Core business grew steadily and profitability continued to improve
Results Highlights
*Revenue from external customers refers to revenue attributable to independent third parties of the Company, which excludes revenue attributable to the SF Holding Group and its associates
HONG KONG, March 28, 2023 /PRNewswire/ -- Hangzhou SF Intra-city Industrial Co., Ltd. ("SF Intra-city" or the "Group"; Stock Code: 9699.HK), the largest third-party on-demand delivery service provider in China, announced its audited annual results for the year ended 31 December 2022 (the "Reporting Period"). During the Reporting Period, the Group adhered to its goal of pursuing long-term sustainable and high-quality growth. The Group demonstrated robust business resilience by steadily expanding its business while continuing to improve its financial performance significantly. During the Reporting Period, SF Intra-city's revenue increased significantly by 25.6% to approximately RMB10,265.2 million; gross profit recorded a threefold increase from approximately RMB94.8 million in 2021 to approximately RMB413.4 million; gross profit margin substantially increased from 1.2% in 2021 to 4.0%. The Company's net loss was approximately RMB286.9 million, down by 68.1% YoY, and the net loss margin narrowed by 8.2 percentage points over the same period.
The management of SF Intra-city said, "Despite the uncertainties of economic environment and the pandemic in 2022, the Group has broadened its sources of revenue growth and strengthened risk resilience, which was attributable to the diversification of revenue structure under the multi-scenario business model. With further enhancement of economies of scale, the Group has consistently refined the operations to increase efficiency and reduce costs, resulting in a significant improvement in profitability. The Group showed impressive improvement in financial performance for four consecutive years."
The intra-city delivery services for both merchants and consumers greatly improved, adhering to business independence and openness to promote the new consumption ecology
During the Reporting Period, the Group's intra-city on-demand delivery services included: (1) intra-city delivery services for merchants and consumers, and (2) last-mile delivery services.
Revenue from the intra-city delivery service increased significantly by 28.7% to approximately RMB6,548.4 million compared to 2021. During the Reporting Period, the Group's full-scenario and differentiated network capabilities were well-positioned to meet the diversified on-demand service needs of merchants in the food and beverage and the non-food industries. By helping consumers from various industries explore differentiated fulfillment standards and service experiences, accumulating industry insights, the Group has solidified its advantage in experience and delivery capabilities on customer brands and the Group's business base, forming an industry solution with differentiated competitive barriers. Therefore, among the intra-city delivery services, (i) the consumer habit of "what you see is what you get" is accelerating, non-food delivery scenario had strong performance, and revenue achieved a YoY growth of 29.2% to approximately RMB 2,417.4 million; (ii) continues to provide consumers with the Group's industry-leading and professional on demand delivery services and personal errand services resulting in a 57.3% YoY growth in revenue to approximately RMB 1,898.7 million; and (iii) further extension of the Group's reach to markets in lower-tier cities, counties, and towns, resulting in a YoY revenue growth of 36.5% to approximately RMB 2,285.1 million. As of December 31, 2022, the Group's network covered approximately 2,000 cities and counties nationwide, and the number of cities and counties with 24-hour operation increased by over 80% YoY to over 1,300 cities.
The scale of intra-city delivery services for merchants maintained healthy growth, achieving a revenue of approximately RMB 4,649.7 million for the reporting period, increased 19.8% YoY. This was mainly due to the extensive cooperation with merchants as well as the Group's open and inclusive on demand delivery network, and the professional, efficient, and multi-scenario solutions. In 2022, the Group has approximately 330,000 annual active merchants on the platform, representing a YoY growth of 27.7%, with over 3,600 branded customers served cumulatively. The Group also developed new cooperation with branded customers such as Mixue Bingcheng (蜜雪冰城), Chayan Yuese (茶顏悅色), vivo and Chando (自然堂) during the year. During the Reporting Period, the Group also formally entered the first partnership with Douyin Life Services (抖音生活服務) to become one of the major on-demand delivery service providers to access Douyin's "group purchase and delivery" (團購配送) to meet the diverse and omni-channel delivery needs of merchants on the platform, to improve the delivery efficiency and to provide the users with the "see-now-buy-now-get-now" experience. SF Intra-city continued to strengthen its cooperation with WeChat and its connection to the WeChat eco-system through various channels such as the real-time logistics assistant (即時物流助手), the accounts ledger services (收款小賬本), and the takeaways delivery locator (門店快送), thereby providing the merchants with a closed-loop cycle of "business traffic + on-demand delivery" 「商流+即時務流」. In 2022, high-value-added scenario revenues such as local e-commerce and local services maintained a high growth rate, with a YoY growth rate of over 50%; representative categories such as tea and beverages, convenience stores, tobacco and alcohol, cosmetics, pharmaceuticals, 3C electronics and pets supplies all saw revenue growth of over 100% YoY.
