Shentong Dilemma: Can Ali Save The Former "Express Brother"?

Compared with last year, Shentong express (002468. SZ) this year's "double 11" security mobilization meeting was advanced to the end of September. This is also the most important public appearance of Chen Dejun, chairman of the company. At the meeting, he announced Shentong express's preparation strategy and courier reward strategy, and talked about the current cooperation between the company and Ali.

"Reshape Shentong's competitiveness in the industry." When Chen Dejun put forward his words, Shentong express, which he was in charge of, was no longer the king of the past. From the first market share of the whole industry in 2014 to 2016, Shentong express was once in the limelight. But today's business data, can not cover up the once "express brother" decline. The latest released business data of express enterprises in September further let Shentong express fall into the question of "lagging behind".

Now, whether the two sides can play a synergistic effect as soon as possible after Ali's shareholding has become the key to whether Shentong express can rise again in the future. However, this is also sad for Shentong express. More than 20 years ago, the founders of "three links and one Da" (referring to Zhongtong express, Yuantong express, Shentong express and Yunda shares) came out of Tonglu, Zhejiang Province, and their career in express delivery is splitting: some of them have already realized the second listing of their companies and rebuilt the market value of 100 billion yuan; while others can only hope for more recovery It depends on external forces.

In Shanghai, the staff of Shentong express are busy at work. Visual China

"Access system" with the lowest market share

Due to different business models, the domestic private express industry has formed a direct operation camp represented by SF holdings and a franchise camp represented by Tongda system (including Baishi group as well as "three links and one Da"). With the characteristics of light assets and enjoying the dividends of e-commerce development, the franchise express enterprises occupy an absolute advantage in business volume and occupy more than 70% of the domestic express industry market share. In particular, the head of the "Tongda" express enterprises, although the scale of revenue is not as large as SF holding, but the advantage of market share is very obvious.

But that was broken this year.

Judging from the recently released business data in September, the business volume of Shunfeng holding (002352. SZ) has maintained the growth trend of express delivery since this year. The business growth of Yuantong Express (600233. SH) and Yunda shares (002120. SZ) has also recovered, but Shentong express has fallen behind.

According to the statistics of the State Post Office, in September, China's express delivery industry achieved business income of 82.43 billion yuan, a year-on-year increase of 27%; the business volume completed 8.09 billion pieces, an increase of 44.6% year-on-year.

However, Shentong express encountered the situation of "no incremental revenue increase" in September: the company completed 860 million tickets in the current month, with a year-on-year increase of 18.58%; the revenue of express service business reached 1.871 billion yuan, a year-on-year decrease of 8.59%.

If we say that in the first half of the year, due to the impact of the epidemic situation and the progress of resuming production and returning to work, the operation of "Tongda" express enterprises has been impacted. However, in the second half of the year, the domestic express industry has entered a comprehensive recovery stage, and Shentong express will inevitably be questioned. Moreover, Shentong express is not satisfactory in the business volume data which has been paid attention to.

In September, Shentong express reduced its business volume by less than 20%, less than half of the growth rate of the industry as a whole. Back to the first two months, the situation of backward industries also exists. In July and August this year, the business volume of domestic express industry increased by 32.2% and 36.5% respectively, while that of Shentong express was 23.51% and 16.74% respectively.

The growth rate of business volume is lower than the industry level, which means that the market share is challenged.

According to the statistics of reporters from the 21st century economic report, in the first nine months of this year, Shentong express achieved a total business volume of 5.951 billion tickets, accounting for 10.6% of the total. During the same period, the market share of SF holdings, Yuantong express and Yunda Express (Zhongtong express and Baishi group are not counted for the time being due to the non disclosure of business data from July to September) accounted for 10.10%, 14.79% and 17.17% respectively.

The current market share of SF holdings is very close to that of Shentong express, but in fact, in the first half of this year, the former's market share once exceeded that of Shentong express.

Affected by the Spring Festival and the layout of e-commerce express delivery, SF holdings launched a challenge to the market share of "Tongda system" this year. In the first quarter, due to the Spring Festival shutdown of "Tongda" express enterprises and the impact of the epidemic, SF holdings quickly seized the market, with the market share once climbing to 13.7% in the first quarter. With the industry returning to work and production, the business of "Tongda" express enterprises is picking up. In the first half of this year, the business volume of SF holdings was 3.655 billion, accounting for 10.79% of the total. However, during the same period, Shentong express only completed 3.517 billion tickets, accounting for 10.38% of the total. This makes, Shentong express in the head of the express enterprises market share ranking behind SF holdings, fell to the sixth.

However, the high premium of SF holding single ticket express is unmatched by Shentong express. However, for the latter, it is urgent to regain the lost market share in order to realize the recovery of competitiveness.

