Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<ul>
<li>In November, domestic parcel volume growth accelerated vs recent months</li>
<li>International remains very strong; STO keeps taking share from Yunda</li>
<li>Avoid domestic 'ground' segment, seek international growth in SF, CaiNiao</li>
</ul>


In November, domestic parcel volume growth accelerated vs recent months
International remains very strong; STO keeps taking share from Yunda
Avoid domestic 'ground' segment, seek international growth in SF, CaiNiao


Monthly Chinese Express Tracker | Prices Keep Sliding, Volume Share Keeps Shifting (December 2023)

<ul>
<li>October's industry numbers hide pricing turmoil seen at company level</li>
<li>STO Express appears to be using price to gain share from Yunda, others</li>
<li>We believe price competition continues to hurt 'ground' express margins</li>
</ul>


October's industry numbers hide pricing turmoil seen at company level
STO Express appears to be using price to gain share from Yunda, others
We believe price competition continues to hurt 'ground' express margins


Monthly Chinese Express Tracker | Q3 Margins Battered By Price | More to Come in Q4 (November 2023)

<ul>
<li>Last week J&amp;T Global Express reported Q324 express parcel volume by segment</li>
<li>Volume growth in all segments slowed dramatically compared to Q224</li>
<li>Without needed context, we believe the numbers undermine J&amp;T growth story</li>
</ul>


Last week J&amp;T Global Express reported Q324 express parcel volume by segment
Volume growth in all segments slowed dramatically compared to Q224
Without needed context, we believe the numbers undermine J&amp;T growth story


Quick Take on J&T Global Express Q324: Volume Growth in All Segments Slowed Dramatically

Equity Capital Markets

Hive Box Holdings / Equity Capital Markets

<ul>
<li>In this insight we compare Hive Box to InPost, a smart locker specialist</li>
<li>The firms play in different geographies, making apples:apples comps tough</li>
<li>In the absence of better comps, comparing Hive Box to InPost still useful</li>
</ul>


In this insight we compare Hive Box to InPost, a smart locker specialist
The firms play in different geographies, making apples:apples comps tough
In the absence of better comps, comparing Hive Box to InPost still useful


Hive Box Holdings Pre-IPO, Part 3: Hive Box Vs InPost Group: Similarities & (BIG) Differences

Alibaba Group Holding  / Equity Capital Markets

To match service levels offered by <a href="https://www.smartkarma.com/entities/446" target="_blank" data-smartkarma-citation="entities:446:1">JD.com Inc (ADR) (JD US)</a> and leading express carrier <a href="https://www.smartkarma.com/entities/4128" target="_blank" data-smartkarma-citation="entities:4128:1">S.F. Holding Co Ltd (002352 CH)</a>, <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding Ltd (BABA US)</a> and its logistics partners are making a belated push to invest in first- and last-mile parcel delivery capacity. BABA and its partners have so far avoided making the large investments needed to control 100% of their parcel delivery networks. Instead of direct ownership of first- and last-mile assets, BABA has tried to rely upon the 'transparency' provided by its technologically sophisticated logistics subsidiary, CaiNiao Network (CN). But five years after BABA set up CN, JD.com's continued lead in logistics quality and logistics speed -- confirmed in private surveys of Chinese consumers -- seems to have convinced BABA and its partners that they must finally take the plunge.Battle lines in this coming logistics war have been drawn over the past year or so. JD.com established JD Logistics in April 2017, and the private company recently raised US$2.5 bn at a valuation of US$13.4 bn. SF Express -- China's largest express carrier by revenue -- already offers first- and last-mile delivery, and has shown a willingness to butt heads with BABA. The five smaller express companies aligned with BABA have recently announced moves that will bring them even closer to the e-commerce giant; there are also indications these express companies are stepping up their own first- and last-mile investments at the behest of BABA.For the five carriers aligned with BABA, a belated push into ownership of first- and last-mile service will require an enormous increase in capital expenditures. The five carriers had combined capex of about 8.3 bn RMB in 2017; we estimate the push to acquire control of first- and last-mile capacity could require additional annual capex of 25 bn RMB or more over the next few years (BABA itself had CapEx of 29.8 bn RMB in its latest fiscal year). Such a dramatic increase in capital spending -- assuming it is mainly shouldered by the express companies -- will require significant, dilutive fundraising by these five express carriers over the next few years; we also anticipate initial returns on these investments will be very low.Alternatively, if it is BABA's private logistics subsidiary CN that does the heavy lifting, this would likely bring forward the timing of that company's IPO (it was valued at US$20 bn in a September 2017 funding round). We do not believe the expansion of first- and last-mile capacity is part of CN's projected total CapEx of 100 bn RMB between 2017-2021. The ultimate beneficiary of this costly expansion of express networks? Alibaba, of course. As a result of the expected push into first- and last-mile delivery, the e-commerce giant will likely end up with deeper reach and faster, more reliable delivery service. These improvements should allow it to retain its position as China's pre-eminent e-commerce company. The apparent asymmetry of expected capex and expected benefits from first- and last-mile investments -- express companies invest, BABA reaps the benefits -- suggests a pair trade: Long BABA against Short positions in China's express companies.