The Group also strategically cooperated with participants of SF Holding Group ecosystem to devise integrated supply chain solutions for merchants, namely "front-end warehousing + mid-end trunk + intra-city on-demand delivery". In 2022, the Group's service to Credit Customers with S F Holding Group led to a contribution of approximately RMB190.2 million in the external revenue, representing a YoY growth of 94.5%.
Revenue from intra-city delivery to consumers was approximately RMB 1,898.7 million for the reporting period, increased by 57.3% YoY. The number of annual active consumers continued to expand to more than 15.6 million during the year, representing an increase of 47.5% YoY. The increase in revenue was mainly due to the strongly cultivating consumption habits of "what you see is what you get" and broader consumer base; and the confidence and trust gained from customers through the provision of quality service.
The Group's "Deliver for Me, Fetch for Me, Purchase for Me, Solve for Me" services covered personal work and life scenarios such as daily errands, medical and healthcare, and business agency services. These services helped to shape the consumers' mindset that "SF Intra-city is the best delivery choice for urgent and valuable items". During the Reporting Period, the Group strengthened the brand marketing to consumers by working with the partner merchants during festivals and popular activities to broaden users' reach. The Group also extended the channels to attract new consumers and optimized the marketing tactics to improve customer acquisition efficiency and conversion rate of new users. In 2022, as an increasing number of consumers recognized SF Intra-city's "fast and reliable"(又快又穩) service, the revenue from the running errands business that covered "fetching, delivering, purchasing and solving plus" (取送買辦+) services had doubled. Moreover, we continued to extend the personal service scenarios, such as partnering with local governments in the elderly care sector to provide quality community services.
Last-mile delivery service quickly rebounded under the receding impact of pandemic
During the reporting period, last-mile delivery service started to see a rapid recovery after the pandemic impact receded and recorded a revenue increase of 19.9% to approximately RMB 3,680.4 million. The Group's last-mile delivery service enabled us to further expand our network and achieve network effect and improve economies of scale, it has also enhanced riders' income, strengthened riders' long-term loyalty, and reduced our fulfilment cost. This service also acts as a flexible supplement to all aspects of logistics service providers to address the mismatch between order volume and delivery capacity, to improve the operational efficiency and reduce delivery cost. Furthermore, the Group deepened the cooperation scenarios with key customers and product innovation, so that they were able to better cope with the peak order periods such as Double 11 and Double 12 Shopping Festivals, as well as the tight courier capacity at the end of the year.
Successful deployment of real-time logistics system to establish smart delivery network
The Group's City Logistics System ("CLS") has three core functions, namely business forecasting and planning, integrated order recommendation and dispatching and real-time operation monitoring, which enable us to optimize riders' scheduling in different industries and scenarios across complex delivery networks. During the Reporting Period, the number of active riders on the platform continued to grow to over 780,000 with an increase of 29.4% YoY. The Company'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 threefold delivery network above, the Group is able to dynamically and flexibly adjust the dispatch of orders, shorten delivery time and lower delivery costs. Based on the accumulation of the technology capabilities, we launched the "SF lntra-city Delivery Cloud" (豐配雲) SaaS real-time logistics system to provide one-stop intra-city logistics solutions for delivery service providers and brands with self-delivery business. In order to further improve the delivery capability and deployment of smart delivery network, the Group successfully launched the on-demand drone delivery service, providing a new service experience for the customers and the merchants.
Looking forward to 2023, the management of SF lntra-city said, "As part of the intra-city delivery infrastructure, we will strive to seize the opportunities arising from multi-channel traffic, local retail development and third party on demand delivery service. We will fully leverage on our own advantages and continue to focus on high-quality growth, improved profitability, and steady development. The services go beyond the delivery. Based on the trend of "bring all you need to your side"(萬物到家), the demands and scenarios of intra-city on-demand delivery services are increasingly diversified. We have also been striving to expand the service boundaries, and to become an open platform for local lifestyle service that connects all parties to create a new business model consisting of local service together, with a view to achieving the mission of "bring enjoyable lifestyle to your fingertips" and create value for our customers and society."