SF Express's revenue surged 35% in 2021, yet its net profit fell by 42%—what happened?

Text / San Sheng

Produced by / Node Finance

March 30,$S.F. Holding (002352.SZ)$It released its full-year financial results for 2021. The report shows that last year its total revenue reached RMB 207.187 billion, up 34.55% year on year; gross profit amounted to RMB 25.638 billion, an increase of 1.83% year on year.

However, despite substantial growth in revenue and gross profit, net profit remained underwhelming. Data show that in 2021, SF Express's net profit attributable to parent company shareholders was RMB 4.27 billion, a year-on-year decrease of 41.73%.

In response, SF Holding attributes this primarily to the increased investment in network resources—including facilities, equipment, and transportation capacity—at the beginning of 2021; the provision of additional subsidies to employees who remained on duty during the Spring Festival amid the pandemic; and the phasing out in 2021 of the substantial tax and fee relief measures related to epidemic prevention that the company had benefited from in 2020.

In fact, viewed on a quarterly basis, the company's non-recurring net profit attributable to shareholders for the four quarters of 2021 was -RMB 1.13 billion, RMB 660 million, RMB 810 million, and RMB 1.5 billion, respectively, with gross profit margins of 6.9%, 12.77%, 13.17%, and 14.49%, indicating a gradual recovery.

From a business-specific perspective, in 2021 SF Express's time-sensitive express delivery segment generated revenue of RMB 96.16 billion, excluding tax, representing a year-on-year increase of 7.3% and accounting for 46.41% of total revenue.

The supply chain and international business segments generated revenue of RMB 39.2 billion, excluding tax, representing a year-on-year increase of 199.8%. Their share of total revenue rose to 18.92%, making them a key component of SF Express's second growth driver. In addition, express freight revenue increased by 25.6% to RMB 23.25 billion, cold-chain and pharmaceutical logistics grew by 20.1% to RMB 7.8 billion, and intra-city urgent delivery expanded by 59.1% to RMB 5 billion.

It can be observed that SF Express's international supply chain and international business are growing the fastest, positioning themselves as the company's highly anticipated second growth driver; however, time-sensitive express delivery, which accounts for the largest share of its revenue, is experiencing the slowest growth.

In response, SF Express stated that the slow growth in its express delivery business was due to the exceptionally strong demand for urgent delivery of anti-epidemic supplies in 2020, which had driven robust performance and established a high base; as a result, the year-on-year revenue growth rate slowed in 2021.

According to user data, as of the end of 2021, SF Express had 1.64 million active monthly-paying customers, with full-year revenue increasing by 25% year on year. The number of individual members reached 491 million, with parcel volume up 23% year on year; among them, the average monthly active online users totaled 135 million.

Overall, SF Holding's performance over the past year has followed a pattern of initial decline followed by recovery. Perhaps in recognition of the company's steadily improving profitability, SF Holding's share price has risen sharply in recent days following the release of its annual report. As of the close on April 1, SF's stock was trading at RMB 49 per share, up 7.22% on the day. What is your view on SF's performance? We welcome your comments.

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