Express logistics revenue is expected to grow at 20.3% in FY19A, 20.4% in FY20A, and 18.7% in FY21E.
  • Supply chain revenue is projected to grow significantly, with 50.0% in FY19A, 40.0% in FY20A, and 40.0% in FY21E.

• Profitability:

  • Gross margin is expected to improve from 17.4% in FY19A to 13.0% in FY23E.
  • EBITDA margin is projected to rise from 9.3% in FY19A to 8.0% in FY23E.
  • After-tax profit margin is expected to increase from 5.0% in FY19A to 4.4% in FY23E.

Risks

• Decline in ASP
• Further increase in operating costs
• Delay in new business development

Share Performance

• 1-month return: 12.6%
• 3-month return: 5.5%
• 6-month return: 1.8%
• 12-month price performance: Up 45% from previous target price of RMB77 to current RMB100.
• Current price: RMB68.92

Shareholding Structure

• Shenzhen Mingde: 55.07%
• Shenzhen Zhaoguang Inv.: 4.29%
• Ningbo Shunda Fengrun VC: 2.27%
• Others: 38.37%

Key Ratios

• Sales mix:
  • Express logistics: 94% (FY19A), 82% (FY21E), 74% (FY22E), 74% (FY23E)
  • Supply chain: 4% (FY19A), 17% (FY21E), 25% (FY22E), 25% (FY23E)
• Profitability:
  • ROE: 12.5% (FY19A), 13.9% (FY20A), 5.5% (FY21E), 9.7% (FY22E), 12.6% (FY23E)
  • ROA: 7.1% (FY19A), 7.2% (FY20A), 3.7% (FY21E), 5.4% (FY22E), 7.1% (FY23E)
• Liquidity:
  • Current ratio: 1.4 (FY19A), 1.2 (FY20A), 1.1 (FY21E), 1.1 (FY22E), 1.2 (FY23E)

Earnings Sensitivity

• ASP: Sensitive to changes in average selling price, with a 2022E net profit of RMB8,079 at an ASP of RMB16.8.
• Unit outsourcing cost: Sensitive to cost changes, with net profit potentially increasing or decreasing based on cost levels.
• Unit transportation cost: Net profit increases with lower transportation costs.
• Unit employee cost: Net profit increases with lower employee costs.

Analyst Information

• Analyst: Wayne Fung, CFA
• Contact: (852) 3900 0826, waynefung@cmbi.com.hk
• CMBIS Ratings:
  • BUY: Potential return of over 15%
  • HOLD: Potential return of +15% to -10%
  • SELL: Potential loss of over 10%
  • NOT RATED: Not rated by CMBIS

Disclaimer

• The information is based on publicly available data and CMBIS estimates.
• CMBIS does not provide individually tailored investment advice.
• There are risks involved in trading any securities, and past performance is not indicative of future results.
• CMBIS is not liable for any losses incurred from reliance on this report.
• This report is for internal use and not for distribution to others.