HONG KONG, Aug 30, 2022 – (ACN Newswire via SEAPRWire.com) – Hangzhou SF Intra-City Industrial Co., Ltd. (“SF Intra-City” or the “Company”, together with its subsidiaries the “Group”; stock code: 9699), the largest third-party on-demand delivery service platform in China(2) , today announced its interim results for the six months ended 30 June 2022 (the “Period”). The interim results showed steady revenue growth, further increases in gross profit and gross margin, and continued improvement in core business indicators, resulting in a solid performance.
— Revenue was RMB4,481.1 million, with external revenue growth(1) reaching 28%
— Gross profit and gross profit margin improved significantly, as the Group successfully achieved a gross profit of RMB180.2 million and gross profit margin of 4.0%
— Net loss margin has continued to improve over the years, narrowing significantly to 3.2%
— Revenue from intra-city delivery service increased by 29.2% YoY to RMB2,929.2 million, representing 65.4% of total revenue
— Revenue from the strong performance of non-food delivery scenarios increased 32.4% YoY to RMB1,051.2 million
— Annual active merchants reached 299,000, representing YoY growth of 31.2%, and the Group has served over 2,900 brand customers cumulatively
— With further optimization of scale and efficiency, diversified product coverage and a multi-scenario business model, SF Intra-City reported promising results once again
During the Period, intra-city delivery to consumers, non-food scenarios(3) and continued expansion in lower-tier cities(4) became the main drivers for the business, while the Group’s diversified revenue structure strengthened its resilience. The Group saw its core business indicators continue to improve, achieving solid revenue growth to RMB4,481.1 million, an increase of 20.8% over the same period last year. Gross profitability further improved, with the Group achieving a gross profit of RMB180.2 million and a gross profit margin of 4.0%. During the Period, the Group’s net loss margin continued on its multi-year trajectory of improvement, narrowing to 3.2% compared with the same period last year. These results were attributable to enhanced economies of scale and network effect, differentiated services driving high-value orders, technology integration and scheduling to achieve optimal efficiency of the Group’s delivery network and continuously refined management and operation to improve resource utilization efficiency and productivity.
SF Intra-City said, “Following our successful full year performance, we are pleased that the Company continued to achieve encouraging interim results this year. Despite the challenges from the macro environment and the impacts of the pandemic, we continued to develop new delivery scenarios and expand our business, while maintaining steady growth in revenue as our core business indicators continued to improve. It is also great to see that we successfully achieved a significate improvement in gross profit and gross margin.”
Maintained High Growth in Intra-City Delivery Service
Revenue from intra-city delivery service increased by 29.2% year-on-year (“YoY”) to RMB2,929.2 million, benefiting from the continuing increase in demand driven by enriched intra-city on-demand delivery scenarios, changes in consumer habits driven by the pandemic, and continued expansion in both non-food delivery scenarios and lower-tier cities. In particular, non-food delivery scenarios posted strong performance, with revenue increasing by 32.4% YoY to RMB1,051.2 million. Revenue in lower-tier cities grew 41.0% YoY to RMB1,035.4 million as the Group further expanded its geographical coverage and enriched its service matrix, driving the development of on-demand delivery services infrastructure in lower-tier cities. During the Period, the proportion of mid-to-long-distance (over 3km) orders increased, while the average delivery time and fulfillment-in-time rate remained at a high level, and the performance quality only fluctuated slightly during the peak time of festivals and holidays. The number of cities that commenced night-time (24 hours) delivery services increased to 777.
Intra-city Delivery to Merchants
The number of annual active merchants reached 299,000, representing a YoY increase of 31.2%, and the Group served over 2,900 brand customers cumulatively. Thanks to the Group’s high-quality, stable and customer-centric services, its customer loyalty and retention rate have improved, with the retention rate for its Top 100 key account customers increasing to approximately 90%. Revenue from intra-city delivery to merchants was RMB 2,156.4 million, up 23.1% YoY. Driven by the pandemic and the new consumption era, consumer habits have increasingly shifted toward a trend of “bring all you need to your side”, which has in turn generated more on-demand delivery needs. The Group has continued to broaden its coverage across product categories and strengthen its product delivery capabilities. Demand for high value-added service scenarios such as local e-commerce and local services remained high, driving YoY revenue growth of 104.3% and 47.8% for these scenarios, respectively. In particular, revenue generated from delivery services provided to the supermarket, retail, pharmaceutical and 3C industries achieved a YoY increase of 71.3%.
SF Intra-City also strategically cooperated with SF Holding Group’s ecosystem participants to create integrated solutions for customers, namely “front-end warehousing + mid-end trunk + intra-city on-demand delivery”. Through resource synergy and capacity integration, these solutions broaden customer reach and increase customer loyalty for both parties. Service to Credit Customers(5) with SF Holding Group led to a RMB86.7 million revenue contribution, representing YoY growth of 115.5%, mainly due to improved service capabilities which enabled SF Intra-City to deepen its cooperation with SF Holding Group to meet more customer needs.
