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Wang Wei, the head of SF Express, is about to usher in his fifth IPO after SF Holdings (002352.SZ), SF REIT (2191.HK), Kerry Logistics (0636.HK) and SF City (9699.HK). Hive Hive Holdings Limited formally submitted a prospectus to the Hong Kong Stock Exchange for listing on the Main Board, with China Thailand as the sole sponsor.
According to the prospectus, from 2021 to the first five months of 2024, more than 1.615 billion pieces were stored in the Hive Hive smart cabinet, and according to the minimum service fee of 0.5 yuan per package (the upper limit is 3.0 yuan), the "free storage service fee" contributed to revenue exceeded 800 million yuan. In 2022, the revenue reached RMB2.891 billion with a net loss of approximately RMB1.166 billion, and in 2023, the revenue reached RMB3.812 billion with a net loss of approximately RMB541 million, but the revenue in the first five months of 2024 was RMB1.904 billion, a year-on-year increase of 33.63%, and the net profit achieved a turnaround, which stemmed from the company's cost control strategy, which steadily increased revenue while controlling operating costs and further improving gross profit margin.
Main business
First, the main business composition
The company's main business is divided into express terminal distribution services, consumer intelligent delivery services, value-added services and other businesses. Express terminal delivery services are one of the Company's core businesses, with revenue of RMB1,455 million, RMB1,686 million, RMB1,836 million and RMB777 million for the five months ended May 31, 2021, 2022, 2023 and the five months ended May 31, 2024, accounting for 57.6%, 58.3%, 48.2% and 40.8% of total revenue for the same period, respectively.
As another important part of the Company's business, consumer intelligent delivery services are mainly divided into e-commerce return and exchange services and individual bulk mailing services, with revenue of RMB149 million, RMB310 million, RMB1.020 billion and RMB692 million respectively, accounting for 5.9%, 10.7%, 26.8% and 36.3% of total revenue during the same period.
Value-added services and other businesses, including storage related services, interactive media services, cleaning services and home living services, etc., had revenue of RMB922 million, RMB896 million, RMB956 million and RMB435 million in 2021, 2022, 2023 and the five months ended May 31, 2024, accounting for 36.5%, 31.0%, 25.0% and 22.9% of total revenue, respectively.
2. Business data
As of May 31, 2024, the company has served a total of 368 million consumers and 0.04 billion couriers. In terms of express terminal distribution services, the company delivered 6.204 billion parcels, 5.823 billion parcels, 6.463 billion parcels and 2.759 billion parcels in 2021, 2022, 2023 and the five months ending May 31, 2024, respectively, showing a steady growth trend.
In terms of consumer intelligent delivery services, the number of parcels delivered in the same period was 114 million, 141 million, 233 million and 113 million respectively, and the business volume of consumer intelligent delivery services also continued to grow.
In terms of free storage services, the number of parcels subject to free storage fees during the same period was approximately 430 million, 460 million, 517 million and 208 million respectively, accounting for 6.9%, 7.9%, 8.0% and 7.5% of the total number of parcels delivered by Hive Hive Smart Lockers.
Investment Highlights:
1. Technical capabilities
The company has demonstrated significant innovation and leadership in technology. Through continuous R&D investment, the company is at the forefront of the industry in the application of AI and IoT technology, and uses AIoT technology to optimize the operation and management of smart express lockers and cleaning and care factory networks, effectively improving service quality and efficiency. In addition, the company also uses big data analytics technology to optimize business performance and operational efficiency through multiple strategic applications, especially in the areas of smart express locker site selection, deployment optimization, pricing model, customer engagement and operational efficiency improvement. The company also plans to further improve the performance and durability of smart delivery cabinets through technological innovations such as advanced identity verification, image recognition and design improvements.
Second, the company's advantages
The company's advantage lies in the operation of the world's largest network of intelligent express locker network of terminal logistics service providers, with an absolute leading position. The company's innovative business model promotes the revolutionary progress of the logistics industry, and the extensive and in-depth network layout of the community enables the company to develop a diversified service model. The company is driven by cutting-edge innovation, strong technical capabilities, an open and inclusive operating structure, synergies with partners across the market, and a visionary, entrepreneurial and experienced management team.
Industry outlook
1. Overview of China's express delivery industry
China's express delivery industry has experienced significant growth over the past few years, mainly due to the boom in e-commerce and increased consumer demand for convenient services. From 2010 to 2023, China's express parcel volume has grown by nearly 50 times, while the number of couriers has grown by less than 10 times, demonstrating the industry's urgent need for efficiency and automation. The growth of the express delivery industry has also brought with it a range of challenges, including the rising cost of pick-up and delivery services, the increased workload of couriers, consumer demand for service flexibility and privacy, and the difficulties of property management companies in maintaining order in the community. To address these challenges, the express delivery industry is exploring the use of end-of-line logistics solutions, such as smart lockers and express stations, to improve service efficiency and customer satisfaction.
