"The advantage of going public is nothing more than raising money,obtaining the funds needed for the development of a company.SF Express also needs money,but it cannot go public for the sake of money," said Wang Wei,chairman of SF Express Group,in an interview with the media 13 years ago.

In 2017,SF Holding (002352.SZ) went public through a reverse merger.After the listing,SF Holding issued multiple rounds of private placements and convertible bonds,raising over 33 billion yuan.In addition to SF Holding,the SF Group also has three listed companies on the Hong Kong Stock Exchange: SF Express (09699.HK),SF Real Estate Investment Trust (02191.HK),and Kerry Logistics (00636.HK).

Seven years after the reverse merger,SF Holding chose to aim at the Hong Kong Stock Exchange again,planning for a secondary listing.On the evening of June 28,SF Holding disclosed that the company had submitted an application for listing on the Hong Kong Stock Exchange on June 28,2024.

If the listing is successful,SF Holding will become the first company in the express delivery industry to be listed simultaneously in "A+H" shares.It is worth noting that compared to the first time it submitted to the Hong Kong Stock Exchange,the stock price of SF Holding in the A-share market has fallen by more than 20%,and its market value has also shrunk significantly,making it hard to say it is the "best timing."

The urgency to list on the Hong Kong Stock Exchange may stem from the tight financial situation of the company.Reporters have noticed that SF Holding has invested more than 30 billion yuan raised from previous private placements and convertible bonds into projects such as the automation upgrade of express delivery equipment,the purchase and maintenance of aviation materials,and the enhancement of land transportation capacity,which has almost been exhausted.At the same time,the debt scale continues to rise.From 2018 to 2023,SF's debt scale increased from 34.7 billion yuan to 118.2 billion yuan,and the asset-liability ratio increased from 48% to 53%.

However,it is still unknown whether SF Holding can raise the expected funds from the Hong Kong Stock Exchange.On the one hand,the stock price of SF Holding on the A-share market has been continuously falling since reaching a phased high of 121 yuan in February 2021,and it is now only 35.69 yuan,with many individual and institutional investors suffering significant losses,and the market sentiment is not high.On the other hand,in recent years,the express delivery industry has entered an era of competition for the stock market,and the revenue growth of SF Holding is facing greater pressure.

Second attempt to list in Hong Kong

According to the Hong Kong Stock Exchange website,the joint sponsors for SF Holding's listing in Hong Kong are Goldman Sachs,Huatai International,and J.P.Morgan.According to the prospectus,the funds raised by SF Holding will be used to strengthen SF's international and cross-border logistics capabilities,improve and optimize China's logistics network and services,develop advanced technologies and digital solutions,upgrade its supply chain and logistics services,and implement ESG (Environmental,Social,and Corporate Governance) related initiatives.

Shortly before resubmitting the application for listing on the Hong Kong Stock Exchange,SF Holding announced that the company had received a notice of record for overseas listing from the China Securities Regulatory Commission.It is clear that SF Holding plans to issue no more than 625.5 million overseas listed ordinary shares and list them on the Hong Kong Stock Exchange.

Based on SF Holding's market value of 182.3 billion yuan (according to the closing price on June 3) and a total share capital of 4.895 billion,a rough calculation shows that if SF Holding issues overseas listed ordinary shares at the maximum scale of 625 million shares,the corresponding fundraising scale could reach 20.6 billion yuan.This is the second time that SF Holding has submitted an application to the Hong Kong Stock Exchange (HKEX).In August last year,the company had submitted a main board listing application to the HKEX.However,the current application is now in an invalid state.According to the rules of the HKEX,if a company planning to go public in Hong Kong fails to complete the hearing or listing within six months after submitting the listing application,the application will automatically become invalid.After it becomes invalid,the process can be restarted by reapplying and uploading the prospectus again.

