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On March 23, 2020, courier “One Brother” SF Holdings (002352.SZ) handed in its papers-its revenue in 2019 exceeded 100 billion yuan, and its net profit was 5.79 billion yuan. Both figures reached a record high.

In this annual report, SF’s business volume in 2019 was 4.83 billion votes, an increase of 28.5% year-on-year, and the growth rate was slightly higher than the industry average. The market share of the express delivery industry accounted for 7.6%.

The reason why the market share has not continued to decline is that SF, which has always been “highly cold,” has entered the sinking market.

In May 2019, SF launched a special warehouse distribution product for the e-commerce industry, and in November took over Pinjun Express, a subsidiary of Vipshop, with immediate results. In the fourth quarter of 2019, SF’s business volume increased by more than 50% year-on-year.

Even so, it’s not easy for SF to want to snatch food from the “accessible” area.

If the express delivery market is likened to a cake, the direct-operated SF has always enjoyed the top cream. In the most lucrative “aging parts” market, SF has the absolute dominant position, while the larger and less profitable e-commerce parts market is left to the franchise-based companies.

Standing in the courier battlefield, SF continues to look forward. It is using the express mode to enter the full-process supply chain market, focusing on the profits of each link such as purchasing, production, distribution, retail, and after-sales.

After hundreds of billions, SF continues to advance into the “no man’s land”.

Express delivery battlefield stops falling

In the traditional express battlefield, SF has stopped falling.

In 2019, SF’s revenue reached 112.19 billion yuan, a year-on-year increase of 22.37%. According to the business structure, the top three businesses with revenue share are aging express, economic express and express.

Aging express includes three products: SF Express, SF Express and SF Express, which mainly rely on air transportation and high-speed rail capacity, and are profitable cows of the company; economic express mainly refers to SF preferential treatment, mainly relying on road transportation; express delivery refers to more than 20KG Parcel business.

In the past two or three years, due to the changes in the macro environment and the increase in the penetration rate of electronic files, the growth rate of SF’s time-sensitive parts business hit the ceiling.

In 2019, the revenue of aging express delivery business was 56.521 billion yuan, a year-on-year increase of 5.9%.The lowest growth rate in the past five years is lower than the growth rate of China’s GDP (6.1%). In 2017 and 2018, the year-on-year growth rates of this sector’s revenue were 17.6% and 14.3%, respectively, equivalent to about 2.5 times the annual GDP growth rate.

Economy express replaced aging express and became the largest growth point of SF’s business volume. The annual report shows that the revenue of SF’s economic sector in 2019 was 26.9 billion yuan, an increase of 32% year-on-year, and the revenue scale was equivalent to 2.23 times of 2016.

The growth of this sector is mainly due to the sinking market of e-commerce.

In May 2019, SF launched e-commerce preferential products, competing for market share with Tongda based on cost-effectiveness, and in November of that year, it took over Pinjun Express, a subsidiary of Vipshop. In the fourth quarter, the company’s business volume reached 1.59 billion pieces, an increase of 51.5% year-on-year, and the growth rate exceeded that of Tongda.

The “quantity” and “price” of the express delivery industry are difficult to achieve. The surge in business volume has failed to bring the same proportion of profit growth to SF.

In the fourth quarter of 2019, SF’s revenue was 33.423 billion yuan, an increase of 31% year-on-year. It was the highest quarter in history. Net profit after deducting non-recurring gains and losses was 696 million yuan. An increase of 33.97 million yuan over the same period in 2018.

From 2015 to June 2019, SF’s market share fell from 9.48% to 7.26%.

As a direct-operating company, SF needs to invest heavily in personnel, vehicles, space, aircraft, and IT. Once the market share declines, the express delivery volume falls short of expectations, which means that there is excess capacity and the loading rate decreases, which corresponds to the continuous rise in costs.

“The cost is high, and the company will inevitably go downhill. Entering the e-commerce market can dilute costs and guide network expansion. This is a strategic turning point for SF.” Express industry veteran and founder of Shuangyi Consulting Gong Fuzhao told Prism.

Start capitalization of the park

In 2019, SF’s net profit was 5.796 billion yuan, net profit after deducting non-recurring gains and losses was 4.207 billion yuan. In addition to the government subsidy of 545 million yuan, the difference between the two also includes a “investment income” of 614 million yuan.

This “investment income” is derived from the transfer of SF Industrial Park.

In August 2018, SF announced that its Shenzhen Fengtai E-commerce Industrial Park Asset Management Co., Ltd. (hereinafter referred to as SF Fengtai) will set up a special asset support project with the logistics industry park it holds as the asset target. It is planned to raise funds through the issuance of ABS (asset-backed securities) with a storage rack scale of 5 billion yuan and a validity period of two years.

The first phase of ABS was issued by SF that year, raising funds of 1.846 billion yuan, and at the same time realizing asset appreciation investment income of 808 million yuan. In 2019, SF’s storage rack quota