Jingdong "eats" deppon logistics industry integration and M & A will continue

after nine trading days and three suspension announcements, the acquisition of deppon finally came to fruition. As expected, the acquirer is JD

On March 11, Deppon Logistics Co.Ltd(603056) ( Deppon Logistics Co.Ltd(603056) . SH) announced that Deppon Logistics Co.Ltd(603056) actual controllers and persons acting in concert signed an agreement with jd.com to transfer the shares of Debang holdings, the controlling shareholder, if the trading conditions were met. After the transfer, Suqian Jingdong Zhuofeng Enterprise Management Co., Ltd., controlled by Jingdong group, will become the indirect controlling shareholder of Deppon Logistics Co.Ltd(603056) and the two sides will carry out in-depth cooperation in the fields of express delivery, cross-border, warehousing and supply chain.

It is understood that after the strategic cooperation is reached, deppon and JD will maintain the independent operation of the brand and team, and the overall strategy and business direction will remain unchanged.

jd.com, Debang or delisting

According to the announcement, Deppon Logistics Co.Ltd(603056) received the notice from Cui Weixing, the controlling shareholder and actual controller of the company on March 11, 2022. Cui Weixing and Xue Xia, who acted in concert 153 natural persons and institutional shareholders (hereinafter referred to as the "Transferor") including the director and Gao Jian of Debang holdings signed relevant share transfer agreements and other transaction documents with Suqian Jingdong Zhuofeng Enterprise Management Co., Ltd. (hereinafter referred to as "Jingdong Zhuofeng") controlled by Jingdong group. On the premise of meeting the delivery conditions agreed in the share transfer agreement and other transaction documents, JD Zhuofeng will transfer 999870% of the total share capital of Debang holdings held by the transferor.

According to the data, deppon holdings holds 664965% of the shares of the listed company Deppon Logistics Co.Ltd(603056) 664965%. JD Zhuofeng indirectly controls Deppon Logistics Co.Ltd(603056) . With the smooth implementation of this transaction, the actual controller of Deppon Logistics Co.Ltd(603056) will be changed. Cui Weixing, chairman and general manager of deppon, will no longer be the actual controller of the company. Deppon holdings will remain the controlling shareholder of the company, and JD Zhuofeng will become the indirect controlling shareholder of the company.

However, the transaction still needs to be reported to and approved by the Anti Monopoly Bureau of the State Administration of market supervision, and the transferee's internal review process needs to be performed. There is still uncertainty about whether the final delivery can be completed and the completion time of delivery.

The announcement also shows that after the completion of the transaction, JD Zhuofeng will trigger the obligation of comprehensive tender offer and shall issue a comprehensive offer to other Deppon Logistics Co.Ltd(603056) shareholders for the listed circulating ordinary shares with unlimited conditions. In order to improve the integration efficiency of JD group's subordinate logistics business segments, the tender offer aims to terminate Deppon Logistics Co.Ltd(603056) 's listing status.

Prior to the news of the acquisition, Deppon Logistics Co.Ltd(603056) had issued three consecutive suspension announcements on February 27, March 1 and March 6, which once attracted a lot of attention from the outside world. It is noteworthy that before Deppon Logistics Co.Ltd(603056) disclosed that the controlling shareholder "planned major matters related to the change of ownership structure", its share price had risen by the limit in advance The cumulative increase of trading in the past three months was 14 and 23 .

"king of less than carload" how to be acquired

In China's logistics industry, Debang was once a unique existence. Statistics show that in 1996, Cui Weixing started with freight and founded the predecessor of Debang in Guangdong, "Cui's freight company", successively launched the transportation mode of air transportation and large ticket, initiated the "truck flight" business, and quickly occupied the medium and high-end market of LCL logistics. In 2010, with an annual operating revenue of 2.62 billion yuan, deppon became a leading enterprise in the field of road LCL logistics in China.

After becoming the "king of less than carload", deppon set its sights on the express industry. In 2013, deppon express was officially launched. At that time, the frequency of online shopping was higher and higher. Driven by the rapid development of e-commerce, China's express market advanced by leaps and bounds. During this period, the competition between "Tongda Department" and Shunfeng became more and more fierce. From 2016 to 2017, the logistics industry ushered in the first wave of listing, in which SF and Tongda express giants successfully landed in the capital market. In contrast, deppon put the listing on the agenda very early, but the process was not easy. It didn't officially land in the A-share market until January 2018.

It is noteworthy that only half a year after listing, deppon decided to transform. This step was also considered as a major mistake by the outside world in the resumption analysis. In July 2018, deppon announced that it would rename the company's brand as "deppon express" and fully focus on the large express market.

In fact, from the financial report, in the following three years, Debang was indeed practicing this strategic goal. From 2018 to 2020, deppon's express business revenue was RMB 11.4 billion, RMB 14.67 billion and RMB 16.66 billion respectively, accounting for 49.50%, 56.58% and 60.58% of the company's total revenue respectively, with the proportion increasing continuously. However, it should be noted that the year-on-year growth rates of deppon express business in the three years were 64.50%, 28.69% and 13.60% respectively, which did not maintain sustained high-speed growth.

