China Logistics: Moderation, consolidation and overseas
Industrials
China last-mile parcel volume grew 22% Y/Y in 2024, far outpacing e-commerce growth of just 6.7%. The decline in consumer confidence actually drove greater volumes due to consumers buying smaller ticket items more frequently and returning more. Blue Lotus expects these two trends to moderate in 2025. Cross-platform integration is thus the No.1 priority and Blue Lotus sees JD Logistics as the prime beneficiary. They expect ZTO’s share loss to continue amid diminished returns to scale, as well as a return of J&T to overseas expansion to drive its upside. Their top pick in the China logistics space in 2025 is JDL. They maintain a Sell rating for SF Holding. They initiate J&T with a Buy rating and downgrade ZTO to Sell.
Edition: 202
- 10 January, 2025
Industrials
China’s largest express delivery company aims to raise around US$2-3bn in its H-share listing. Sumeet Singh notes how SFH doesn’t appear to be in an imminent need for cash. However, with several logistics focused companies lining up to list, the company is probably trying to jump the queue before the likes of Cainiao sucks up liquidity. Should SFH decide to go ahead with its H-share listing, it will have to offer a discount, as past A/H listings haven’t had a very great post-listing performance track record. Furthermore, positive trends in revenue growth and gross profit over the last few years (driven by its Supply Chain and International business) have reversed in 2023.
Edition: 169
- 15 September, 2023