The Four Heavenly Kings are expected to reunite! Why do express delivery giants rush to list on the Hong Kong stock market? Shareholders Meeting | Plan | Four Major Meetings

SF Express Holdings, which has been listed on the A-share market, recently announced plans to go public again in Hong Kong.

Domestic express delivery companies are setting off a wave of going public in Hong Kong, with industry giants such as SF Express, Jitu, and Cainiao also reporting news of going public in Hong Kong this year.

SF Express will be launched at an opportune time within 18 months

SF Holdings announced on August 1st that it plans to issue overseas listed foreign shares and apply for listing on the Main Board of the Hong Kong Stock Exchange Limited.

SF Holdings will choose an appropriate timing and issuance window to complete the issuance and listing in Hong Kong within the validity period of the subsequent shareholder meeting resolution, which is 18 months from the date of approval by the company's shareholder meeting or other extended period agreed upon.

SF Holdings stated that this move is aimed at further promoting internationalization strategy, building an international capital operation platform, enhancing international brand image, and enhancing comprehensive competitiveness.

The announcement shows that the number of H-shares issued this time does not exceed 10% of the total share capital of the company after this issuance, and the overall coordinator is granted an over allotment right of no more than 15% of the H-shares issued above.

According to Zhao Xiaomin, CEO of Guanshuo Capital, generally speaking, companies listed in Hong Kong will issue more than 15% of their shares, while SF Holdings will only issue no more than 10% of its shares, indicating its strategic intention to seek a Hong Kong stock listing.

Just before the announcement of its planned listing, SF Express Holdings achieved its best semi annual performance since its A-share listing. According to the performance forecast, SF Holdings is expected to achieve a net profit attributable to shareholders of the listed company of 4.02 billion to 4.22 billion yuan in the first half of 2023, a year-on-year increase of 60% to 68%.

Hong Kong stocks may welcome the "Four Heavenly Kings" of express delivery

In addition to SF Express Holdings, there have been reports of multiple logistics and express delivery companies going public in Hong Kong this year.

In June of this year, Jitu submitted an application for listing in Hong Kong.

Public information shows that the founder and major shareholder of Jitu is Li Jie, the former head of OPPO's Indonesia business. After entering the Chinese market in 2020, Jitu's growth rate was unexpected, breaking the original domestic express delivery pattern in a short period of time and entering the first tier of domestic express delivery companies.

According to the prospectus, the profits of Jitu in 2020, 2021, and 2022 were -664 million US dollars, -6192 million US dollars, and 1.573 billion US dollars respectively; Adjusted losses were $476 million, $910 million, and $800 million, respectively.

The planned fundraising scale for Jitu's listing is between $500 million and $1 billion, with fundraising purposes including expanding logistics networks, upgrading infrastructure, and strengthening sorting, warehousing capabilities, and capacity in Southeast Asia and other markets.

In addition, in May this year, Cainiao confirmed its listing plan and is expected to complete the listing within the next 12 to 18 months. Previously, there were rumors in the market that Cainiao plans to go public in Hong Kong and intends to raise $2 billion.

Also in May, Lecang Logistics submitted its prospectus and planned to go public through an IPO in Hong Kong

This means that with the addition of JD Logistics, which has already been listed on the Hong Kong stock market, the four domestic express delivery "main forces" of SF Express, Jitu Express, and Cainiao Express will compete in the Hong Kong stock market.

Why did SF Express flock to the Hong Kong stock market for listing?

Zhao Qingming, Vice President of China Foreign Exchange Investment Research Institute, stated in an interview with China News Agency's Guoshi Express reporter that in recent years, China's logistics and express delivery industry has developed rapidly, with fierce market competition and a high demand for corporate funds. In this context, it is normal for express delivery companies such as SF Express Holdings to go public for financing in order to seek greater development.

According to official data, the volume of express delivery business in China will exceed 60 billion items in the first half of this year, with a year-on-year growth rate of over 17%; The revenue from express delivery business is expected to exceed 550 billion yuan, with a year-on-year growth rate of about 11.5%. Among them, the monthly business volume in the second quarter remained stable at over 10 billion pieces, with an expected growth rate of over 22%.

In response to the reasons why express delivery companies such as SF Express Holdings have chosen to list on the Hong Kong Stock Exchange, Zhang Xiaorong, the director of the Deep Science and Technology Research Institute, believes that the domestic logistics and express delivery industry market is highly competitive. Although the market has not yet reached the ceiling, profit margins are greatly reduced, and the international market has more development potential. To enter the international market, a large amount of funds are needed to build international brands and international operation teams, and overseas financing is a necessary option.

Hansen Supply Chain Chairman Huang Gang also stated that the competition in the domestic logistics and express delivery market has entered a relatively intense stage, and it is not easy to capture the other party's market; From the international market perspective, currently UPS, FedEx, and DHL, the three international express delivery giants, occupy the main market share. However, according to recent financial reports, their performance growth rate has also slowed down under the influence of the global environment. With the rapid development of cross-border e-commerce business, the international express logistics business of Chinese express logistics enterprises has good development potential, especially in Southeast Asia and countries along the "the Belt and Road". From this perspective, the launch of SF Express's H-share listing plan is also a trend for Chinese express delivery companies to promote international market strategies.

Zhao Qingming analyzed that considering the current overall market atmosphere of the A-share market, SF Holdings may not have ideal financing effects in the A-share market. Although the Hong Kong stock market has a lower valuation, it has a higher recognition of the express logistics industry, and SF Holdings may be more able to gain investor support.

According to financial data service provider Wanda Information, Chinese logistics companies that have completed listing on the Hong Kong stock market include Kerry Logistics, JD Logistics, and Anneng Logistics.

In addition, for companies like SF Holdings that hope to promote internationalization strategies, listing on the Hong Kong stock market is also a preferred option. Zhao Qingming said that as one of the international financial centers, Hong Kong has a mature capital market and a standardized legal system, which can provide a good financing environment for enterprises. In addition, there are many international investors active here, and companies listed on the Hong Kong stock market will be more easily favored by international investment institutions, which is conducive to opening up the international visibility and reputation of the enterprise, and promoting Chinese logistics and express companies to better achieve their internationalization strategy.