However, while deppon focuses on the express market, its express business, which was originally in a dominant position, is going downhill. From the perspective of external competition, in recent years, the listed express companies of SF and Tongda are not only consolidating the main express industry, but also marching into the express market with low market concentration. In addition, aneng logistics, which decisively cut off the express business, Baishi, which sold the Chinese express business to Jitu, and one meter tick, and other enterprises have made continuous moves in the LCL express market.

Under the deepening "inner volume", from 2018 to 2020, deppon's express business revenue was RMB 11.21 billion, RMB 10.75 billion and RMB 10.05 billion respectively, declining year by year.

In the opinion of Zhao Xiaomin, an expert in the express industry, the logic of deppon Express's positioning of large express is wrong, and its ranking in the express market is relatively backward. Moreover, express is a service industry, not a high-tech enterprise, and it is difficult to have the ability to overtake in corners. The market does not agree that deppon Express has the ability to define large express, and its share in the express market cannot be raised, The scale can't go up. Deppon should focus on express, supplemented by express, rather than express. In the case of resource mismatch, deppon's strategy to the market is unclear, which eventually leads to the decline of express business and the failure of express business. This has been the model in the past three years.

Internally, deppon has also made attempts to change. For example, in May 2020, deppon and Yunda announced a "marriage", which triggered the industry's expectations for the future development of the two companies.

However, in the view of insiders, the two sides did not deliver new developments to the market in the following year; In May 2021, deppon also said that it would adjust the development strategy of express business, increase resource investment and enable express to regain growth. However, from the subsequent financial results, it did not convey enough confidence to the market.

A month ago, Deppon Logistics Co.Ltd(603056) issued the announcement of performance reduction in 2021. The net profit attributable to shareholders of Listed Companies in 2021 is expected to decrease by 378134100 yuan to 491099 million yuan, 67.00% to 87.00% year-on-year, compared with the same period of last year (statutory disclosure data).

For the pre reduction of performance, Debang said in the announcement that it was mainly affected by the adjustment of external environment and internal business strategy. In terms of the external environment, the overall prosperity of the macro environment has declined and the competition in the field of large cargo transportation has intensified, which has slowed down the growth of the company's revenue, and the high oil price throughout the year has an adverse impact on profits. In terms of internal strategy, the company continues to increase resource investment based on long-term layout, and the cost and expense are under pressure in stages.

integration and M & A is still the main theme of the industry

Many voices in the industry are optimistic about JD's winning Debon this time. Cao Lei, director of ECOSOC e-commerce research center of jd.com, pointed out that the sector layout of jd.com logistics includes warehouse distribution, transportation, express delivery, large items, cold chain, cross-border, rural logistics, pharmaceutical distribution, campus distribution, last mile distribution, unmanned distribution, supply chain, logistics advertising, cloud warehouse, smart car equipment system Home appliances installation, maintenance, after-sales and other more than 10 sub tracks. In addition, JD logistics also invested in many logistics technology companies, such as Yida warehouse (Intelligent express cabinet), dada group (crowdsourcing logistics), Juma logistics (intra city distribution), geek repair, Fuyou truck (freight), road innovation and Xingshen intelligence (intelligent logistics). The acquisition of deppon is expected to strengthen JD's advantages in large express delivery and improve its whole industrial chain, whole scene and ecological layout.

With JD's acquisition of deppon, the integration and M & A of express logistics industry has once again attracted the attention of both inside and outside the industry. In fact, in recent years, mergers and acquisitions in the field of express logistics have occurred frequently. In express logistics enterprises, the whole industry shows a trend of increasing concentration. In the first half of last year, SF announced that it would spend 10 billion to acquire a majority stake in Kerry Logistics. In the second half of last year, Jitu express won the express business of Baishi group in China and successfully ranked among the first camp of China Express. It is the two most concerned integration events in the logistics industry in 2021. At the end of last year, a number of people in the logistics industry told reporters that integration and M & A will be the main theme of the logistics industry in the next year or two, both in the Chinese market and the international market.

Through "buy and buy", logistics enterprises do not need to spend too much time cultivating new businesses and reducing trial and error costs. At the same time, the volume is also growing, and the situation of giants is taking shape.

Just yesterday, JD logistics released its first annual performance report after listing. In 2021, the total revenue reached 104.7 billion yuan, a year-on-year increase of 42.7%, of which the revenue from external customers reached 59.1 billion yuan, a year-on-year increase of 72.7%, accounting for 56.5% of the total revenue.

Shunfeng, another giant who keeps "buying", has reached the 200 billion mark in revenue. Thanks to the completion of the acquisition of 51.5% shares of Kerry Logistics at the end of September last year, from the fourth quarter of 2021, the revenue of relevant business of Kerry Logistics has been consolidated, and the revenue of SF supply chain and international business has increased significantly. In terms of calculation, in terms of express business, supply chain and international business, SF's revenue in 2021 was 206084 billion yuan, an increase of 35.8% year-on-year compared with 151743 billion yuan in 2020.

The reporter said that there are more and more small-scale logistics enterprises in Jingdong. At present, there are more and more small-scale logistics enterprises in Jingdong. The reporter said that there are more and more small-scale logistics enterprises in Jingdong. At present, there are also many new logistics enterprises in Jingdong. The reporter said that Jingdong has to take the lead, However, for most enterprises that work silently by themselves, the market will not give too much time, which also means that there are more stories about integration and M & A in the future.

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