In February of this year,in response to the invalidity of the HKEX listing application,SF Holding stated that the company's work for the Hong Kong listing is progressing in an orderly manner,and the prospectus becoming invalid is part of the normal trading mechanism of the HKEX.

"Going public in Hong Kong will definitely choose the best timing,not the shortest time," Wang Wei mentioned at the shareholders' meeting on August 17,2023.Currently,all competitors in the express delivery industry have plans to go public in Hong Kong,so being able to take the initiative is the most important.

From August last year to June this year,has Wang Wei waited for the "best timing" to go public in Hong Kong?

Looking at the stock price,SF Holding's stock price has been in a continuous decline over the past year.In mid-August 2023,the stock price of SF Holding was still above 47 yuan per share,and the current price is only 35.69 yuan per share,a drop of over 20%.The market value of A-shares has also shrunk from over 500 billion yuan at its peak in 2021 to the current 171.9 billion yuan.

However,recently,with the support of various factors such as the monetary cycle and policy support,funds have begun to flow back into the Hong Kong stock market,which is beneficial to a certain extent for companies going public.

According to Wind data,since February of this year,the Hang Seng Index has fluctuated upwards for several months,with an increase of nearly 15%.In March 2024,after the average daily transaction amount of Hong Kong stocks fell below 10 billion Hong Kong dollars for six consecutive months,it returned to above 10 billion Hong Kong dollars.The long-dormant Hong Kong IPO market has also gradually warmed up.According to Choice data,as of June 30,a total of 25 companies have gone public on the HKEX this year,with a total financing amount of 10.649 billion yuan.

In addition,the successive listings of domestic competitors may also put certain pressure on SF Holding.In June last year,J&T Express submitted a prospectus to the HKEX and successfully went public in October.In May 2023,ZTO Express completed a dual primary listing on the HKEX and the NYSE.However,SF Holding,which submitted a prospectus in August of the same year,is still striving for a listing in Hong Kong.The pressure to "not be slower than competitors" has increased sharply.

Is the company short of money again?

The urgency of SF Holding's sprint to the HKEX may stem from the tight financial situation.According to the announcement,after going public through a reverse takeover in 2017,SF Holding initiated two private placements and one convertible bond issuance,raising over 33 billion yuan.

In August 2017,the company issued 227 million shares at a price of 35.69 yuan per share,raising 8 billion yuan; in 2021,it issued another 350 million shares at a price of 57.18 yuan per share,raising 20 billion yuan; in January 2019,the company issued convertible corporate bonds,raising 5.8 billion yuan.

Based on this calculation,in the seven years since its reverse takeover,SF Holding has raised a total of 33.8 billion yuan through private placements and convertible bonds.

However,the aforementioned huge amount of raised funds has almost been exhausted.First Financial Daily reporters found through the company's special report on the actual use of raised funds that the unused raised funds for the two financings in 2019 and 2021 are both 0.0 yuan.

Taking the latest private placement as an example,the special report on the "2023 Annual Placement of Raised Funds and Actual Use" released by SF Holding in March this year shows that as of the end of 2023,SF Holding used 2.965 billion yuan of raised funds that year,with a total of 20.072 billion yuan of raised funds used,and the unused raised funds are 0.0 yuan.

Roughly sorted out according to the announcement,within six years,most of the three large amounts of raised funds were invested in projects such as express equipment automation upgrades,aviation material purchases and maintenance,and land transportation capacity enhancement.In 2017,the 8 billion yuan raised by SF Holding through private placement was invested in information service platform construction,aviation material purchases,and other projects; in 2019,the 5.8 billion yuan convertible bond issued by SF Holding was mainly used for aircraft purchases and aviation material purchases and maintenance,intelligent logistics information system construction,and other projects.In 2021,SF raised another 20 billion yuan through private placement,investing in equipment upgrades,airport construction,aviation material purchases and maintenance,and other directions.

