With a huge revenue loss of nearly $1 billion and Wang Wei's fortune shrinking by $134 billion, how will SF get through its darkest moments?

Out | Tanker

Author | Walker

Editor | Egg General

On May 28, Jingdong Logistics was listed in Hong Kong, closing up more than 3.3% on the first day of listing at HK$41.7 per share, with a turnover of about HK$7.17 billion and a market capitalization of HK$254.02 billion. This is following the listing of Jingdong Health, another successful listing within the Jingdong Group system.

This can not help but trigger the outside world to Liu Qiangdong's banter - "Dong has another company listed!" "Dong has been a low-profile person for a few years, but he still runs a high-profile business."

That said, the title "Brother Dong" seems to be one of the most prominent labels on Liu Qiangdong. China's Internet gurus, most of the time with a kind of teaching teacher image, perhaps because the expansion of Internet thinking are relied on these preachers spared no effort to practice, perhaps with a lot of highly educated, high IQ entrepreneurial background.

But in this, there are two exceptions. With a lot of "fellow" like the outside world to call themselves "teacher" different, these two big brother is more willing to "brother" with the staff, and the "Jianghu righteousness "

These two companies have left the most profound impression on the outside world.

The two are Liu Qiangdong of Jingdong and Wang Wei of SF.

A rather interesting story is that Liu Qiangdong every year to choose a day, with the treasurer, distribution staff to eat jelly, after eating jelly and then use the jelly cup and they drink white wine together. The reason for this is that when the first Jingdong distribution station appeared, there were people present who proposed to drink some wine to celebrate, but there are not so many glasses, Liu Qiangdong let people buy jelly, everyone finished the jelly, to jelly cups as a glass of wine, *** drink a glass of white wine.

This is the beginning of the Jingdong brilliant, but also Liu Qiangdong in the Jingdong can not erase the "big brother image". Very often, Liu Qiangdong called everyone as "brothers", brothers also called him "Brother Dong".

Wang Wei is the same.

On April 17, 2016, a SF Express brother accidentally cut off a small car that was backing up, the driver got off and hit and scolded, talking very hard, but also even slapped the brother six slaps.

Therefore, do not look at Liu Qiangdong and Wang Wei, the two in some ways belong to the "peers are enemies", but do not forget the style of Jianghu righteousness still let them sometimes sympathize with each other.

Now, with the successful listing of Jingdong Logistics, the same "Jianghu big brother" of the two, in the same piece of commercial rivers and lakes, and finally met on the narrow road.

In fact, the relationship between Liu Qiangdong and Wang Wei is quite complicated.

On the one hand, the two people with a strong sense of Jianghu, many times almost the same breath, and even often give birth to the feeling that "there is a confidant in the world". As a result, the two sides are constantly interacting with each other and supporting each other from time to time.

On June 1, 2017, Wang Wei publicly broke with Caijiao, and that night Liu Qiangdong came out in solidarity: "I believe in the quality of SF, Wang Wei's person! Nowadays, citizens send all public courier information, whether it is not the platform is taken away! Once serious law-abiding! Citizen's private information who to maintain? Call on the relevant departments to investigate!"

On the other hand, Liu Qiangdong and Wang Wei in the company's operational level of thinking is still not the same, especially in the treatment of employees there are obvious differences. Just three months before Liu Qiangdong's solidarity with Wang Wei, SF has just gone public, the IPO application disclosed that SF did not give all the logistics boys on the five insurance and gold, which is different from Liu Qiangdong's style of insisting on giving the first-line employees on the five insurance and gold.

It is understood that in terms of employee spending, 2020 Jingdong Logistics **** counted 26.1 billion for the first-line employee spending, according to the prospectus disclosure of the number of first-line employees at the end of 2020 to make a conservative estimate, an average of each employee's annual expenditure of nearly 110,000 yuan, the monthly expenditure of nearly 9,000 yuan. This is considered to be one of the very few companies in the industry that insist on paying five insurance premiums for their employees.

The key is that both Jingdong Logistics and SF are investing heavily in the logistics field.

SF needless to say, logistics is its main business; and Jingdong Logistics is Liu Qiangdong force row, against all odds, and even "smash pots and pans" to establish the first competitiveness of Jingdong, since 2007, step by step, self-built logistics, build distribution teams and self-built warehouses, until now to go public, Jingdong Logistics every step has been quite easy to walk. Each step is not easy to walk.

But in the end, the reason why the two can sympathize with each other is that for a long time, there is almost no direct competition between Jingdong Logistics and SF.

Although SF also does business in e-commerce, Jingdong Logistics is unlikely to take orders from e-commerce platforms other than the Jingdong platform. What's more, on the Jingdong platform Jingdong self-owned all the use of Jingdong logistics, only brand owners open stores, may use SF logistics.

