SF Earnings: Net Profit Missed Our Estimate Due to Less-Than-Expected Cost Control

Wide-moat SF Holding, or SF, reported fourth-quarter revenue and net profit both lower than the Refinitiv consensus estimates as of March 26 by 10% and 17%, respectively. Net profit in the quarter was 16% lower than our estimate, due to less-than-expected cost control and a weaker-than-expected supply chain and international segment. Revenue in the fourth quarter rose 2% year on year. Net profit dropped 6% year on year in the quarter. SF’s parcel volume was 3% higher year on year in the quarter, an improvement from the 1% drop in the September quarter. We are pleased that management plans to steadily increase the dividend payout ratio during 2024-28 from 20% in 2022 and 35% in 2023. The company guided that share buybacks during 2024 would amount to a 1.3%-1.6% reduction in share count, based on the closing price on March 26. Our fair value estimate of CNY 54 per share is unchanged.