Good News on Listing | Frost & Sullivan Assists SFHC to Successfully List on the Hong Kong Stock Exchange (6936.HK)

SF Express Holdings Limited (hereinafter referred to as 'SF Express Holdings') successfully listed on November 27, 2024. The company plans to issue 170 million H shares, of which 90.5% will be international offerings, 9.5% will be Hong Kong offerings, and an additional 15% will be underwritten options. The issue price per share is HK$34.30, raising a total of approximately HK$5.83 billion.

During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and supporting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.

• The company is the largest integrated logistics service provider in Asia;

• The company has created a successful business model - direct operation, integrated operations, and independence;

• The company is a bridge connecting Asia with the world;

• The company is the preferred brand for providing differentiated and high-quality services;

• The company drives operations with technology and innovation;

• The company has a visionary management team and promotes a people-oriented corporate culture.

According to a report by Frost & Sullivan,

Based on 2023 revenue, the company:

• Asia's largest and the world's fourth-largest integrated logistics service provider;

• It is China's largest express delivery service provider with a 24-hour service;

• It is the largest express delivery, less-than-truckload (LTL) express, and same-city instant delivery logistics service provider in Asia.

As of June 30, 2024, the company:

• It is the largest air freight carrier in Asia, owning the largest fleet of cargo aircraft in the region;

• Possessing the first logistics hub in Asia and the fourth in the world dedicated to freight transportation - Ezhou Freight Hub;

• We possess the largest land transportation fleet in Asia, the most extensive service network across the region, and the largest delivery team.

As the pillar of the global economy, the global logistics industry contains market opportunities worth tens of billions of dollars, enabling the circulation of goods and services around the world. The total global logistics expenditure in 2023 was $11.1 trillion, and it is expected to reach $13.8 trillion by 2028, with a compound annual growth rate of 4.4%.

Among all regions, Asia is the largest and fastest-growing market in the global logistics market, with one of the lowest concentrations and the most attractive growth prospects. In 2023, logistics expenditure in Asia reached as high as $5.1 trillion, accounting for 45.5% of the global market. It is expected that the compound annual growth rate between 2023 and 2028 will be 5.5%.

In particular, in 2023, China accounted for the largest share in Asia, reaching 53.4%, and is expected to grow at a compound annual rate of 4.2% between 2023 and 2028. This growth benefits from sustained economic growth, manufacturing upgrading, and consumption upgrading. Benefiting from strong economic growth, ongoing urbanization, growing consumer demand, as well as the increasing importance of Southeast Asia in the global supply chain, the rise of cross-border e-commerce, favorable government policies, and regional trade initiatives, intra-regional trade within Asia is becoming increasingly prosperous. It is expected that the compound annual growth rate of markets outside China in Asia during the same period will reach 6.9%.

Source: Frost & Sullivan report

According to a Frost & Sullivan report, outsourcing logistics needs to third-party service providers is an increasingly growing trend in the global logistics industry. During the period from 2023 to 2028, the compound annual growth rate of global third-party logistics expenditure is expected to be 5.2%, while the compound annual growth rate of global logistics expenditure during the same period was only 4.4%, reflecting an increasing penetration rate of third-party logistics globally, rising from 47.1% in 2023 to 48.8% in 2028. The shift in enterprises' demand from self-operated logistics to third-party logistics is mainly driven by several factors, including the excellent service quality, operational efficiency, timeliness, and cost savings of third-party logistics. Self-operated logistics often struggles to match the service capabilities, quality, and reliability of professional third-party logistics service providers. By outsourcing logistics to professional third-party logistics service providers, enterprises can free up more time and resources to focus on their core competencies, while optimizing logistics costs and enhancing the end customer experience.

Asia is the region with the largest expenditure on third-party logistics and the fastest growth rate, mainly due to strong overall logistics expenditure growth and the continuous improvement of third-party logistics penetration rates.

Source: Frost & Sullivan report

Comprehensive logistics service providers typically offer a full range of domestic and international logistics services, providing one-stop solutions for multinational corporations, large enterprises, small and medium-sized enterprises, and individual customers. There are only about ten comprehensive logistics service providers in the world that can offer a full range of logistics services. Their service scope usually includes but is not limited to express delivery (including time-sensitive delivery), freight forwarding (via full truckload and/or less-than-truckload modes), cold chain logistics, international freight forwarding services (air, sea, rail, or land transportation), and supply chain solutions. With these service capabilities, comprehensive logistics service providers can meet the following diverse needs: 1) Procurement and production logistics: from raw material suppliers to manufacturers, and then to warehouses; 2) Distribution logistics: from warehouses to domestic or cross-border distribution channels; 3) Consumer and after-sales logistics: including but not limited to last-mile delivery to end customers and reverse logistics scenarios. With their global logistics network, comprehensive logistics service providers have the most ability to seize the opportunities for the development of the global logistics value chain.