Therefore, the two sides are basically "well water offenses river water" situation.

However, from 2019, the industry rumors that Liu Qiangdong intends to split the news of Jingdong Logistics listed, the two sides of the situation has become increasingly "embarrassing".

Because in order to solve the problem that investors believe that "large customers account for too high a proportion of revenue", Jingdong Logistics has gradually begun to "go to the platform of Jingdong". Based on Jingdong's complete supply chain management and inventory system, Jingdong Logistics in the past two years in the industrial and e-commerce supply chain management, signed a number of large enterprise customers.

According to the IPO application previously submitted by Jingdong Logistics, in September 2018-2020, the proportion of revenue from external customers of Jingdong Logistics has grown from 29.9% to 43.8%, while the total revenue growth rate is 59.38%. This has shown that Jingdong Logistics has enjoyed the growth of the group's business, while the proportion of revenue from external customers has been able to increase rapidly.

The reason is particularly simple.

Jingdong Logistics is a completely different form from all logistics companies, rather than calling it a logistics company, it is better to see it as a supporting warehousing logistics and management system to the e-commerce platform.

In fact, more often than not, Jingdong uses "storage instead of transportation" to maintain a high turnover of goods transportation, and it is this way to ensure that the Jingdong platform of local self-owned goods within 8 hours of the delivery time.

And this set of management system and the establishment of the foundation of the information system, if to some industrial production enterprises, just to solve these enterprises urgent supply chain management problems.

And this is exactly where the business of SF intersects. Because this involves the supply chain management of high-end logistics, in the past is the basic disk of SF business, but now the intervention of Jingdong Logistics triggered the competition between the two sides.

It is worth noting that in early 2020, the positioning of the Jingdong Group was officially upgraded to "supply chain-based technology and service enterprises". The prospectus shows that in 2020, Jingdong Logistics integrated supply chain revenue accounted for 75.8% of total revenue, which is a strong proof of its entry into high-end logistics.

It is because of the establishment of such a clear direction of business expansion on the basis of Dong in the early 2020 restarted the process of Jingdong Logistics listed in Hong Kong, and successfully listed on May 28, the first day of the listing closed up more than 3.3% at 41.7 Hong Kong dollars per share, with a market value of 254.02 billion Hong Kong dollars.

The successful listing of Jingdong Logistics, for SF, undoubtedly friends have become more powerful, and the pressure of competition has increased.

From the data published in the prospectus, Jingdong Logistics 2019 is far ahead of other domestic integrated supply chain logistics service providers, both in terms of warehouse area and total revenue.

This means that in the field of high-end enterprise logistics, where Shunfeng originally dominated, Jingdong Logistics has gradually become the frontrunner.

Tanker Tanker" observed that in order to meet the challenge posed by Jingdong Logistics, just a few days after Jingdong Logistics submitted its application for listing to the Hong Kong Stock Exchange in February, SF announced its intention to acquire Kerry Logistics, the largest international logistics company listed on the Hong Kong Stock Exchange. The latest news shows that the acquisition is almost finalized. On the day of the 28th Jingdong Logistics listing, SF announced its intention to acquire more than 51.8% of the shares of Kerry Logistics for a huge sum of money.

On the trading day following the release of this stunning acquisition in February, Shunfeng's shares soared, ushering in an all-time high share price of $12.47 billion. However, what happened next was quite "magical".

April 22, Shunfeng released the first quarter of 2021 financial results, revenue loss of 989 million yuan, compared with a profit of 907 million yuan in the same period a year earlier, a year-on-year decline of 209.01%. This news shocked the market, Wang Wei publicly apologized for this, and Ms. Wu Weiting, the head of finance for four years of performance, resigned.

Subsequently, SF's stock price all the way to diarrhea, as of the close of trading on May 28, the stock price has been cut to 69.85 yuan, compared to the high price of the Spring Festival in the pre-high point, the market value of SF evaporated 273 billion yuan, Wang Wei himself shrinking value of 134 billion yuan.

Already the media has expressed the attitude that 2021 SF "bad year".

In fact, after the pole rabbit into the field, the price war in the field of e-commerce courier more and more intense, SF, although not valued the low-end market, but also had to invest in real money to compete with the new players.

According to Sina Finance reported, by now abnormal market prices, SF single ticket revenue has continued to decline for 22 months, and the rate of decline continued to reach double digits. The latest data show that SF single-ticket revenue was 15.74 yuan, down 12.12% year-on-year.

The point is that in the supply chain market, where SF has been dominant, it is now also experiencing considerable problems.

In 2017, Wang Wei said ambitiously that SF wants to target "not only the 400 billion traditional express delivery market, but the 12 trillion large logistics market".

