A losing intra-city delivery subsidiary of major Chinese courier SF Holding Co. Ltd. is in the process of registering in Hong Kong as it seeks to increase its funding sources and share in the country’s competitive logistics industry.
Hangzhou SF Intracity Industrial Co. Ltd., which became an independent entity in 2019, has been granted approval to go public on the Hong Kong Stock Exchange, according to a post-hearing information package filed Monday. It comes about six months after SF Holding listed some of its real estate assets in the former British colony.
SF Intracity did not disclose how much it intended to raise, but said the new capital would be used to strengthen its research and development capabilities, expand its service coverage and passenger pool, as well as fund acquisitions and potential investments in industry. The IPO will be sponsored by BofA Securities Inc. and China International Capital Corp., according to the document.
Prior to the announcement, SF Intracity, 77.6% of which is controlled by SF Holding, directly or through its subsidiaries, completed two rounds of funding with several large investors, including Goldman Sachs Group Inc., Citic Capital Holdings Ltd. and Lenovo Group Ltd. .
SF Intracity reported a net loss of 758 million yuan ($ 119 million) on revenue of 4.8 billion yuan in 2020, a result it attributed largely to its increased investment in R&D and its expansion into new cities which gave it fewer profitable opportunities, compared to 2019 when its net losses and revenues were 470 million yuan and 2.1 billion yuan, respectively.
SF Intracity’s many Chinese rivals have also struggled with mounting losses. For example, Dada Group, listed in the United States, backed by e-commerce giant JD.com Inc., reported a net loss of 1.7 billion yuan in 2020, virtually unchanged from 2019, even as its revenue increased 85% year-on-year to 5.7 billion yuan.
Despite the growing loss, SF Intracity has said it will not seek short-term financial returns. Instead, it will focus on expanding its customer base and the coverage of its services.
At the end of May, SF Intracity said it had a presence in more than 1,000 cities and counties, serving more than 530,000 businesses and more than 126 million individual users. The company has expanded its quick courier offerings to include fresh food, clothing, pharmaceuticals, digital and office documents.
Citing data from iResearch, the company said it was China’s largest intra-city express delivery platform by order volume in 2020, with a market share of 10.4 %.
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