Source: Frost & Sullivan report

Over the past decade, integrated logistics has been proven to be a successful business model in the global logistics industry, with the market share of leading companies operating under this model continuously expanding. Calculated based on global third-party logistics expenditure, the market share of the world's four major integrated logistics service providers increased from 4.3% in 2014 to 5.8% in 2023.

During this decade, the global third-party logistics industry's overall compound annual growth rate based on revenue was only 2.7%, while the four major comprehensive logistics service providers globally achieved a compound annual growth rate of 6.1% based on revenue. Comprehensive logistics service providers, with their strong operational capabilities and innovative service models, can more effectively meet market demands, thereby achieving faster growth rates. At the same time, this also highlights the importance of scale, diversified services, and global networks in the logistics industry.

This trend is expected to continue in the coming years, as global logistics demand becomes more complex and integrated. Comprehensive logistics service providers are expected to further increase their market share and consolidate their leading position in the industry.

The global logistics industry is relatively fragmented. According to a Frost & Sullivan report, in 2023, the total revenue of the world's top ten integrated logistics service providers accounted for 7.6% of the total third-party logistics market. Among them, SF Express Holdings had a market share of 0.7%, ranking fourth globally and first in Asia and China. Calculated based on the compound annual growth rate of revenue from 2021 to 2023, SF Express Holdings grew the fastest among the world's four major integrated logistics service providers. In addition, calculated based on the compound annual growth rate of revenue from 2021 to 2023, SF Express Holdings ranked third among the world's top ten integrated logistics service providers.

Source: Frost & Sullivan report

scaleThe huge scale advantage enables lower unit costs and better service quality that small logistics enterprises cannot achieve.

Global logistics networkIt can meet the comprehensive and end-to-end logistics needs of enterprises and individual customers in numerous countries and regions.

Mature infrastructureThe ability to utilize scarce or difficult-to-obtain resources to build infrastructure, such as dedicated freight logistics hubs, large fleets of freight aircraft, air rights, and airport departure and arrival times. For example, as of November 2024, there is only one dedicated freight hub in Asia. Obtaining a freight airline license and establishing a freight fleet is difficult and costly, with major route times already allocated to existing freight airlines, making it difficult for new entrants to obtain these valuable resources.

A comprehensive customized solution that meets complex needs and secures a larger share of the customer walletThe logistics needs of large enterprises and small to medium-sized enterprises are becoming increasingly refined and complex. They are increasingly seeking the following goals: 1) to meet all their logistics needs; 2) to minimize the time and complexity associated with interfacing with multiple logistics service providers; 3) to reduce overall logistics costs and improve operational efficiency; 4) to seamlessly integrate with their internal systems; 5) to leverage industry knowledge and data insights to obtain value-added logistics services. Comprehensive logistics service providers can best meet these needs and promote additional logistics services and solutions through cross-selling, thereby acquiring a higher share of the customer wallet cost-effectively and enhancing customer loyalty.

Synergistic effects across logistics networks and operationsBy integrating freight transportation, sharing trunk line capacity, transfer stations, and warehousing, and building logistics nodes capable of handling a variety of services, comprehensive logistics service providers can optimize the operational efficiency of multiple logistics networks. This capability not only enables higher capacity utilization but also effectively reduces unit costs, thereby enhancing the economic efficiency and competitiveness of overall logistics services.

Technology leadership and data insightsAs the scale expands, global comprehensive logistics service providers can invest more in technology research and development to enhance operational capabilities. This technological advantage enables them to acquire more data resources and use more accurate exclusive models for demand forecasting and resource allocation, thereby further improving operational efficiency. The combination of technology and data not only enhances service quality but also consolidates their leading position in the market.

Financial strength and integration capabilitiesWith strong financial resources, global comprehensive logistics service providers possess the ability to operate smoothly in different macroeconomic environments and achieve industry integration through mergers and acquisitions. Over the past decade, the world's top ten comprehensive logistics service providers have completed or announced more than 70 merger and acquisition deals. This strong financial and integration capability not only helps them gain an advantage in competition but also supports their rapid expansion of service networks and increase in market share, further consolidating their leading position in the industry.

Frost & Sullivan has extensive research experience in the transportation industry and has assisted well-known companies in successfully listing on the capital market. Successful listing cases include:

Pan Yue International (2516.HK), Jitu Express (1519.HK), Le Can Logistics (2490.HK), Jia Yuda (NASDAQ:JYD), CBL (NASDAQ:BANL), International Shipping (2409.HK), De Yin Tianxia (2418.HK), Kua Dog Taxi (2246.HK), Canggang Railway (2169.HK), Yanguang Mingzhu (YGMZ.NASDAQ), Asia Express (8620.HK), InfinityL&T (1442.HK), Xiangxing International (8157.HK), CSSC Leasing (3877.HK), Chengdu Expressway (1785.HK), Huazi International (2258.HK), Wanlida (8482.HK), Qilu Expressway (1576.HK), Asia Industry (1737.HK), Jun Gao Holdings (8035.HK).