S.F. Holding, the express delivery giant headed by billionaire Wang Wei, has filed for a secondary listing in Hong Kong to fund the company’s expansion overseas and strengthen its network in China.
The company, which already trades on the Shenzhen stock exchange, did not disclose the size or timing of the listing in its preliminary prospectus that was filed on Monday. S.F. Holding is said to be planning to raise as much as $3 billion, according to a Bloomberg News report.
The proceeds from the listing will be used for S.F. Holding’s international expansion, followed by plans to further strengthen its logistics network and service offerings in China, according to the prospectus.
Founded in 1993 in the city of Shunde in Guangdong province, the delivery giant already has operations in more than 200 countries and regions, but revenues from mainland China still accounted for almost 80% of its 267.5 billion yuan ($36.9 billion) in sales last year. The company’s profit was $973.8 million in the same period.
“Looking ahead, we aim to become the leader in global logistics and connect Asia with the world,” the company said in its prospectus.
To achieve this goal, S.F. Holding will need to compete not only with global giants, such as FedEx and United Parcel Service, but also fellow Chinese delivery companies that are seeking a larger share of the international logistics market.
Billionaire Jet Li’s J&T Express, for example, is planning to list in Hong Kong as well. Backed by investors like Chinese web giant Tencent, the company is the largest express delivery operator in Southeast Asia, according to Frost & Sullivan data cited in its preliminary prospectus. Cainiao, the logistics affiliate of Chinese e-commerce giant Alibaba, is also busy investing billions of dollars to build warehouses and other infrastructure abroad as it prepares for an initial public offering that may also take place in Hong Kong.
With Wang at the helm as chairman, S.F. Holding has managed to stand out in a fiercely competitive market by offering what it calls “time-definite express services.” Unlike its peers that often outsource parcel deliveries to franchisees or local partners, the company works with its own employees as well as a fleet of aircraft and delivery vehicles to ensure same or next day deliveries.
It’s a strategy that helped the low-profile billionaire to convince consumers as well as enterprises to pay more in courier fees for time-sensitive deliveries, which lifted its market cap to a high of $73.8 billion in February 2021. In that same year, the company acquired tycoon Robert Kuok’s Kerry Logistics in a $2.3 billion deal to further its global expansion.
But it hasn’t all been smooth sailing since then. Investors started to dump the company’s shares after it projected heavy losses due to its investments in new businesses in the first quarter of 2021. And the stock has never been able to fully recoup the losses, it’s down another 23.3% just this year as increasing competition and China’s weakening economic prospects weigh on the company’s outlook. Wang’s wealth, which is based on a roughly two-third ownership in S.F. Holding, is currently estimated at $17.6 billion.
The billionaire’s recent initiatives include the launch of a lower cost service that isn’t time sensitive called “economy express.” It charges as little as 30 U.S. cents per parcel, compared with an average of $2.10 for the company’s other product offerings, according to the prospectus.
But the company’s declining margins has become a point of concern for investors, and perhaps even for Wang himself. In May, he sold Fengwang Information, a subsidiary that offered the cheaper deliveries, to billionaire Li’s J&T Express for $173 million.
“We believe reduced exposure to this hyper-competitive segment may support SF’s margin recovery going forward,” analysts at research firm Equity Capital Markets said in an August 9 note published via Smartkarma, adding that the company “has de-emphasized inexpensive ground parcel service in recent years.”