According to rough estimates,SF has successively invested 8.85 billion yuan,5.62 billion yuan,and 3.005 billion yuan in express equipment automation upgrades,aviation material purchases and maintenance,and land transportation capacity enhancement,respectively.

In addition,in recent years,SF Holding has also continuously acquired companies to expand its territory.For example,in 2018,SF reached an agreement with DHL,one of the three giants in international logistics,and spent 5.5 billion yuan to buy 100% of the equity of DHL Hong Kong and DHL Beijing; in 2021,SF spent another 14.6 billion yuan to acquire Kerry Logistics,headquartered in Hong Kong.

Corresponding to the large-scale construction projects and company acquisitions is the continuous increase in debt scale.Financial reports show that from the end of 2018 to the end of 2023,SF Holding's debt scale increased from 34.7 billion yuan to 118.2 billion yuan,and the asset-liability ratio increased from 48% to 53%.At the end of the first quarter of 2024,SF Holding's total asset scale reached 224.94 billion yuan,with a total debt of 122.915 billion yuan,and the asset-liability ratio was about 54.64%,which is at a relatively high level in the company's historical financial reports.

Looking at its balance sheet,as of the end of the first quarter of this year,among the debts due within one year,only short-term borrowings and non-current liabilities due within one year amounted to 33.9 billion yuan,while SF's cash balance was only about 4.18 billion yuan.Investor sentiment was once dampened

After two rounds of additional issuances,SF Holding's stock price fluctuated and fell continuously for three years,leaving many institutions and individual investors facing a significant unrealized loss,which once affected the sentiment of market investors.

At the beginning of SF Holding's "shell" listing,the company's stock price was once strong.In March 2017,the stock price was at 60 yuan per share,and after several rounds of fluctuations,it rose,reaching a peak of 121.07 yuan in February 2021.

During this phase,secondary market investors flocked to buy,including SF employees.According to media reports at the time,on the day of SF Holding's "shell" listing,nearly 20,000 stock trading accounts were opened by SF employees to purchase their own company's shares.

Institutional investors were also actively entering the market.In November 2021,SF Holding issued an additional 350 million shares at a price of 57.18 yuan per share.According to data from Choice,22 institutions participated in the placement at that time,with a lock-up period of six months.Among these institutions,there were well-known private equity firms such as Chongyang Investment and Jinglin Assets,as well as large public fund companies such as Fudan Fund,Guotai Fund,and Bocom Schroders Fund.

However,the stock price of SF Holding turned downward and continued to be sluggish.From 2021 to 2023,the stock price of SF Holding fell by 21.7%,16.03%,and 29.75% respectively each year.As of June 28,the latest closing price was only 35.69 yuan.

Institutional investors participating in the additional issuance were once "deeply trapped".When the lock-up period ended in May 2022,the stock price of SF Holding was only over 40 yuan,far below the issuance price of the second additional issuance.It was not until December 2022 that the stock price briefly reached the additional issuance price,and soon after,it continued to fall.

Many institutional investors suffered severe unrealized losses.Taking Shanghai Chongyang Strategic Investment Co.,Ltd.(hereinafter referred to as "Chongyang Strategic Investment"),which has a large investment scale,as an example,the listing announcement of SF Holding's additional issuance shows that two funds under Chongyang Strategic Investment were allocated a total of 58.76 million shares,with an allocation amount of 3.36 billion yuan.

As of the end of the first quarter of this year,Chongyang Strategic Investment still held 58.44 million circulating shares,which did not change much from the initial holding scale.According to the current stock price of SF Holding,Chongyang Strategic Investment's unrealized loss is about 1.3 billion yuan.

Individual investors who bought stocks at the beginning of the listing,and even employees,suffered even greater losses or unrealized losses.Judging from the stock price,around March 2017,the stock price of SF Holding was operating above 60 yuan,and the current latest price is only 35.69 yuan,with a reduction of more than 40%.Industry Growth Bottlenecks Emerge

Amidst dampened investor sentiment,the future growth expectations of SF Holding are also constrained by industry bottlenecks.The prospectus indicates that,according to a Frost & Sullivan report,by 2023 revenue,SF Holding is the largest integrated logistics service provider in China and Asia,and the fourth largest globally.

