(Yicai Global) March 31 -- SF Holding’s shares climbed after the Chinese express delivery giant reported a 35 percent jump in revenue for last year, though profit took a tumble.

SF [SHE: 002352] closed 3 percent higher in Shenzhen today at CNY46.02 (USD7.25) a share, though the stock is still down 34 percent from the end of last year.

Revenue was CNY207.2 billion (USD32.6 billion) in the year ended Dec. 31, the Shenzhen-based firm’s latest earnings report showed yesterday. Net profit slumped 42 percent to CNY4.3 billion (USD677.4 million), weighed down by declines in express business and average shipment income. 

Net profit at SF’s express segment plunged 55 percent to CNY3.8 billion as economy services took a larger share of business and the company invested more in building out its network.

The government tightened regulation of market competition in the year to protect deliverymen’s rights and interests, helping to keep the price war in check, SF said.

“The improved competitive environment, the reduced scope for price competition, and clients' more demanding service quality requirements will primarily benefit leading express delivery and logistics companies,” it said.

In a report on China's express-delivery sector published on March 2, Fitch Ratings said “competition will likely continue to be intense in the medium term, as the major operators expand capacity aggressively to achieve economies of scale and higher market shares, amid slowing growth in e-tailing sales due to weak consumption.” 

SF, which operates courier SF Express, may need to fortify its position against main rivals JD Logistics and Deppon by spending more on capital expenditure or mergers and acquisitions, the report added. “While SF may raise debt to do so, it may partly offset the negative credit impact by equity funding, as it did in November 2021,” Fitch said.

The net loss at SF’s freight segment narrowed 36 percent last year to CNY582 million (USD91.7 million), as the firm increased its direct-shipment trunk lines and dispatch frequency. That of the supply chain and international segment swelled almost sixfold to CNY615 million, mainly because of the consolidation of Kerry Logistics' financial results in the fourth quarter.

SF delivered 10.6 billion parcels in 2021, up 30 percent from the year before, while average revenue per shipment fell 8.6 percent to CNY16.25 (USD2.56), mainly because of fast-shipment growth and the rising share of economy express and intra-city on-demand delivery.

SF will continue to promote the use of new energy vehicles to cope with the risk of fuel price swings and also optimize network coordination, increase loading rate and efficiency of resource utilization, and evaluate and explore a mechanism for charging appropriate fuel surcharges on specific products.

SF Intra-City Industrial, SF’s Uber-like platform for parcels deliveries inside cities, reported a net loss of CNY899 million for 2021, versus CNY758 million in 2020. Revenue jumped 69 percent to CNY8.1 billion.

Shares of SF Intra-City [HKG: 9699] fell 5 percent today to end at HKD7.03 (90 US cents) each.

Editor: Futura Costaglione