Li Xin, a well-known Hong Kong investment bank analyst, believes that in order to realize Wang Wei's vision, Shunfeng has not hesitated to invest huge sums of money in the global acquisition of supply chain logistics companies. "Many internationally recognized supply chain companies have been tagged with SF in these two years, and this year, they are even ready to take 51.8% of Kerry Logistics with a large sum of 17.555 billion yuan." Li Xin told "Tanker Tanker".

However, he believes that Shunfeng is still not getting enough out of these acquisitions right now. "Judging from the financial report data, these high investments in the supply chain area have yet to realize the expected benefits, and have become the most important piece of heartache in Wang Wei's mind." He added.

On the evening of April 9, Wang Wei results briefing in response to the performance loss, said Shunfeng Holdings in the second quarter of this year will certainly not be another loss, but the feasibility of the full-year profit back to the same level last year is not high.

This actually shows that Wang Wei also knows that SF's new profits can not cover the cost, and the reason for its losses is crucially important to the issue of profitability, especially the decline in gross profit margins to the company has brought a lot of pressure.

The reason why Wang Wei is seen as the "kingpin of the shopping mall" is that he has his own ideas whenever he is confronted with an unexpected event, and this time is no exception.

In many people are wondering, SF and Wang Wei will actually use what way to solve the crisis they face, February 10, SF Real Estate Investment Trust (SFREIT) to the Hong Kong Stock Exchange to submit the form, which is seen as an important attempt to Wang Wei of SF new revenue channels.

Latest news shows that on May 5, SFREIT has begun a public offering, the offer price is between HK$4.68 and HK$5.16 per fund unit, raising a maximum of about HK$2.683 billion; on May 17, it was formally listed on the Hong Kong Stock Exchange, under the stock code 2191.

It is worth mentioning that the nature of the listing of SFREIT is a REITs fund. The first step in the process is to make sure that you can get the best out of the situation.

The so-called REITs fund, in fact, is the fixed assets held by the property is converted into a number of shares of each marked price, and then into a public fund, listed on the stock exchange. The people who buy it get a share of the annual income from the property, just like with stocks.

"Tanker" believes that Wang Wei's choice of REITs to solve his problem of declining income is indeed a deep consideration.

In fact, for logistics real estate, the REITs fund model is of great significance. Logistics real estate is a typical heavy asset industry, the general logistics real estate projects can only be operated through the property to obtain rental and other operating income, and can not be sold at one time back to the capital, the recovery of invested funds generally need more than ten years.

Therefore, the issuance of REITs can revitalize the assets, and make Shunfeng from heavy to light, not only to obtain abundant cash flow, effectively solve the funding problem, but also to hold the scarce land resources, to achieve the scale expansion, optimize the revenue, so it can be said to be multi-purpose.

Of course, in the field of logistics real estate, this set of asset-light approach to play in the wind is the big brother of GLP.

In the past few years, GLP has been able to leverage 3 to 5 times of its REITs by selling its share of the funds, which has provided it with a huge amount of liquidity that has been fundamental to its rapid expansion in China and even in Asia.

It is reported that by the end of 2020, GLP has become the largest logistics real estate operation service provider in the Asia-Pacific region.

Moreover, this company has raised and operated seven private equity funds dedicated to investing in China, with an asset management scale of more than $130 billion, and the management scale of the derived funds has exceeded the $10 billion level, and the annual fund management fees have reached the level of more than $100 million.

Wang Xueying, head of the research department of another investment fund in Hong Kong, told Tanker Tanker: "Shunfeng wants to issue a REITs fund, certainly there is the idea of trying to find a way to expand the source of income, but it is also related to the listing of Jingdong Logistics."

In her view, Jingdong Logistics and Shunfeng a lot of high-level business is overlap, and now Jingdong Logistics has caught up, Shunfeng want to compete with it must obtain more resources. "Therefore, Shunfeng's choice to issue a REITs fund also has to do with raising capital to compete with Jingdong Logistics in other high-end areas." She said.

And previously, when talking about the listing of SF REIT, SF's top executives also inevitably revealed that the idea of raising capital through this fund. At that time, Zhai Diqiang, Chief Executive Officer and Executive Director of SF REIT, said, "The establishment of SF REIT in Hong Kong by SF Holding is part of the strategic deployment of financing plans, and Hong Kong, as an international financial center, the establishment of SF REIT will provide the group with a very good financing channel."

And by choosing to list the REIT in Hong Kong, Wang Wei may have thought that he had taken advantage of the right place, right time, and right people.

First, since 2020, the state has launched many studies on public REITs funds and recognized that this will be the next direction of asset securitization. Second, Shunfeng has already operated a similar fund with its own experience.