However,in recent years,the express delivery industry has been transitioning from a market of incremental growth to one of stock competition.Data released by the State Post Bureau shows that in 2013,the growth rate of express delivery volume was 61.6%.By 2022,the year-on-year growth rate of express delivery volume was only 2.1%.

In the stock market,although SF Holding,the leader in express delivery,has seen growth in performance over the past three years,signs of growth pressure are already very evident.Financial reports show that from 2021 to 2023,SF Holding's operating income was 207.2 billion yuan,267.5 billion yuan,and 258.4 billion yuan,with year-on-year change rates of 34.55%,29.11%,and -3.39%,respectively,indicating a shift from positive to negative growth rates.

At the same time,the company's gross margin is also at a low level.From 2021 to 2023,SF Holding's gross margin was 12.37%,12.49%,and 12.82%,respectively,while the net sales margin was 1.89%,2.62%,and 3.06%.At the time of its listing in 2017,the company's gross margin was as high as 20.07%,and the net sales margin was 6.68%.

A person in charge of a domestic express delivery company told the First Financial Daily reporter that since 2019,major express delivery companies have been engaged in fierce price wars.The industry's integration and clearance have been accelerating,and currently,small express delivery companies have basically been cleared out,leaving only a few leading express delivery companies.

As competition in stock business intensifies,SF is trying to seek incremental growth overseas.In 2015,Wang Wei discussed in "Facing the Challenges on the Road to Innovation": "I have always believed that relying on manual labor to move goods is not the ultimate destiny of SF.Next,our profit model will transition from physical labor to intellectual labor,from brawn to brain."

Correspondingly,in addition to express delivery services,SF has five business segments: supply chain and international,express,cold chain and medical,same-city urgent delivery,and other non-logistics services.In recent years,as the revenue proportion of express delivery services has decreased,the proportion of supply chain and international business in the company's total revenue has been continuously increasing.

According to financial reports,in 2018,express delivery services (time-sensitive express,economical express) accounted for 81.1% of SF's revenue,which decreased to 54.5% by 2023.In 2018,the supply chain and international business accounted for only 2.8% of SF's total revenue,which increased to 23.2% by 2023.However,driven by the rapid growth of cross-border e-commerce,SF Express's overseas market business will soon face a "close-quarters combat" with domestic competitors.

According to the financial reports disclosed by J&T Express,in terms of parcel volume,J&T Express's market share in the new markets of Saudi Arabia,the United Arab Emirates,Egypt,Brazil,and Mexico increased from 1.6% in 2022 to 6% in 2023.In 2023,the parcel volume reached 230 million pieces,a year-on-year increase of 369%,with annual revenue of $327 million,a year-on-year increase of 299.7%.Alibaba Group's financial report for the fiscal year 2024 shows that as of March 31,2024,in the field of international logistics,Cainiao's daily cross-border parcel volume has exceeded 5 million pieces.In the fiscal year 2024,Cainiao's revenue was 99.02 billion yuan,a year-on-year increase of 28%,mainly due to the growth of cross-border business.

With various factors combined,market institutions do not have strong expectations for the future growth of SF Holding.On April 30,shortly after the release of the first-quarter report,two institutions lowered their previous profit forecasts for the company.BOC Securities reduced its expectation of SF Holding's net profit attributable to the parent company for 2024 from 11.17 billion yuan to 10.125 billion yuan; Huachuang Securities also lowered its expectation of the net profit attributable to the parent company for 2024 from 9.69 billion yuan to 9.32 billion yuan.

Amidst uncertain growth expectations and weakened investor confidence,SF Holding insists on going public in the Hong Kong stock market.Has it found a "good timing"?