Uninteresting people tell interesting things, ordinary people follow the path of legends
On the penultimate working day of 2023, that is, December 28, the **market has finally returned**, and it has the momentum to regain 3,000 points before the end of the year. However, for me, the rise and fall of the volume and price of ** is only a window to observe the market sentiment, and has little impact on the final result of investment. So, I don't really care. In the long run, the end result of the investment is only related to the development trend of the company, and not to the market sentiment.
Zhuge Liang exhorted the young master Liu Chan in "The Teacher's Table" that if he wants to work hard, he must "be a virtuous minister and a villain". In the past, I just thought this sentence was very ordinary, but now I realize the weight in it. If a person wants to have a happy life, he must take the initiative to make friends with good people and resolutely stay away from bad people. If one wants to achieve financial freedom through investment, one must partner mainly with good companies and resolutely reject junk companies. In the past, I often made the mistake of not taking the initiative to cut off contact with the villain for the sake of that so-called face. In terms of investment, I was lucky with garbage companies and missed many opportunities to invest in good companies.
SF Holdings, in my opinion, has the potential to be a good company. With the same distance and the same charge, SF Express's service is significantly better than EMS (interested friends can give it a try, the gap is particularly obvious). However, high-quality service does not guarantee that the company will automatically achieve excellence, and it is also necessary to insist on doing a good job in the following aspects.
First, create demand for growth. There's a little story in economics that explains very well that demand is created. The story goes like this: A shoe manufacturer sent two salesmen to a distant island to inspect the situation, and one of them came back and said, "The inhabitants of the island don't wear shoes, so our products can't be sold!"Another came back and said, "The inhabitants of the island are not wearing shoes now, and our products will definitely sell well!"Both salesmen have a point, the key question is how to create a demand for residents to wear shoes. Back to reality, look at how much demand has been created by Nike, Adi, and Li Ning for the shoes we wear now. Running, there are running shoes;Basketball players, basketball shoes;Those who play soccer have soccer boots;Walking, there are walking shoes;Mountaineering, there are hiking shoes, and so on. There is no saturated demand, only uncreated demand.
In my article "How to Judge the Growth Ability of Enterprises", I talked about three ways for enterprises to seek growth. Similarly, SF Holding can also have three approaches if it wants to achieve growth:
Expand into new markets. This is what SF has been doing, acquiring Kerry Logistics and expanding the international market. M&A is indeed a shortcut to new markets, but the problem is that it is easy to fail in integration. Hua ** bought a hot potato, and finally had to sell it cheaply. Therefore, as an investor, I would prefer companies to develop on their own, or acquire small local companies, rather than using the capital market to engage in large-scale mergers and acquisitions.
Develop new services. For example, pets can be mailed.
Diversified. For example, SF used express cabinets to sell goods in the past, and now it is engaged in live broadcast sales.
At present, SF has done a lot of work in creating demand and seeking growth, but the results are not ideal. Except for the self-operated courier service, other businesses have not improved. On May 18, 2023, SF Express sold its low-end e-commerce express Fengwang business to J&T. Fengwang has been losing money before, and e-commerce express delivery was originally a pillar of SF's growth, but in the end it still didn't take off.
Second, improve efficiency to reduce costs. One of the most important advantages in the core competitiveness of enterprises is the cost advantage, especially when the industry giants compete with each other and fight the best war. Even a small cost advantage can sometimes win or lose a situation. For example, Buffett's long-praised Guy Insurance Company has gradually become one of the top ten insurance giants in the United States with its low-cost advantage, and its comprehensive cost ratio has been lower than the industry average. Getco's slogan, "Fifteen minutes saves 15 percent," became a household name in the United States. Another example is the previous Gree Electric Appliances, which has a cost advantage in the air-conditioning industry, and after several rounds of first-class battles in the industry, it has successfully established the position of the leader of the air-conditioning industry.
However, the logistics industry now seems to have no room to reduce costs. Look at Zhongtong, Yuantong, and J&T, things that cost 1 yuan or even a few cents, and after placing an order online, the express delivery can be mailed over. There is also the income of the courier brother, which is already very low compared to the work he does, and the pressure drop will greatly discourage their enthusiasm for work. The figure below is SF's net profit, you can see the best express business, and the net profit margin is only 35%。Docking the company's ** chain business, the net profit margin is 215%, which is harder to earn than the money of individual customers. To put it bluntly, the above business is on the verge of profit and loss. And the intra-city business is simply a loss, and the more you do, the more you lose. SF Express started with high-end logistics, and the profit margin is still like this, not to mention other express companies.
SF Holding has carried out an intelligent upgrade of its logistics business through Internet technology. It is indeed more convenient for couriers to send and receive couriers. Sometimes, however, the use of technology doesn't necessarily reduce costs. Moreover, the popularization of technology has made everyone intelligent, and the cost of everyone has been reduced, which means that the cost of everyone has not been reduced, and it cannot produce unique advantages. As shown in the figure below, SF's total expense ratio shows a downward trend, but it is still higher than the industry average. Similarly, when I analyzed China Merchants Bank before, I also mentioned that although China Merchants Bank is based on technology, its cost-to-income ratio is higher than the industry average, which does not highlight the effect of technology in reducing costs.
To sum up, SF Holding's future growth is more likely to develop new services and create added value of services. Otherwise, it will be difficult to achieve final success with other logistics companies.