To match service levels offered by JD.com Inc (ADR) (JD US) and leading express carrier S.F. Holding Co Ltd (002352 CH), Alibaba Group Holding Ltd (BABA US) and its logistics partners are making a belated push to invest in first- and last-mile parcel delivery capacity. BABA and its partners have so far avoided making the large investments needed to control 100% of their parcel delivery networks. Instead of direct ownership of first- and last-mile assets, BABA has tried to rely upon the 'transparency' provided by its technologically sophisticated logistics subsidiary, CaiNiao Network (CN). But five years after BABA set up CN, JD.com's continued lead in logistics quality and logistics speed -- confirmed in private surveys of Chinese consumers -- seems to have convinced BABA and its partners that they must finally take the plunge.Battle lines in this coming logistics war have been drawn over the past year or so. JD.com established JD Logistics in April 2017, and the private company recently raised US$2.5 bn at a valuation of US$13.4 bn. SF Express -- China's largest express carrier by revenue -- already offers first- and last-mile delivery, and has shown a willingness to butt heads with BABA. The five smaller express companies aligned with BABA have recently announced moves that will bring them even closer to the e-commerce giant; there are also indications these express companies are stepping up their own first- and last-mile investments at the behest of BABA.For the five carriers aligned with BABA, a belated push into ownership of first- and last-mile service will require an enormous increase in capital expenditures. The five carriers had combined capex of about 8.3 bn RMB in 2017; we estimate the push to acquire control of first- and last-mile capacity could require additional annual capex of 25 bn RMB or more over the next few years (BABA itself had CapEx of 29.8 bn RMB in its latest fiscal year). Such a dramatic increase in capital spending -- assuming it is mainly shouldered by the express companies -- will require significant, dilutive fundraising by these five express carriers over the next few years; we also anticipate initial returns on these investments will be very low.Alternatively, if it is BABA's private logistics subsidiary CN that does the heavy lifting, this would likely bring forward the timing of that company's IPO (it was valued at US$20 bn in a September 2017 funding round). We do not believe the expansion of first- and last-mile capacity is part of CN's projected total CapEx of 100 bn RMB between 2017-2021. The ultimate beneficiary of this costly expansion of express networks? Alibaba, of course. As a result of the expected push into first- and last-mile delivery, the e-commerce giant will likely end up with deeper reach and faster, more reliable delivery service. These improvements should allow it to retain its position as China's pre-eminent e-commerce company. The apparent asymmetry of expected capex and expected benefits from first- and last-mile investments -- express companies invest, BABA reaps the benefits -- suggests a pair trade: Long BABA against Short positions in China's express companies.

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Hong Kong

S.F. Holding Co., Ltd operates as a holding company. The Company, through its subsidiaries, provides logistics, order tracking, supply chain management, and warehousing services. S.F. Holding operates worldwide.

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S.F. Holding (6936 HK)

Monthly Chinese Express Tracker | Q3 Margins Battered By Price | More to Come in Q4 (November 2023)

Companies focused on China's domestic 'ground' express continued to experience price pressures in October. These pressures will continue in the...

Tracking Traffic

Quick Take on J&T Global Express Q324: Volume Growth in All Segments Slowed Dramatically

Last week J&T Global Express reported a sharp slowdown in average daily parcel volume in all of its operating segments. We think the numbers...

Tracking Traffic

Hive Box Holdings Pre-IPO, Part 3: Hive Box Vs InPost Group: Similarities & (BIG) Differences

In this insight we compare Hive Box to InPost, a publicly-traded smart locker and e-comm fulfillment specialist based in Poland. It's not a perfect...

Tracking Traffic

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

As China's largest smart locker company Hive Box prepares for a potential IPO in Hong Kong, we are resurfacing this old insight to help readers...

Daniel Hellberg

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Market Cap (USDm)

P/E

Dividend (Yield)

Monthly Chinese Express Tracker | Prices Keep Sliding, Volume Share Keeps Shifting (December 2023)

Although domestic parcel volume has strengthened in recent months, pricing continues to weaken, and China's 'sort & transport' express companies...

Tracking Traffic

Monthly Chinese Express Tracker | Q3 Margins Battered By Price | More to Come in Q4 (November 2023)

Companies focused on China's domestic 'ground' express continued to experience price pressures in October. These pressures will continue in the...

Tracking Traffic

Quick Take on J&T Global Express Q324: Volume Growth in All Segments Slowed Dramatically

Last week J&T Global Express reported a sharp slowdown in average daily parcel volume in all of its operating segments. We think the numbers...

Tracking Traffic

Hive Box Holdings Pre-IPO, Part 3: Hive Box Vs InPost Group: Similarities & (BIG) Differences

In this insight we compare Hive Box to InPost, a publicly-traded smart locker and e-comm fulfillment specialist based in Poland. It's not a perfect...

Tracking Traffic

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

As China's largest smart locker company Hive Box prepares for a potential IPO in Hong Kong, we are resurfacing this old insight to help readers...

Daniel Hellberg