The quality requirements of SF aging parts are continuously upgraded.
Source: Financial Network
The performance of SF Express in the first quarterly report was like a deep-water bomb, which caused an uproar in the market. Although the company explained that this was due to the short-term impact caused by the superposition of various factors, the company’s long-term development trend did not change. SF Express, which was too "excellent" in 2020, was constantly questioned. What’s more, it was even said that SF Express lost money because its business pieces were not profitable and it did not ask SF Express to send paper documents in the electronic era. But is SF Express really just a courier company that sends a "contract"? Is it really only a contract that needs SF Express today?
SF Express, which started from business parts, has now become a comprehensive business entity with business clusters such as time-limited parts, economic parts, express business, city, cold transportation, international business and supply chain business. The proportion of time-limited parts only accounts for 43.09% in the 2020 annual report, but in 2020, the business income of time-limited parts excluding tax was 66.36 billion yuan, a year-on-year increase of 17.41%. As the core product of SF, the profitability of SF’s aging parts continues to be stable.
Today, SF has upgraded the aging products to achieve a new definition. First, it is the aging commitment, making accurate commitments to customers and taking the lead in aging. Through the combination of air/rail/steam transportation modes, priority is given to shipment, transit and delivery, providing competitive timeliness. The second is the operation guarantee, which realizes the traceable door-to-door standard express service through the exclusive process guarantee of each link of receiving and forwarding. The third is based on different scenarios, rich product matrix to meet the diverse customer needs of different customers. The fourth is to maintain high efficiency. If it is simply understood, SF time-limited products are trying to deliver them today and arrive tomorrow.
Some insiders said that in different times, customers who need prescription products are different. The core of SF aging network is not aimed at the business parts market, but its core is high-aging and reliable service. Today, high-end consumer goods and fresh food are its biggest use varieties. Founder Securities analysts believe that the aging parts have entered a mature stage in the pattern, but the high growth of e-commerce demand has given the aging parts a second vitality, which is the core driving force for SF Express’s performance growth at present.
Among SF Express’s over 60 billion yuan time-consuming parts revenue, the proportion of consumer business has increased rapidly, accounting for almost half of the country, and the proportion of document business is about 30%, while the contract invoice business is only a small part of document products. Simply calculate, if the revenue of SF Express is 154 billion yuan in 2020, then the revenue of document products only accounts for about 13% of the total revenue.
The reason why SF is a growth stock rather than a cyclical stock is to get rid of the dependence on business parts and equalize the so-called cyclical influence. In the era of big consumption, SF’s aging parts have already been upgraded, and they are active in the demand side of all consumers and B-end users, keeping up with the high-end demand of customers, and the customer’s stickiness is constantly increasing.

Figure: Category structure calculation of SF aging parts (2020H1, from orient securities research report).
High-end demand for aging parts in the era of great consumption
Since 2020, affected by epidemic factors, the online shopping penetration rate of residents has been improved, and the online promotion of high-end e-commerce has increased, and consumers’ online shopping habits have continued.
After the epidemic situation has been basically controlled, online shopping has maintained a rapid growth trend, and high-quality consumer goods, such as high-value and high-margin department stores, high-time survival fresh goods, etc., are also accelerating the online trend. These high value-added goods also have a relatively rigid demand for high-quality express delivery services. Driven by the demand of domestic high-end e-commerce, traditional commerce is accelerating to penetrate online, and the demand space of aging network is opening. The demand is shifting from traditional business parts to undertaking consumption upgrading and the rise of high-tech industries, and the space of SF aging parts is further opened.


Orient securities analysts believe that the demand for aging parts is shifting from transporting traditional business parts to undertaking online demand for high-quality consumption. From the perspective of sub-categories, the growth rate of documents has slowed down due to electronicization, and high-end e-commerce devices have benefited from the accelerated growth of high-quality online consumption. In the medium and long term, with the rise of high-tech manufacturing industry and the commissioning of Ezhou Airport, aging network is also expected to undertake the delivery demand of precision instruments, spare parts, biomedical products and other goods brought about by the rise of high-tech industry.
The analyst believes that the increase in the proportion of consumption in aging parts is not only due to the explosive traffic caused by the epidemic in a short period of time, but also inevitable, that is, the advantages of e-commerce channels in resource allocation, circulation mode, efficiency and cost, the continuous investment of luxury e-commerce sellers in digital construction, the continuous optimization of fresh e-commerce sellers on fresh supply chain, and the continuous enhancement of consumers’ trust and stickiness in online channels.
SF’s online penetration rate in 3C electronics, high-value clothing, medical health, skin care and other categories has been continuously improved. The strict requirements for express quality of Cordyceps sinensis, gold jewelry, high-end clothing, high-end cosmetics such as lamer, and high-end small household appliances such as Dyson have promoted the accelerated development of SF’s prescription parts. At the same time, the development of the company’s supply chain business will also bring in new prescription parts, and the development of SF’s prescription parts will be strengthened by the joint efforts of the two.
Innovating Value-added Space of Business Components and Enhancing Customer Stickiness
In the field of business parts, SF also provides extended value-added services on the basis of express delivery service, and provides one-stop information scheme for the whole process management of documents and bills, including internal operation management optimization, logistics receipt and delivery management and personalized value-added services at the end, helping enterprises realize intelligent document and bill management, helping them reduce operating costs and enhance customer stickiness.
In the 2020 annual performance briefing, the company also stated that SF B2B business parts (industrial and commercial express) are the main source of income and profit. With the progress of science and technology, the popularity of electronicization, including the disappearance of the demand for mailing invoices, the industry and commerce are challenged to some extent. SF creates some time-sensitive segmented products in the supply chain, turns passive into active, and maintains the advantages of the company’s time-sensitive parts, as follows:
First, continue to deepen the B-side and dig deep into some industrial and commercial needs. The aging products created by the company can improve the aging of products, and then from the perspective of management, they can create greater value for customers.
Second, use data to reflect the specific scenes in the supply chain. Instead of the traditional supply chain, the company uses technology and express delivery network to build a brand-new supply chain. After these links are opened by technology, the products can be reproduced and fissile quickly, and many SF resources can be used, such as Ezhou Airport, airplanes and transportation resources with obvious advantages. By using technology and data to penetrate into all walks of life, many common scenes can be extracted and seamlessly connected with SF Express’s network. There is an internal project called "Lego", which is to let customers use the Lego model to combine on the billboard.
Broaden the extension of aging parts for potential customers
According to the research of CICC analysts, the persistence, stability and reliability of SF Express’s service during the epidemic period have improved the recognition of its brand in the public mind, and SF Express has a good mass base.
Zhao Xiaomin, an expert in the express delivery industry, is concerned about SF Express’s comprehensive ability in the fresh season. He believes that in recent years, the competition in the field of "fresh fruit" in the express delivery industry is extremely fierce, and SF Express has adopted multi-arms joint operations in the field of fresh fruit, from providing ordinary transportation to providing industry solutions and continuing to customized solutions, which has solved the blank of standardization in the field of fresh fruit in the past.
In the consumption upgrade of online shopping, there are a large number of high-end e-commerce brands and express delivery needs that require high timeliness services, such as fruits and fresh food, and these are the potential customer groups of SF Express Service.
SF’s powerful "network management and control" ability and aggregated distribution network have solved the product sales for the majority of fruit farmers and made great contributions to increasing production and income. The support of national policies for the logistics industry has also made SF Express’s aging parts have a new growth dividend, and the company’s market share in high-end aging parts may be further enhanced.














































