Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

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Best Inc. Is Closing Its Money-Losing 'Store+' Business, a Small but Positive Step Forward

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Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Equity Bottom-Up

After the US market close on Thursday, <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> reported a weak set of Q3 results, as expected. But the company also announced a bold new strategic initiative that should result in a leaner, more focused company.  In addition to winding down its Store+ business (disclosed earlier, please see <a href="https://www.smartkarma.com/insights/best-inc-is-closing-its-money-losing-store-business-a-small-but-positive-step-forward" target="_blank" data-smartkarma-citation="insights:45395" rel="noopener">Best Inc. Is Closing Its Money-Losing 'Store+' Business, a Small but Positive Step Forward</a>), Best announced it was considering "strategic options" for its Global, UCargo, and Capital divisions. Going forward, the company will focus on Express, Freight, and Supply Chain Management. We do not believe this strategic decision will lead to a quick turnaround in profitability, but we do believe it makes Best more attractive to an acquirer. Best's decision to exit non-core businesses shows financial pressures are intensifying in China's express sector. This tells us the forces behind consolidation are quickly gaining momentum. We retain our BUY rating on Best, a potential acquisition target.

After the US market close on Thursday, BEST Inc (BEST US) reported a weak set of Q3 results, as expected. But the company also announced a bold new strategic initiative that should result in a leaner, more focused company.  In addition to winding down its Store+ business (disclosed earlier, please see Best Inc. Is Closing Its Money-Losing 'Store+' Business, a Small but Positive Step Forward), Best announced it was considering "strategic options" for its Global, UCargo, and Capital divisions. Going forward, the company will focus on Express, Freight, and Supply Chain Management. We do not believe this strategic decision will lead to a quick turnaround in profitability, but we do believe it makes Best more attractive to an acquirer. Best's decision to exit non-core businesses shows financial pressures are intensifying in China's express sector. This tells us the forces behind consolidation are quickly gaining momentum. We retain our BUY rating on Best, a potential acquisition target. 

Best Inc's Weak Q3 Results Spur 'Strategic Refocusing Plan', Retain BUY