\u3000\u3 China Vanke Co.Ltd(000002) 352 S.F.Holding Co.Ltd(002352) )
Core view: SF 2021q4 performance meets expectations, and the performance is repaired quarterly. We expect that in 2022, with the company improving efficiency, increasing income and stable operation, the profitability will be greatly improved.
Raise the profit forecast and maintain the “buy” rating. Affected by the capacity input at the beginning of the year, the Spring Festival epidemic and the rapid growth of low gross profit products, SF 2021’s profit is under pressure. However, since the second quarter, with the ramp up of production capacity and the adjustment of product structure, the profitability of the company has been gradually repaired. Considering that SF is still in the ramp up period of production capacity in 2022, the management is expected to release profit elasticity by strengthening cost control. We raised the forecast of S.F.Holding Co.Ltd(002352) 20222024 net profit attributable to parent company to RMB 6.92/92.4/10.79 billion (previously predicted to be RMB 5.975/9.202 billion in 2022 / 2023), and the corresponding EPS was RMB 1.41/1.88/2.20 (previously predicted to be RMB 1.23/1.88 in 2022 / 2023).
The performance is in line with expectations, and the profit is repaired quarterly. In 2021, SF achieved a net profit of 4.27 billion yuan, a year-on-year decrease of 41.7%, and a net profit of 1.83 billion yuan, a year-on-year decrease of 70.1%. This is basically consistent with the non net profit deducted by SF previously estimated, but the net profit of SF in 2021 exceeded our expectation because it did not take into account the impact of nearly 1 billion yuan of non recurring profit and loss caused by SF’s disposal of subsidiaries. Quarter by quarter, SF’s net profit of Q1-Q4 after deduction of non-profit was -11.3, 660, 810 and 1.5 billion yuan respectively in 2021, and the performance showed an obvious trend of quarterly repair. From the perspective of various business segments, in 2021, SF express segment (time express, economic express, cold transport and medicine), express segment, intra city segment, supply chain and international segment achieved a net profit of RMB 3.8, – 6, – 9 and 600 million respectively, with a corresponding year-on-year increase of – 55%, 36%, – 19% and 498%.
The new business continues to improve and the cost fluctuates slightly. Since the second half of 2021, the loss of SF’s new business has gradually narrowed. (1) SF express lost 600 million yuan in the first half of 2021, while it basically reached breakeven in the second half of 2021. (2) In the fourth quarter of 2021, SF and Kerry Logistics have achieved consolidation. Kerry Logistics is the world’s leading freight forwarding and supply chain company, with a net profit of 7.3 billion yuan to its parent company in 2021. SF holds 51% equity of Kerry Logistics, and its international and supply chain business has become a new profit growth point of SF. (3) SF city was listed on the Hong Kong Stock Exchange in December 2021. Considering the gradual improvement of local business and the reduction of shareholding ratio to 65%, it is expected that the impact of SF city on the profits of the parent company will also be reduced in 2022. In 2021, SF’s labor cost accounted for 41% of revenue, a year-on-year decrease of 3 percentage points; The proportion of transportation capacity cost in revenue was 35%, with a year-on-year increase of 7.5 percentage points. Excluding the impact of Kerry Logistics consolidated statement, the proportion of labor cost and transportation capacity cost in revenue increased by 0.86 and 3.04 percentage points respectively year-on-year, which was mainly affected by the capacity investment at the beginning of the year, the Spring Festival epidemic, the rapid growth of low gross profit products and so on. In 2021, Shunfeng’s four networks financing strategy achieved initial results, achieving an overall cost reduction of 670 million yuan. It is expected that the four networks financing will continue to promote in 2022, driving the improvement of the company’s cost.
Optimize the product structure and wait for the elastic release. In 2021, with the gradual ramp up of production capacity, SF’s profitability has been repaired quarterly, but the profitability elasticity of its core business has not been released. Since 2022, SF has continuously strengthened cost control, further optimized product structure, and gradually transitioned from low margin products to high margin products. According to the operation briefing of SF express from January to February, the unit price of SF express from January to February increased by 5% year-on-year. We expect that in 2022, SF time limited parts will still maintain a high single digit growth, the international freight forwarding business will still remain in a high range, and the continuous improvement of the company’s capacity utilization and cost control is expected to gradually release the performance flexibility.
Risk warning event: the growth rate of aging parts is lower than the expected risk; Risk of the impact of the epidemic on business; Risk of oil price fluctuation; Risk of new business cultivation.