Intra-city Delivery to Consumers
During the Period, the revenue from intra-city delivery to consumers grew 50.1% YoY to RMB772.8 million, benefiting from the increasing penetration of intra-city on-demand delivery service driven by consumers’ growing demand for timeliness and convenience in daily life and business scenarios, consumers’ recognition of and trust in the SF Intra-City brand and easy access to its services through various channels and SF Intra-City’s continuously improving reach, conversion and activation of individual users. With the pandemic catalyzing personal daily and office demands, the running errands business surged by more than 100%. The annual active consumer base continued to expand, reaching 12.3 million, representing YoY growth of 55.0%.
In the first half of 2022, the Group continued to optimize the quality of its products and services for individual consumers. By providing high-standard services and a standardized collection and delivery process, the Group enables consumers to enjoy better delivery experiences. Meanwhile, considering that the majority of orders from consumers consist of mid-to-long-distance deliveries or non-standard service needs, the Group has built a team of “pioneer riders” exclusively dedicated to individual consumer orders to achieve better performance in order-pick-up rate, completion rate and fulfillment-in-time rate. Even during peak times such as holidays, our fulfillment-in-time rate fluctuated by no more than 3.0%.
Last-mile Delivery Advantage Further Strengthened through High-Quality Service
Revenue from last-mile delivery service increased by 6.8% to RMB1,534.8 million. The rider pool is integrated through a comprehensive national scheduling network. Whole-city delivery capacity coordination and scheduling enables SF Intra-City to adapt to different business and customer needs and maintain stable performance quality. The disruption of express delivery in certain areas due to the pandemic lockdown measures put the last-mile business under pressure and caused a short-term slowdown in growth. However, the Group also saw the rapid recovery of business after improvement in the pandemic situation, accompanied by the deepening of cooperation scenarios with key customers and product innovation. Not only has last-mile delivery service enabled the Group to further expand its network and achieve network effect and economies of scale, it has also improved riders’ income, strengthened riders’ long-term loyalty and reduced our fulfilment cost.
Technology Empowers Improvements in Rider Network
The CLS adopted by the Group has three core functions, namely business forecast and planning, integrated order recommendation and dispatching and real-time operation monitoring, enabling the Group to optimize the scheduling of riders in different industries and scenarios across complex delivery networks. The Group’s highly efficient real-time order dispatching system supports the complex delivery network, which has different layers of geographical coverage, including store level, business district level and city level. With the aforementioned threefold delivery network, the Group is able to dynamically and flexibly adjust order dispatching, shorten delivery time and lower delivery costs. In order to further improve its terminal delivery capability and deploy its smart delivery network, the Group successfully launched its on-demand drone delivery service, providing a new service experience for intra-city on-demand delivery of goods.
The Company concluded, “In the face of the complex external environment and the challenges of the pandemic, and thanks to our riders and staff, who remained their posts, SF Intra-City was proud to actively participate in the anti-pandemic efforts through supply delivery work with other stakeholders, as well as through helping merchants and consumers solve their ‘last-mile’ difficulties. Looking ahead, we will continue to broaden our range of service scenarios and industry solutions, optimize our business structure, and enhance our value by creating differentiated service capabilities, so as to ensure high-quality and stable consumer experience and empower merchants’ business operations. We firmly believe in the long-term value of local lifestyle services and real-time services and will strive to realize profitability and create long-term value for our shareholders.”
About Hangzhou SF Intra-City Industrial Co., Ltd. (stock code: 9699.HK)
SF Intra-City focuses on the emerging opportunities of intra-city on-demand delivery services. Since 2019, SF Intra-City has operated as an independent legal entity to capture the growth opportunities arising from the new consumption trends. SF Intra-City adopts a multi-scenario business model, providing full coverage of delivery scenarios for all types of products and services. The Company’s extensive service coverage, ranging from mature scenarios such as food delivery to growth scenarios such as local retail, local e-commerce and local services, has enabled it to respond to the evolving customer needs resulting from the development and upgrade of the local consumer market. For more details, please visit company’s website: https://ir.sf-cityrush.com/en/investor-relations/.
(1) External revenue is total operating revenue less revenue from connected transactions with SF Holding and its affiliated companies
(2) Ranking is based on independent third-party order volume in China in 2021, according to iResearch. The calculation of order volume takes into account the number of orders sourced independently by the market players, excluding orders from related parties.
(3) “non-food delivery scenarios” refers to local consumption scenarios that are unrelated to food delivery scenarios, mainly comprising local retail, local e-commerce and local services.
(4) “lower-tier cities” refers to cities, counties and towns that are in the third tier or below.
(5) “Credit Customers” refers to certain existing customers who have entered into Master Service Agreements with SF Holding and/or its associates in respect of a variety of delivery and logistics solution service products SF Holding Group and/or its associates offers.
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