Three major Chinese express delivery companies posted steady revenue growth last year on the back of booming e-commerce in the world’s most populous country.
SF Holding Wednesday announced that its revenues rose 27.6 percent year-on-year to 90.9 billion yuan (13.6 billion U.S. dollars) in 2018 thanks to fast growth in traditional and new businesses better catered to meet customer demands.
Smaller rivals STO Express and Yunda Holding saw revenues up 34.4 percent and 38.5 percent to 17 billion yuan and 13.8 billion yuan, respectively, according to their preliminary financial results for 2018 filed to the Shenzhen Stock Exchange.
The steady rise came amid a stable growth in e-commerce, the major source of business for the express delivery industry, said Chen Zhaolin, an analyst with Southwest Securities.
The industry is expected to handle 20 percent more parcels in each of the next two years, Chen said.
The increasing penetration of courier services in less-developed central and western regions could provide further impetus to the industry, according to Essence Securities.
China’s express delivery sector handled 50.7 billion parcels, an annual increase of 26.6 percent, according to the State Post Bureau. Meanwhile, the sector generated 603.8 billion yuan of revenue, up 21.8 percent.
Online retail sales of physical goods in China grew 25.4 percent year-on-year to 7 trillion yuan last year, according the National Bureau of Statistics.
Courier services like STO Express and Yunda Holding that rely more on business from online shopping platforms saw faster business growth and will continue to post more robust earnings in a certain period of time, said Shenwan Hongyuan Securities in a research note.
SF Holding, a leader in the middle and high-end courier service market, said its net profits attributable to its shareholders for 2018 fell 4.57 percent from the previous year to 4.56 billion yuan on rising costs and new business expansion.
Meanwhile, STO Express said its 2018 net profits rose 37.5 percent to 2.05 billion yuan and Yunda Holding announced its 2018 net profits rose 67.3 percent to 2.66 billion yuan.
SF Holding has been diversifying from express delivery service to be a comprehensive logistic service provider through acquisitions, and this raises higher demand for corporate management and operations, Sinolink Securities said.
The express delivery industry is facing common challenges, including fierce market competition and rising labor and transportation costs, according to Sinolink Securities.