2. Overview of China's terminal logistics industry
End-of-line logistics solutions are playing an increasingly important role in China's express delivery industry. These solutions simplify the process of sending and receiving parcels and overcome the challenges of door-to-door service by using end-of-line facilities, such as smart lockers and post stations. Smart lockers provide 24/7 self-service to improve the security and flexibility of sending and receiving parcels, while express stations provide parcel sending and receiving services during business hours. The end-of-line logistics solution not only reduces the unit distribution cost of the courier company and improves the work efficiency of the courier, but also provides consumers with greater service flexibility and privacy protection, while also reducing the management burden of the property management company.
In terms of market size, China's end-of-line logistics solutions market is growing steadily. From 2019 to 2023, the market size by parcel volume grew from 31.1 billion units to 94.3 billion units, at a CAGR of 32.0%. The market size is expected to reach 166.4 billion units by 2028, growing at a CAGR of 12.0% from 2023 to 2028. The volume of express parcels handled by terminal logistics solutions as a proportion of total parcels is also increasing, from 45.4% in 2019 to 65.4% in 2023, and is expected to remain at a high level of around 70% in the future. In particular, the end-of-shipment solutions segment is growing rapidly, mainly due to the rapid growth in the number of e-commerce reverse parts and the increase in the proportion of e-commerce reverse parts and loose parts handled by end-of-line solutions.
Industry status
In the fierce market competition, the Group, as a leader in the terminal logistics solutions market in China, has a significant market share and leading position. As of December 31, 2023, the Group operated 314,000 sets of smart express cabinets, with revenue from end-of-line logistics solutions reaching RMB290 million, with a market share of 6.1%, ranking first in the industry. Through an innovative business model, an extensive community network layout, cutting-edge innovation-driven technological capabilities, an open and inclusive operating structure, and a visionary management team, the Group has successfully promoted the revolutionary progress of the logistics industry and established a strong competitive advantage in the market.
Substantial shareholder
The Company's substantial controlling shareholders include Mr. Wang Wei, Matilda Holdings, Shunfeng Holdings, Sunford, Fortune Box, YiBao, Fortune Box, Zhejiang Fortune Box, Liangyue, Bestford, Asura, Ruixuan, Builnefit, Ceromel, Ms. Yu, Mr. Xu Yubin, Mr. Zhou Xiangdong, Ms. Li Wenqing and Ms. Yang Rongrong. Mr. Wang Wei holds approximately 48.45% of the voting rights of the Company through Sunford, Fortune Box, YiBao, Domal Hong Kong, Zhejiang Fortune, Shunfeng Holdings and Liangyue. Mingde Holdings is one of the controlling shareholders of the Company, which is directly owned by Mr. Wang Wei and Mr. Lin Zheying with 99.90% and 0.1% respectively.
Use of Funds
The funds received by the company are mainly used to expand and optimize the smart cabinet network, enhance the service capabilities and scope of value-added services, and research and development work. The use of these funds reflects the company's strategic plan for business expansion and long-term growth. The company plans to expand its service coverage to lower-tier cities and overseas markets, optimize the geographical distribution of Hive Hive smart cabinets, innovate more customized marketing activities and promotions, and expand the service network of cleaning and home life services to enhance brand awareness. The company's allocation of funds demonstrates its focus on core business and innovation areas, as well as its intent to seek growth and expansion.
Development strategy
1. Expand and optimize the layout of Hive Nest smart cabinets
The company plans to expand into more unsaturated markets by expanding the distribution of Hive Nest smart cabinets, selecting locations with higher demand to deploy smart cabinets, and reallocating underutilized smart cabinets to better locations to improve overall performance and enhance terminal logistics service capabilities.
2. Innovate and enhance value-added service capabilities
The company is committed to enhancing its value-added service capabilities through innovation, and giving full play to the location advantages and customer acquisition capabilities of the Hive Hive Smart Cabinet network to better meet the needs of local communities. This includes creating more customized and diversified marketing campaigns for advertisers in the interactive media business, such as deploying prototyping machines in a network of smart cabinets, and providing integrated online and offline marketing solutions in conjunction with online marketing campaigns.
3. Invest in technological innovation and improve operational efficiency
The company plans to invest in R&D and carry out functional upgrades to optimize the Hive Hive smart cabinet, including the optimization of safety functions, information processing efficiency and exterior design. The company plans to enhance its data analysis capabilities, improve the utilization rate of express lockers and predictive maintenance through dynamic operational adjustments, and improve service efficiency. At the same time, the company also plans to continuously develop and upgrade the technical systems related to intelligent shuttle cabinets and unmanned distribution solutions, and use AI to drive more application scenarios.
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