Since the domestic express enterprises returned to work in March this year, the implementation of "price war", exchanging quantity with price and sacrificing short-term profit has become the common choice of "Tongda" express enterprises.

In terms of effect, the business volume growth of Zhongtong express, Yuantong express, Yunda express and Baishi group recovered rapidly after a short period of pain, but Shentong express did not seem to achieve good results. Among the four A-share express companies that released monthly operating data, Shentong express became the only company whose revenue fell in September. The alarming signal is that since July this year, the company's express business revenue has shrunk year on year for three consecutive months.

According to the company's recent performance forecast, Shentong express is expected to make a profit of 0 to 30 million yuan in the first three quarters. Among them, it is expected to lose about 41 million yuan to 71 million yuan in the third quarter.

Can Ali be the Savior?

As of October 22, the market value of Shentong express was only 23.3 billion yuan, about half of Yuantong express, one third of Yunda shares and one seventh of Zhongtong express.

Nantong Hongshi Investment Co., Ltd. (hereinafter referred to as Nantong Hongshi) can not sit still. On the evening of October 21, the company announced that it planned to reduce the shares of Shentong express by centralized bidding, accounting for 2% of the total share capital.

The 21st century economic report reporter noted that Nantong Hongshi was a "historical shareholder" of Shentong express when it backed Aidisi in 2016, and now holds about 39.9066 million shares of Shentong express, making it the sixth largest shareholder. After this reduction, Nantong Hongshi may withdraw from the list of ten major shareholders.

The reduction of large shareholders' cash out reflects the dilemma of Shentong express's stock value to a certain extent. So far this year, the company's share price has fallen by more than 20%. However, for Ali, who wants to continue to increase its shareholding in Shentong express, it may reduce the cost of equity.

After early years of growth, the express industry is now from the leading competition into the oligarch competition stage. However, the deep "binding" between head e-commerce enterprises and express enterprises has become a significant feature of the development of domestic express enterprises. "Without cheap express service, China's e-commerce industry can not get rapid development; conversely, the rapid development of online shopping has made the cake of express enterprises bigger, and the relationship between the two shows a spiral rise." Dongxing securities analysis believes that e-commerce enterprises are happy to see the express industry carry out "limited" integration, its purpose is to improve the overall distribution efficiency of the industry, at the same time, limit the monopoly profits of express enterprises.

In March 2019, Shentong express announced that it had obtained strategic investment from Alibaba. Its controlling shareholder and the persons acting in concert signed a framework agreement with Alibaba (China) Network Technology Co., Ltd. (hereinafter referred to as Alibaba network), which will indirectly hold the equity of Shentong express as a strategic investor: pay 4.665 billion yuan and indirectly hold about 14.65% of Shentong express through a new company Of the company.

In September this year, Alibaba express further increased its shareholding by 25%. Moreover, Alibaba network also has about 21% of Shentong express's remaining exercisable rights. This means that if Ali network fully exercises the stock option, it will eventually hold 46% of the shares and firmly hold Shentong express.

Although Ali continues to buy shares of other "Tongda" express companies, Shentong express is likely to become another head express company controlled by Ali after Baishi group.

"For Shentong express, in the 20 months from March 2019 to now, it can be said that there have been ups and downs, from high light hours to low ebb, and finally to the loss situation, which is deplorable." Zhao Xiaomin, an expert in express delivery industry, told reporters of the 21st century economic report that Shentong express should fully return to the law of the express industry from the headquarters to the network, and fully graft Ali's resources.

What resources are worth grafting? In this regard, CICC believes that Shentong express and Ali can achieve synergy in information system, digital upgrading, domestic and international supply chain business and terminal network optimization.

It is undeniable that for Shentong express, deep binding of Ali can obtain the tilt from business volume and technical resources. Chen Dejun also said that the cooperation with ALI will continue to promote the rapid iterative upgrading of Shentong informatization.

However, Ali's direct change or limited to Shentong express business. For Shentong express itself, it is necessary to improve the production capacity and reduce the cost. The upcoming "double 11" is the test.

"Compared with previous years, this year's war preparations are mainly reflected in the upgrading of informatization and intelligence." This year, when the reporter submitted a report on the cost of the whole cloud express system, the company reported that it could save 10% of the cost of supporting the whole cloud express system in the 21st century.

In terms of capacity, Shentong express said that by the end of October this year, more than 40 transfer centers across the company's network will complete capacity upgrading, with an overall capacity increase of nearly 30%. Shentong express told reporters of the 21st century economic report that it will invest 10 billion yuan in operation and construction in the next three years to create a new mode of express intelligent operation.