As early as December 2018, Shunfeng has tested the water for asset securitization, and established the first single class of perpetual logistics real estate storage shelf class REITs "Huatai Jiayue - Shunfeng Industrial Park Phase I Asset Support Special Programs", and in that year, the first issue of the fund-raising scale reached 1.846 billion yuan, and the company The first issue of the year raised 1.846 billion yuan, and the company realized about 808 million yuan of investment income from asset appreciation.

In 2019, the second phase of the fund-raising totaled 1.36 billion yuan, realizing asset appreciation investment income of 614 million yuan. By the end of 2020, the special program has raised more than 4.5 billion yuan.

Finally, the Hong Kong Stock Exchange has also introduced favorable policies for REITs.

On December 4, 2020, the Hong Kong Real Estate Investment Trusts Code was amended to relax the investment restrictions on REITs, including allowing REITs to invest in property development projects in excess of the existing 10% cap on gross asset value, raising the borrowing limit for REITs from 45% to 50% of gross asset value, and so on.

Moreover, REITs listed on the Hong Kong stock market have also performed well, such as Yuexiu REITs, which has achieved phenomenal growth after listing, with its asset size rising from RMB 4.5 billion to RMB 36.3 billion in the first half of 2020.

It is under the influence of these factors that Wang Wei made up his mind to promote the listing of Shunfeng REITs fund in Hong Kong.

However, in Wang Xueying's view, REITs are not a panacea for Shunfeng's development woes, "Whether a REITs can have an excellent performance depends not only on the basic conditions of the listing market, but also on the operation of its investment properties."

At present, the property assets involved in the SF REIT are three, that is, Foshan Guicheng Fengtai Industrial Park, Wuhu Fengtai Industrial Park, as well as the Asian logistics center in Hong Kong - SF Tower, in accordance with the prospectus shows that the total valuation of the assets amounted to 6 billion Hong Kong dollars.

"This Hong Kong logistics park has the largest area, the highest rent, and the highest valuation, amounting to 5.2 billion Hong Kong dollars, the heaviest weight in the entire asset portfolio. However, in 2020, affected by many factors, Hong Kong property rents fell 17%, the highest level since 2009." Wang Xueying believes that this makes Shunfeng this REITs fund returns must be significantly reduced, the future dividend shrinkage, the overall yield will be a large negative growth.

"As can be seen from the prospectus, this has also led to fluctuations in the fair value of the investment property, recording a loss of HK$64.6 million, making Shunfeng REIT's profit for the period in the first nine months of 2020 just HK$320,000, a drop of 99.8% compared to the same period in 2019." Wang Xueying added to Tanker Tanker.

And in Li Xin's eyes, he is not optimistic about the development of this fund of Shunfeng, at least in the current stage of development, "as can be seen from the listing application, the volatility of Hong Kong alone, directly pulling down the profit performance, and Foshan, Wuhu and two places are not a first-tier city, the rental level of the space of the rise, I'm afraid that it is difficult to support a higher return. "

In addition, he also believes that SF's three so-called logistics real estate development potential is limited, "the rent of SF-affiliated tenants accounted for 80% of the total rental income over the same period of time, and three of the top five in terms of total rental income came from SF Holdings."

It is for this reason that Li Xin told "Tanker Tanker", "The reality of such a single customer and too many connected transactions will have a certain impact on the fund's return expectations, thus reducing investors' interest in taking the plunge."

And judging from the share price performance on the first day of listing, the market feedback was exactly what the two analysts mentioned above expected. This new stock, which was oversubscribed during the public offering phase, failed to gain sustained investor recognition and suffered a breakout on the first day of listing.

On May 17, SFH opened at HK$4.49/share, down 9.8% from the issue price of HK$4.84/share; by the end of the first day of trading, its share price had fallen to HK$4.16/share, a drop of nearly 15%.

It is interesting to note that on the same day that the fund issued by SF was listed and broke the market, Jingdong Logistics started its sensational prospectus.

According to data from a number of Hong Kong brokers obtained by "Tanker Tanker" at the time, as of 6 p.m. on the same day, Jingdong Logistics margins were provisionally recorded at HK$112.76 billion, which equates to an oversubscription of about 141.3 times in terms of the public fundraising amount of HK$792 million.

Today, the successful listing of Jingdong Logistics and its share price performance, but also to a certain extent highlights the attitude of the capital market - Jingdong Logistics in the opening of the market soared more than 16%, and ultimately reported 41.7 Hong Kong dollars per share, the market value of 254 billion Hong Kong dollars.

The capital market on the shunfeng fangtuo and jingdong logistics "a cold and a hot", may let Liu Qiangdong and Wang Wei two big brothers think for a long time. And now a reality is that in the past, mutual solidarity peers, finally in the same battlefield relative, who can not be "merciful".

After all, the stock market and shopping malls are just like the general jianghu, has always been a place where heroes are judged by their successes and failures.

*The title image is from: Figure Bug Creative, has been authorized.