Results Review

4Q25 results slightly beat our expectation

SF Holding announced its 2025 results: Revenue rose 8.4% YoY to Rmb308.23bn, and attributable net profit grew 9.3% YoY to Rmb11.12bn. In 4Q25, revenue rose 7.0% YoY to Rmb82.97bn, and attributable net profit increased 10.01% YoY to Rmb2.81bn, marking a notable improvement from YoY declines seen in 2Q25 and 3Q25. 4Q25 beat our expectation mainly due to improved gross margin.

We believe earnings fluctuations in 2Q25-3Q25 were not driven by heavy capacity investment (capex reached Rmb9.5bn in 2025, declining for the fourth consecutive year in both absolute terms and as a percentage of revenue) but rather by short-term, strategic efforts to capture incremental business. The operating performance recovered swiftly as pricing policies were optimized in 4Q25.

Trends to watch

Solid revenue and profit growth likely: unique logistics network and supply chain capabilities position the firm to capture growing customer demand. As the largest integrated logistics service provider in China and Asia, and the fourth largest globally, SF has established three core business segments: standard businesses (including large- and smallparcel express), supply chain services (end-to-end solutions for key industries), and international business (supporting Chinese companies’ global expansion). Supported by technology and AI, we expect these three segments to create synergies, reinforcing one another and delivering more balanced, steady growth.

Stable dividend and increased share buyback reflect confidence. The firm maintains strong operating cash flow, with operating cash flow of Rmb27.6bn and free cash flow (excapex) of Rmb18bn in 2025. Its financial position continues to improve, with the debt-to-asset ratio falling to a five-year low of 49% at end-2025. The firm declared a dividend payout of 40% for 2025, unchanged from the prior year, and expanded the Ashare repurchase plan from Rmb1.5–3bn to Rmb3–6bn. As of market close on March 31, Rmb3.4bn remained under the program, with completed repurchases averaging Rmb38.78 per share, above the current share price. The firm also announced an H-share repurchase plan of up to HK$500mn.

Financials and valuation

We maintain our 2026 and 2027 earnings forecasts at Rmb12.0bn and 13.6bn. The A-shares are trading at 16x 2026e and 14x 2027e P/E. We maintain an OUTPERFORM rating and TP of Rmb51.87, implying 22x 2026e P/E and offering 36% upside. H-shares are trading at 13x 2026e and 11x 2027e P/E, and we maintain an OUTPERFORM rating and TP of HK$50.37, implying 19x 2026e P/E and offering 43% upside.

Risks

Global economic slowdown; sharp rise in fuel costs.